Chemicals: Commodity Chemicals

Methanex Corp.

Equity Research Estimate Changes

May 3, 2017

Price: $45.00 (05/2/2017)

Price Target: $60.00
Diverse Driver Set Supports Long Term
Earnings Growth
OUTPERFORM (1)

Charles Neivert The Cowen Insight

646.562.1370
charles.neivert@cowen.com We continue to recommend MEOH shares based on the visible earnings growth path
stretching over the next two to three years. A transparent use for cash, limited capex
Jeffrey Rossetti
646.562.1335 over maintenance through 2018, improving industry fundamentals and market growth
jeffrey.rossetti@cowen.com well above GDP support earnings going forward.
Key Data MEOH Remains One of Our Top Long-Term Plays
Symbol NASDAQ: MEOH
52-Week Range: $53.35 - $26.83 MEOH remains one of our best long ideas given the multitude of upside contributors
Market Cap (MM): $4,022.9 to earnings. We see the earnings and share value driven by a mix of: volume growth,
Net Debt (MM): $1,332.3 modest price increases, industry capacity growth aligned with demand, improving
Cash/Share: $2.49 conversion costs/mt based on high operating rates, fewer production curtailments,
Dil. Shares Out (MM): 89.4 transparent policy for use of cash, increasing FCF to deploy toward share repurchase
Enterprise Value (MM): $5,461.9 and dividend growth, and normalized earnings well above current levels. The diverse
ROIC: NA list of drivers represent opportunities for share appreciation. We expect shares to show
ROE (LTM): NA some volatility in the near-term, with the possibility of a reduction in price realization
BV/Share: $18.60 in June for North America and in 3Q17 for Europe once 2Q17 contracts are reset.
Dividend: $1.20 We would be buyers of the shares today and would buy more aggressively if volatility
Yield: 2.67% produces dips in the share values.

FY (Dec) 2016A 2017E 2018E Forward Look Is More Important Than Last Quarter
Earnings Per Share
The medium and long-term outlook for MEOH looks to be very constructive. MTO
Year $(0.17) $5.09 $4.51
plants continue to move toward and into construction, which bodes well for demand
Prior Year - $5.49 $4.19
later in 2017 and into 2018. MTBE demand, especially in China, is advancing. We
P/E NM 8.8x 10.0x
expect MTBE production growth in the U.S. as well. We believe LYB will decide to push
Consensus EPS $(0.17) $4.92 $4.12
Consensus source: Thomson Reuters
forward with a new PO/TBA plant later this year or in early 2018. TBA is a precursor to
MTBE and has no other significant end use. Demand for methanol in basic chemicals
EBITDA continue to grow at a GDP type pace. These products represent 55% to 60% of global
Q1 $36.0 $267.0A $217.0 methanol demand. This, combined with the more rapid growth rate from MTO plants,
Prior Q1 - $259.0 $190.0 gasoline blending, and marine use, leads us to believe that at least a 5% growth rate
Q2 $38.0 $248.0 $205.0 for methanol over the next 2-3 years is plausible. With global demand of about 75 MM
Prior Q2 - $286.0 $179.0 metric tons, 5% growth through 2019 suggests that additional demand should outpace
Q3 $74.0 $221.0 $222.0 additional supply growth during the period. A 5% rate implies 11-12 MM metric tons
Prior Q3 - $238.0 $205.0 of additional demand by 2019. If we are generous about new capacity becoming
Q4 $139.0 $218.0 $245.0 available by that time, we see a gain of 10-11 MM metric tons, including capacity
Prior Q4 - $203.0 $241.0 from Iran and China, as we well as a late 2019 start in the U.S. We note that a sizable
Year $287.0 $954.0 $890.0 proportion of the supply gains through 2019 are in China and Iran, which should imply
Prior Year - $986.0 $815.0 a higher degree of uncertainty for timing. This is especially true of any coal based
EV/EBITDA 19.0x 5.7x 6.1x capacity. Given Chinas current policy, which may constrain coal used in chemical
processes, we view this situation supporting price realizations averaging $325-$335/
mt in 2017 and 2018. This pricing scenario, coupled with high operating rates at the
MEOH facilities, will lead to strong FCF which should easily support share repurchase
programs through 2018, the possibility for another dividend boost in 2018, and capital
for whatever path MEOH chooses for the Chile assets (total possible spend in Chile is
$100 MM, mostly in 2018).

www.cowen.com Please see pages 10 to 14 of this report for important disclosures.

