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Methanex Corp T.MX

Alternate Symbol(s):  MEOH

Methanex Corporation is a producer and supplier of methanol to international markets in North America, Asia Pacific, Europe and South America. The Company’s 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 Trinidad production site supplies methanol to all 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. It also has interest in two methanol facilities in Beaumont, Texas, one of which also produces ammonia and methanol facility in Delfzijl, Netherlands.


TSX:MX - Post by User

Post by retiredcfon Apr 09, 2021 8:39am
245 Views
Post# 32965347

TD Upgrade

TD UpgradeThey raise their target from US$46 to US$50. GLTA

Methanex Corp.

(MEOH-Q, MX-T) US$37.32 | C$46.88

Industry Supply Issues Support Ongoing Methanol Price Strength Event

We have updated our estimates to reflect Methanex's actual Q1/21 posted prices and Argus' latest methanol outlook.

Impact: POSITIVE

 Methanol Prices: Methanol demand has continued to recover, but pricing remains driven by supply-side factors, and although methanol supply has improved in China, it has further tightened in the Atlantic Basin, which we attribute largely to delayed plant restarts on the U.S. Gulf Coast following Winter Storm Uri and the prospect of planned Q2/21 maintenance activity in Europe. Methanex's April posted contract price in North America increased by $27/tonne to $519/ tonne, a price level not seen since late-2018, and the posted contract price in Europe increased to €410/tonne in Q2/21 vs. €390/tonne in Q1/21, while the April posted contract price in Asia was stable at $430/tonne.

 Estimate Revisions: Industry forecaster Argus still expects methanol prices to moderate based on improving methanol supply and the start-up of the new Yuhang/Koch plant in the U.S., as well as the impact of softer olefin/olefin derivative pricing on MTO demand, although the timing of that moderation has likely been pushed out to early-Q3/21. Our revised 2021 forecast reflects an average realized price of $358/tonne vs. $331/tonne previously.

 Capital Allocation: Methanex's financial flexibility has the potential to meaningfully improve at current methanol prices, as it should generate ~$500mm of annual free-cash-flow at our Q1/21E average realized price of $380/tonne. We anticipate that Methanex will be prudent about restarting the Geismar 3 project and see the Street as more likely to be supportive of Geismar 3 against the current macro backdrop, particularly if Methanex is able to bring in a partner, which the current macro backdrop may also be more conducive to.

TD Investment Conclusion

We are attracted to Methanex's market leadership in methanol and its unique position as the only methanol supplier with well-established production and sales in all major regions. Although methanol prices are at cyclically strong levels currently, we estimate that Methanex's share-price is already anticipating lower prices and is discounting an average realized price in the low-$300s/tonne, which we characterize as the low-end of the normal range and consistent with what we are modelling for 2022/2023.


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