Methanex Corp T.MX

Alternate Symbol(s): MEOH

Chemicals Basic Materials

Methanex Corporation is a Canada-based producer and supplier of methanol to international markets. The Company supplies methanol to international markets in North America, Asia Pacific, Europe, and South America. Its operations consist of the production and sale of methanol, a commodity chemical. It operates production sites in Canada, Chile, Egypt, New Zealand, Trinidad and Tobago and the United States. It has three plants in New Zealand, Motunui 1, Motunui 2 and Waitara Valley. Its two plants in Geismar serve customers in methanol markets. It has two plants in Trinidad, Titan and Atlas that supplies methanol to various methanol markets. Its Chile production site supplies methanol to customers in South America and Asia Pacific, having two plants in Chile, Chile I and Chile IV. Its Egypt plant is located on the Mediterranean Sea and primarily supply methanol to the domestic and European market. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.

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Methanex Corp

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Post by retiredcfon Jul 14, 2021 2:41pm

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Post# 33543417

TD

Are looking for 50% appreciation with a US$51.00 target. GLTA

Methanex Corp.

(MEOH-Q, MX-T) US$33.61 | C$42.15

Prices High to Start Q3/21; Supply-side Performing a Bit Better Event

We have updated our estimates to reflect Methanex's actual Q2/21 posted prices and Argus' latest methanol outlook.

Impact: SLIGHTLY POSITIVE

July Prices Strong: The methanol supply/demand balance loosened a bit in Q2/21, as margins came under pressure for some methanol-to-olefins producers, and production in the Atlantic Basin recovered from Winter Storm Uri, but market conditions remain tight enough to support average realized pricing at the high-end of the normal range as Q3/21 begins. Methanex's posted contract price in North America rolled at $542/tonne in July, which marks the third consecutive month at the highest price since mid-2014. The European posted contract price rolled at €410/tonne for Q3/21, and the Asia posted contract price declined only 2% to $420/tonne in July, after spending five months at $430/tonne, the highest price since late-2018.
Estimate Revisions: Start-up of a new methanol plant in the U.S., which has been in progress since mid-June, should prompt prices to moderate, and Argus' latest forecast calls for China spot methanol prices to decline gradually through the end of 2021. However, we perceive some upside risk to Argus' outlook, because we expect the impact of the plant start-up to be tempered by a continued recovery in methanol demand as the economy reopens, and the potential for deferred maintenance during the pandemic to contribute to a higher-than-normal level of industry supply outages. We have updated our Q2/21 EBITDA estimate to $260mm from $243mm, largely based on an increase in our average realized price to $387/tonne vs. $375/tonne. We continue to model based on average realized prices of $350/tonne in Q3/21, $325/tonne in Q4/21, and $325/tonne in 2022/2023.

TD Investment Conclusion

We are attracted to Methanex's methanol market leadership and its unique position as the only methanol supplier with well-established production and sales in all major regions. Although methanol prices remain at cyclically strong levels, we would argue that Methanex's share-price is already discounting much lower prices, as the stock is trading at a free-cash-flow yield of 9-10% at an average realized price of $300/ tonne, which we characterize as the low-end of the normal range, and a free-cash- flow yield of >20% at our Q2/21E average realized price.