 Cowen and Company Methanex Corp.
Equity Research May 3, 2017

At A Glance
Our Investment Thesis Forthcoming Catalysts

We have an Outperform rating on MEOH shares as we believe the company is well MTO restarts and additional MTO
positioned to benefit from the healthy long-term supply/demand outlook for methanol startups in China.
coupled with the company bringing on significant new capacity before competitors. Decision on restarting Chile IV
(expected mid 2017).
Increased marine fuel demand.
Potential for more aggressive share
repurchase.

Base Case Assumptions Upside Scenario Downside Scenario

Realized price of $344/mt in 2017 and
$327/mt in 2018, vs. $242/mt in 2016.
Production of 7.5 MM metric tons in
2017 and 7.6 MM metric tons in 2018,
vs. 7.0 MM metric tons in 2016.
Limited gas restrictions in Egypt and
Trinidad.
Methanex does not restart Chile IV
plant.
Higher than expected methanol price
as a result of methanol demand
growing faster than supply.
Delays in new capacity additions.
Methanex restarts Chile IV plant.
Lower than expected methanol price
as a result of lower olefin prices.
New capacity additions start up faster
than expected.
Higher than expected gas restrictions
in Egypt and Trinidad

Price Performance Company Description

$60 Methanex is a methanol producer headquartered in Vancouver, Canada. The company

has manufacturing, marketing and supply chain abilities in North America, Latin
55 America, Europe, the Caribbean, the Middle East and throughout the Asia Pacific
50
region. Methanex has 8.5 MM metric tons of annual production capacity with the
potential to increase to 9.4 MM metric tons should Chile reach full potential.
45

40

35
Analyst Top Picks

30 Ticker Price (05/2/2017) Price Target Rating

Olin Corp OLN $31.93 $37.00 Outperform
25 Celanese Corp. CE $87.02 $100.00 Outperform
Aug-16 Nov-16 Feb-17 May-17 Methanex Corp. MEOH $45.00 $60.00 Outperform

Source: Bloomberg

2 www.cowen.com
Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Chile Restart, Two Unit Operation Seems Likely

The fact that one unit in Chile is running at fairly high levels already should certainly
be viewed as a positive. The real proof of higher gas supply for the unit will be evident
during the course of 2Q and 3Q when curtailments for the Chilean winter typically
take place. Our own channel checks in the region give us confidence that year round
full operation of one unit is a high probability by 2018. The timing of gas development
seems to be the only question in our mind regarding the restart of the second unit;
when not if. Our confidence on this front has been further boosted by the increasing
likelihood that Total will invest heavily in developing Argentina's vast shale deposits.
The extra gas this project could bring makes it more likely that enough gas can be
brought into southern Chile to run both units. (The new project might even prod
Chile's own gas development into a faster pace of growth.) The combination of more
gas availability in Chile during 2017 and 2018, as well as increased gas supply in Egypt
could add over 500K metric tons of product per year vs. 2016 production in those two
facilities. (This still assumes seasonal curtailment, in both Chile and Egypt, does not
include commission volumes in Egypt, and no contribution from a second methanol
plant in Chile). This volume produces a sizable incremental gain in EBITDA even at
methanol prices well below 1Q17 levels. We estimate 1Q17 EBITDA at almost $150/
mt and expect EBITDA/mt to range between $105/mt and $130/mt over the remainder
of 2017 and 2018. Using the midpoint of the range, the incremental capacity from
Egypt and Chile adds almost $60 MM per year to EBITDA. Our range on EBITDA/mt is
based on the conditions we see in the industry, including our belief that new U.S. and
Chinese ethylene start-ups will have a negative impact on ethylene prices and thus
constrain upside for methanol prices.
Earnings Growth Driven by Factors Beyond Volume and Price

