Post by
incomedreamer11 on Jul 29, 2021 9:05am
Scotia comments
OUR TAKE: Mixed.
While the market will like the 2% EBITDA beat ($262M vs. $257M), the stock may underperform near-term, largely on the 19.3% discount rate realized in Q2.
Beyond that, there was little new to report following all of the previously announced positive news over the past week or two:
(1) the sale of 40% of WFS to Mitsui for $145M;
(2) the restart of G3 for less than expected capex; and
(3) a dividend reset to $0.50/sh annually.
POSITIVE SURPRISES • Q2 sales of Methanex-produced methanol was 1.582M mt, up from 1.518M mt q/q. • The Q2 ARP improved slightly to $376, up from $363 q/q. • Cash of $764M + $900M of undrawn backup liquidity. • Global methanol demand increased by 3% q/q.
NEGATIVE SURPRISES • Discount rate worsened to 19.3% in Q2 vs. 18.8% in Q1, and guidance of 17% for 2021 overall. It seems unlikely Methanex will be able to earn a sub-15% discount rate in 2H/21, meaning Methanex will almost certainly miss its guidance discount rate this year. • Production at Egypt was a little light at 134K mt, or a 10% reduction in output q/q. • In its Q2 release, Methanex removed its EBITDA guidance line last shown in its Q1 release, where it stated "We anticipate similar adjusted EBITDA results in [Q2] compared to [Q1]". Whether deliberate or not, some may view this as a sign that EBITDA has peaked for this part of the cycle