BOROUGE PLC

Recommendation history

• Q4 2023HoldHold: Borouge delivered resilient Q4 results—$1.5 billion revenue, $600 million adjusted EBITDA at a 40% margin, and $288 million net profit up 16% year over year—but FY23 revenue fell 14% to $5.8 billion and net profit dropped 29% to $1.0 billion. The $1.3 billion 2024 dividend and first-quartile cost position support the downside, while weak polyolefin pricing, a planned 500kt 2024 volume disruption, potentially less durable cost savings, and debt-funded Borouge 4 keep this from being a clean buy.
• Q3 2023HoldHold: Borouge delivered resilient Q3 results—$592 million adjusted EBITDA, a 40% margin, $282 million net profit and 16% sequential volume growth—but this was achieved against sharply lower pricing, with average selling prices down 15% year-on-year and product premia falling to $174/tonne for polyethylene and $107/tonne for polypropylene. Q4 pricing is expected to remain subdued and volumes to normalize toward Q2 levels, while the 500 kt of planned 2024 maintenance disruption, unresolved Borouge 4 valuation and continued polyolefin oversupply limit near-term upside despite the $1.3 billion 2023 dividend commitment.
• Q2 2023HoldHold: Borouge delivered resilient Q2 earnings, but the improvement was largely defensive rather than cyclical. Q2 net profit rose 16% QoQ to $231 million, EBITDA margin reached 37%, and the Value Enhancement Program contributed $253 million in H1 toward a $400 million 2023 target; however, H1 revenue fell 19% to $2.8 billion as prices declined 22%, while management acknowledged weak Chinese demand, significant new capacity, and a potentially difficult 2024.
• Q1 2023HoldBorouge merits a hold, not a fresh buy: Q1 EBITDA margin stayed above 33% despite a 13% sequential revenue decline, and management expects the value-enhancement program to deliver $400 million of 2023 EBITDA impact while returning to full production from Q2. The dividend floor of at least $1.3 billion and structural cost advantage support the bull case, but weak global polyolefin conditions, uncertain China exports, reliance on unverified savings, and limited disclosure on turnaround economics keep the risk/reward mixed.
• Q4 2022HoldBorouge delivered resilient 2022 results, with revenue up 8% to $6.7 billion, sales volumes up 15%, adjusted EBITDA of $2.6 billion and a 2023 dividend commitment of at least $1.3 billion. However, Q4 EBITDA fell 9% sequentially to $541 million, PP premium compressed to $117/ton versus the $140/ton through-cycle guide, and the promised $400 million value-enhancement benefit is largely back-half weighted and not yet demonstrated. The unresolved funding and valuation mechanics for Borouge 4 add risk; the stock is a hold rather than a clean buy.