MEOH has seen a sizable drop in its cost/mt of production that goes beyond the
changes in natural gas costs. As the company has ramped up production levels,
especially in Chile and Egypt, we believe that MEOH may have been able to drop
its conversion cost alone by as much as $10/mt. (Note: The $10/mt drop includes
the benefit of high operating rates in the U.S. as well as New Zealand). Based on
current production levels, this would imply an additional $70-$75 MM in EBITDA per
year. We are not sure that this is fully captured in future estimates. As a result, even
in a more challenged price environment, MEOH creates more FCF as long as high
operating rates are maintained. This can probably improve a bit more if the company
can maintain its current level of operation in Chile and Egypt as gas supplies increase
and facilities run at a steadier pace.
Look Through Near Term Earnings Volatility
The roller coaster that methanol prices experienced over the last 6-9 months has
had a significant impact on earnings. Earnings volatility can have either positive
or negative effects on earnings as the value of product produced changes. The
most recent quarter was likely impacted positively due to the typical lag between
production and sales. In a rising price market, it would mean that sales were made
from older, lower cost product. We see the opposite situation developing in 2Q17, a
period of declining prices. We would expect earnings to be impacted negatively with
sales coming from higher cost, earlier production. We see prices 3Q17 and forward
having much less volatility and representing a truer picture of MEOH earnings power
excluding the volatility offset.
Earnings Power: Impressive Upside as Reasonable Methanol Price

From where MEOH stands today, we still see significant earnings upside via a
combination of lower conversion costs, higher output rates and a path to an average

www.cowen.com 3
Cowen and Company Methanex Corp.
Equity Research May 3, 2017

realized price of $350/mt, which we consider to be a normalized level. We use 2016 as

our basis for comparison.
For purposes of comparison we assume both Chile plants are operating, Trinidad
remains at an 85% operating rate, both Chile and Egypt experience modest seasonal
gas curtailment (less than 5% drop in operating rate), New Zealand does not receive
any high CO2 gas and MEOH retains its current sharing arrangements regarding
methanol and natural gas prices. We note that a $350/mt methanol price realization
might imply a $325/mt realization in Asia and about a $370/mt price realization in
North America and Europe. The $325/mt Asia price would require, assuming some
improvement in MTO economics (2.7 metric tons of methanol per unit of MTO output
vs. 2.8 today) and an ethylene price of $900/mt ($0.41/lb) and a propylene price of
$975/mt ($0.45/lb). All this seems reasonable in a balanced marketplace. (See Figures
1 and 2 for pricing detail.)
Under these conditions, MEOH EBITDA exceeds $1.15 BB and FCF is almost $700 MM
while earnings approaches $7.00/share. We would expect a situation like this to exist
no earlier than 2019, given the start-up of some capacity in the 2018-2019 timeframe
(MEOH in Chile and Yuhuang Chemicals).
Methanex Plants Should Be Capable of High Reliability Operation
The MEOH facility portfolio is made up of plants that are of a different vintage than
those being built today. With the exception of the Atlas plant in Trinidad, even the
newer MEOH operations in Egypt are not built to the largest possible scale. The older
technology plants seem to have a better operating history than the mega plants being
built today. The newer technology seems to be harder to operate consistently and on
average, at least anecdotally, have more downtime. As such, having a set of plants
with older technology might reduce earnings volatility from unscheduled outages.
We Look for Solid Earnings in 2017 and 2018 as a Platform for the Future
For 2017, we project adjusted EPS of $5.09, adjusted EBITDA of $954 MM and FCF of
$682 MM. Although our 2018 projections (EPS of $4.51 and adjusted EBITDA of $890
MM) are slightly lower than 2017, the FCF level provides plenty of room to execute on
share repurchase and dividend increases. Our 2018 earnings are lighter as a result of
late 2017/early 2018 ethylene startups which may limit MTO operating rates to some
degree and keep prices from rising in any meaningful manner until 2H18. Some of the
drag from pricing will be offset by stronger volume and cleaner operations. We see
conditions in the olefins market improving in 2019 and bringing more of the MEOH
drivers to bear on earnings.

