Materials
Hassan Ahmed argues that the recent uptick in methanol prices is sustainable in the near-to-medium term based on cost curve support, potentially higher oil prices and tightening supply / demand fundamentals. Marginal methanol producers are making razor-thin margins at current prices, suggesting limited (if any) pricing downside. Beyond 2024, Hassan expects limited new methanol capacity builds, with demand growth outstripping supply growth and global utilisation rates tightening. He also anticipates that MEOH’s FCF generation will accelerate post-2024 as a result of the Geismar 3 start-up. Over the next five years, MEOH can cumulatively provide over 65% of its current share price in excess cash flow (excl. the acquisition of OCI's assets). 12-month TP $60 (30% upside).
Edition: 201
- 13 December, 2024
Materials
Hassan Ahmed forecasts MEOH cumulatively generating >45% of its current share price in excess cash flow over the next five years. The recent higher methanol price regime is sustainable throughout the year on the back of cost curve support. Beyond 2023, Hassan expects limited new methanol capacity builds, with demand growth outstripping supply growth and global utilisation rates tightening. He raises his 2023 & 2024 EPS estimates from $3.05 to $3.45 and from $4.05 to $4.60, respectively. His 12-month TP is increased to USD60 (from USD40), reflecting the start-up of Geismar 3.
Edition: 157
- 31 March, 2023