Post by
retiredcf on Apr 29, 2021 8:44am
TD
This is a flash report so there is potential for them to raise their current US$50 target. GLTA
Methanex Corp.
(MEOH-Q, MX-T) US$40.95 | C$50.35
Q1/21 a Slight Beat; Highest Quarterly EBITDA Since Q3/18 Event
Methanex reported Q1/21 adjusted EBITDA of $242mm, modestly above the consensus estimate of $236mm and in line with our forecast of $243mm. The conference call is at 11:00 a.m. ET. Dial-in: 1-800-806-5484 (passcode 9396607).
Impact: SLIGHTLY POSITIVE
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Q1/21 Results: Adjusted EBITDA of $242mm represents the company's highest quarterly EBITDA since Q3/18 and was up $106mm vs. Q4/20 adjusted EBITDA of $136mm. The sequential increase was largely due to the increase in the company's average realized methanol price and pricing remains strong to-date in Q2/21.
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Methanol Prices: Methanol demand has continued to recover, and Methanex anticipates that it will return to pre-pandemic levels later in 2021, but methanol pricing remains driven by ongoing industry supply challenges, particularly in the Atlantic Basin. Methanex's May posted contract price in North America increased by $23/tonne to $542/tonne, a price level not seen since mid-2014, and the posted contract price in Europe increased to €410/tonne in Q2/21 vs. €390/tonne in Q1/21, while the May posted contract price in Asia was stable at $430/tonne. Industry forecaster Argus still expects methanol prices to moderate based on improving methanol supply and the start-up of a new U.S. plant, as well as the impact of softer olefin/olefin derivative pricing on MTO demand; however, the timing of that moderation has likely been pushed out to early-Q3/21, and we are mindful that deferred maintenance during COVID-19 may aggravate the usual industry supply volatility.
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Geismar 3: Methanex has invested $385mm of the $1.3-$1.4bln expected capital cost of Geismar 3 and anticipates spending a further $60mm during the remaining care-and-maintenance period (Q2/21 and Q3/21). We anticipate that Methanex will be prudent about restarting the Geismar 3 project but expect that Geismar 3 will take precedence over share buybacks and/or the restoration of a more meaningful dividend. We also see the Street as more likely to be supportive of Geismar 3 against the current macro backdrop, particularly if Methanex can bring in a partner, which the current macro backdrop may also be more conducive to
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