4 www.cowen.com
Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Figure 1 MEOH Realized Pricing and Adjusted EBITDA

$400 $1,200

$350
$1,000

Annualized EBITDA ($ MM)

$300
$800
$250

Price ($/mt)
$200 $600

$150
$400
$100
$200
$50

$0 $0
1Q16 2Q16 3Q16 4Q16 1Q17

MEOH average realized price ($/mt) MEOH Annualized Adjusted EBITDA ($ MM)

Source: Cowen and Company

Figure 2 MTO Economics Improving on Spot But Deteriorating on Contract Basis

Ca sh Ca sh Asia P a cific
Ca sh Cost of Ma rgin/Unit of Ca sh Cost of Ma rgin/Unit of Me tha nol
Ethyle ne Asia P ropyle ne Asia MT O P roduction on MT O output on P roduction on MT O output on " Allow e d" Contra ct China Me tha nol
$/MT $/MT Re ve nue /unit Contra ct Contra ct S pot S pot Me tha nol $/MT Discounte d $/MT S pot $/MT
1/6/2017 1,090 900 1,085 1,222 -137 1,105 -20 325 374 332
1/13/2017 1,140 890 1,104 1,222 -118 1,105 -1 332 374 332
1/20/2017 1,172 910 1,132 1,222 -90 1,130 2 342 374 341
1/27/2017 1,250 915 1,174 1,222 -48 1,133 41 357 374 342
2/3/2017 1,225 915 1,162 1,222 -61 1,127 35 352 374 340
2/10/2017 1,310 970 1,237 1,222 15 1,177 60 379 374 358
2/17/2017 1,365 990 1,277 1,222 54 1,236 40 393 374 379
2/24/2017 1,330 960 1,241 1,222 19 1,214 27 381 374 371
3/3/2017 1,300 945 1,217 1,365 -148 1,228 -11 372 425 376
3/10/2017 1,225 910 1,159 1,365 -207 1,211 -53 351 425 370
3/17/2017 1,158 885 1,110 1,365 -255 1,155 -45 334 425 350
3/24/2017 1,148 855 1,087 1,365 -278 1,071 16 326 425 320
3/31/2017 1,155 855 1,091 1,103 -13 1,029 62 327 332 305
4/7/2017 1,160 838 1,083 1,103 -21 1,029 54 324 332 305
4/14/2017 1,205 840 1,107 1,103 3 1,015 92 333 332 300
4/21/2017 1,220 810 1,096 1,103 -7 994 102 329 332 293
4/28/2017 1,195 815 1,087 1,103 -17 966 121 326 332 283
Note: "Allowed" methanol price represents the price of methanol to the MTO process which creates breakeven economics. 1 unit of MTO = 0.5 MT ethylene and 0.6 MT propylene
Source: Cowen and Company

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Figure 3 MEOH Pricing

Methanex (ME O H) P ricing ($/mt) 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 Apr-17 May-17 J un-17 2Q 17

North America $266 $255 $269 $326 $444 $442 $409 - -
E urope $300 $250 $265 $280 $385 $480 $480 $480 $480
Asia P acific $262 $268 $275 $315 $453 $390 $360 - -
ME O H average non-discounted posted price $272 $260 $272 $312 $437 $437 $416 - -
Discount -15% -14% -13% -11% -16% -15% -15%
ME O H av erage realiz ed price $230 $223 $236 $278 $365 $372 $354 - -
Note: Average non-discounted posted price and realiz ed ME O H price is estimated for April and May 2017.
Source: Cowen and Company

Figure 4 Lowering 2017 EBITDA Projection on Lower Pricing Forecast. Raising 2018 EBITDA Projection on Lower Cost of Production

