Post by
incomedreamer11 on Jul 28, 2021 10:35am
METHANEX SELL RATING REITERATED
11:19 AM EDT, 07/19/2021 (MT Newswires) -- UBS on Monday reiterated its sell rating on the shares of Methanex (MX.TO) with a US$26.00 target price after the methanol producer resumed construction of its US$1.3-billion Geismar-3 plant in Louisiana and partially restored its dividend after both were lowered in the early days of the pandemic.
"As expected, Methanex announced it will move forward with construction of Geismar-3. The capital cost ($1.3B midpt total, with ~$800-900M to go) is slightly lower than originally estimated ($1.35B midpt), and is derisked somewhat since more engineering has been completed & equipment has already arrived at the site. Startup is expected in late 2023/early 2024. Methanex indicates the IRR to be 20%+ under most scenarios, and better use of cash than buyback," analyst John Roberts said in a note. "The dividend was reduced to $0.15/share annually (from US$1.44) after the onset of the pandemic, and progress on G3 was suspended. Although methanol prices have recovered, management indicated a more flexible cash distribution policy is more prudent given the significant volatility of the past several years. Buybacks could factor more significantly in the future, but no timeframe or criteria was provided for buybacks to resume."
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