Me tha ne x (MEOH) 2015A 2016A 2017E 2018E

Cow e n P rior Cow e n Cow e n P rior Cow e n
P roduction
Chile 204 395 740 628 765 664
Trinidad (Methanex interest) 1,644 1,605 1,700 1,666 1,700 1,700
New Zealand 1,856 2,181 2,272 2,173 2,272 2,187
E gypt (50% interest) 74 293 394 561 449 532
Medicine Hat 456 488 525 529 540 552
Geis mar 1 and 2 959 2,055 1,960 1,963 1,940 1,940
T ota l P roduction (000's of tons) 5,193 7,017 7,591 7,520 7,666 7,575

S a le s V olum e
Methanex P roduced Methanol 5,050 6,828 7,591 7,410 7,666 7,575
P urchased Methanol 2,780 1,892 1,875 1,923 1,821 1,869
Commis sion S ales 641 758 834 1,024 884 959
T ota l S a le s V olum e (000's of tons) 8,471 9,478 10,300 10,357 10,371 10,403

Ave ra ge Re a liz e d P rice /ton $322 $242 $365 $344 $332 $327
Cost/ton $247 $203 $236 $220 $228 $215

Adjuste d EBIT DA ($ MM) $401 $287 $986 $954 $815 $890

Adjusted Net Income ($ MM) $110 -$15 $485 $449 $359 $392
Adjuste d EP S $1.20 -$0.17 $5.49 $5.09 $4.19 $4.51
Source: Cowen and Company

Valuation

Our $60 price target is based on 7.7x (above the 5 year average of 8.0x) our 2018
EBITDA estimate of $890 MM and 13.3x (above the 5 year average of 10.0x) our 2018
EPS projection of $4.51.

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Figure 5 Historical Forward P/E Multiple is 10.0x Figure 6 - Historical Forward EV/EBITDA Multiple is 8.0x

14.0 14.0

12.0 12.0

10.0 10.0

8.0 8.0

6.0
6.0

4.0
4.0

2.0
2.0
0.0
0.0

EV/FY2EBITDA Average EV/FY2EBITDA

FY2 PE FY2 PE Average Linear (FY2 PE)
Linear (EV/FY2EBITDA)

Source: Cowen and Company Source: Cowen and Company

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Methanex
Income Statement* 2014 2015 2016 1Q17 2Q17E 3Q17E 4Q17E 2017E 1Q18E 2Q18E 3Q18E 4Q18E 2018E
REVENUES
Total Revenues $3,223.4 $2,225.6 $1,998.4 $810.3 $846.7 $775.8 $793.6 $3,226.5 $789.7 $748.7 $767.4 $825.9 $3,131.7

OPERATING EXPENSES
Cost of Goods Sold 2,419.7 1,857.9 1,774.4 559.3 606.3 561.7 582.5 2,309.7 579.6 551.1 552.5 588.0 2,271.2
Depreciation, Depletion & Amortization 142.7 194.8 228.1 56.0 60.0 60.0 60.0 236.0 60.0 60.0 60.0 60.0 240.0
Total Operating Expenses 2,562.4 2,052.7 2,002.5 615.3 666.3 621.7 642.5 2,545.7 639.6 611.1 612.5 648.0 2,511.2

OPERATING INCOME 703.0 237.9 28.4 195.1 180.5 154.1 151.1 680.7 150.0 137.7 154.9 177.9 620.4

OTHER INCOME
Earnings (loss) of associate (Atlas) 5.1 51.8 19.9 17.0 5.0 5.0 5.0 32.0 5.0 5.0 5.0 5.0 20.0
Finance income and other expenses (7.3) (6.5) 4.2 0.0 0.3 0.3 0.3 1.0 0.3 0.3 0.3 0.3 1.3
Finance costs (37.0) (69.9) (90.1) (23.3) (24.0) (24.0) (24.0) (95.3) (24.0) (24.0) (24.0) (24.0) (96.0)
Total Other Income (Expense) (39.2) (24.5) (66.0) (6.3) (18.7) (18.7) (18.7) (62.4) (18.7) (18.7) (18.7) (18.7) (74.7)

INCOME BEFORE TAXES AND MINORITY INTEREST 663.8 213.4 (37.5) 188.7 161.8 135.4 132.4 618.4 131.4 119.0 136.2 159.2 545.7

Income Tax 157.5 11.0 (9.3) 37.7 42.1 35.2 34.4 149.4 34.4 30.9 35.4 41.4 142.1
Minority Interest 51.7 1.7 (15.7) 19.5 3.0 3.0 3.0 28.5 3.0 3.0 3.0 3.0 12.0
NET INCOME - REPORTED ATTRIBUTABLE TO MEOH $454.6 $200.6 ($12.5) $131.6 $116.7 $97.2 $95.0 $440.5 $93.9 $85.1 $97.8 $114.8 $391.6
ADJUSTED NET INCOME $397.4 $110.0 ($15.4) $140.0 $116.7 $97.2 $95.0 $448.9 $93.9 $85.1 $97.8 $114.8 $391.6

EPS - Adjusted $4.12 $1.20 ($0.17) $1.56 $1.32 $1.11 $1.10 $5.09 $1.10 $0.96 $1.14 $1.30 $4.51

Weighted Average Shares Outstanding - Diluted 95.7 91.0 89.8 89.9 88.8 87.6 86.5 88.2 85.5 88.2 85.5 88.2 86.8

EBITDA 702 401 287 267 248 221 218 954 217 205 222 245 890
Source: Company Reports, Cowen and Company

*$ million, except where noted

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Methanex
Condensed Cash Flow Statement* 2014 2015 2016 1Q17 2Q17E 3Q17E 4Q17E 2017E 2018E
CASH FLOW FROM OPERATIONS
Net Income 506.3 202.4 -28.2 151.0 119.7 100.2 98.0 469.0 403.6
Depreciation, Depletion & Amortization 142.7 194.8 228.1 56.0 60.0 60.0 60.0 236.0 240.0
Other Operating 94.0 16.9 106.4 71.9 0.0 0.0 0.0 71.9 0.0
Changes in Working Capital 57.9 -117.1 -56.3 -58.3 -0.5 29.2 14.6 -15.0 7.8
Net Cash Provided by Operating Activity 801.0 297.0 249.9 220.7 179.3 189.4 172.5 761.9 651.4
CASH FLOWS FROM INVESTING

Capital Expenditures -84.2 -96.9 -99.9 -19.6 -20.0 -20.0 -20.0 -79.6 -88.0
Other Investing -596.9 -329.3 11.7 -7.1 0.0 0.0 0.0 -7.1 0.0
Net Cash Provided by Investing Activities -681.0 -426.3 -88.2 -26.7 -20.0 -20.0 -20.0 -86.7 -88.0
CASH FLOWS FROM FINANCING
Change in Debt 550.8 -189.5 17.3 -24.5 0.0 0.0 0.0 -24.5 0.0
Shares Issued / Paid -252.6 -146.3 0.0 -33.7 -55.0 -58.0 -55.0 -201.7 -52.0
Dividends Paid -89.9 -97.2 -98.8 -24.7 -26.6 -26.3 -25.9 -103.6 -104.2
Other Uses of Cash -109.3 -134.4 -111.3 -19.8 0.0 0.0 0.0 -19.8 0.0
Net Cash Used by Financing Activities 98.9 -567.4 -192.8 -102.7 -81.6 -84.3 -80.9 -349.6 -156.2
Net increase (decrease) in cash 218.9 -696.7 -31.0 91.2 77.6 85.1 71.6 325.6 407.2
Cash, beginning of period 732.7 951.6 254.9 223.9 315.1 392.8 477.9 223.9 549.5
ENDING CASH 951.6 254.9 223.9 315.1 392.8 477.9 549.5 549.5 956.7
OPERATING CASH FLOW 801.0 297.0 249.9 220.7 179.3 189.4 172.5 761.9 651.4
FREE CASH FLOW 716.8 200.0 150.0 201.1 159.3 169.4 152.5 682.3 563.4
CASH FLOW PER SHARE ($/share) $8.37 $3.26 $2.78 $2.46 $2.02 $2.16 $1.99 $8.64 $7.50
DIVIDENDS ($/share) $0.95 $0.95 $1.10 $0.28 $0.30 $0.30 $0.30 $1.18 $1.20

Balance Sheet* 2014 2015 2016 1Q17 2Q17E 3Q17E 4Q17E 2017E 2018E
ASSETS
Cash & Cash Equivalents 951.6 254.9 223.9 315.1 392.8 477.9 549.5 549.5 956.7
Accounts Receivable 404.4 504.4 499.6 513.6 558.3 511.5 505.8 505.8 499.2
Inventories 306.8 253.2 281.3 351.4 353.1 327.1 339.3 339.3 342.5
Other Current Assets 23.1 19.6 20.8 23.4 35.5 32.5 33.3 33.3 34.6
Total Current Assets 1,685.9 1,032.1 1,025.7 1,203.5 1,339.6 1,349.0 1,427.8 1,427.8 1,833.0
Property, Plant & Equipment 2,778.1 3,158.8 3,117.5 3,079.1 3,039.1 2,999.1 2,959.1 2,959.1 2,807.1
Other Assets 311.4 365.1 413.5 397.1 397.1 397.1 397.1 397.1 397.1
TOTAL ASSETS 4,775.3 4,555.9 4,556.7 4,679.8 4,775.9 4,745.3 4,784.1 4,784.1 5,037.2
Total Current Liabilities 819.8 581.9 606.9 665.6 723.7 677.1 698.9 698.9 704.6
Long-Term Debt 1,528.2 1,488.0 1,502.2 1,476.9 1,476.9 1,476.9 1,476.9 1,476.9 1,476.9
Other Non-Current Liabilities 374.1 517.4 642.2 657.3 657.3 657.3 657.3 657.3 657.3
TOTAL LIABILITIES 2,722.1 2,587.4 2,751.3 2,799.9 2,857.9 2,811.3 2,833.1 2,833.1 2,838.9
SHAREHOLDERS' EQUITY 2,053.2 1,968.6 1,805.4 1,879.9 1,918.0 1,933.9 1,951.0 1,951.0 2,198.3
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 4,775.3 4,555.9 4,556.7 4,679.8 4,775.9 4,745.3 4,784.1 4,784.1 5,037.2
Source: Company Reports, Cowen and Company

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Valuation Methodology And Risks

Valuation Methodology

Commodity Chemicals:
We utilize a blend of historical and relative earnings and EBITDA multiples,
comparable company analysis, free cash flow yield, dividend yields, and longer term
discounted cash flow models to arriving at our 12-month price targets.

Investment Risks

Commodity Chemicals:
Risks include (1) stronger than anticipated economic recovery stimulating higher
than anticipated demand for commodity product slate, (2) raw material pricing
pressures that materially differ from our underlying expectations, (3) supply changes
that differ from planned expectations, (4) greater than anticipated capital intensity,
(5) cost cutting and other company specific synergies that differ materially from our
expectations.

Risks To The Price Target

We have an Outperform rating on MEOH shares based on relative valuation and

our belief that supply/demand environment should remain relatively balanced over
the forecast period. Risks to our price target include: (1) weaker than anticipated
production, sales volumes, and pricing, (2) higher than anticipated cost structure, (3)
lower oil prices which impact methanol's value as a fuel or fuel additive, (4) regulation
which reduce methanol's allowable content in fuel, (5) external delays in natural gas
development in Chile, which would inhibit the restart of significant capacity.

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Addendum
Stocks Mentioned In Important Disclosures

Ticker Company Name

CE Celanese Corp.
MEOH Methanex Corp.
OLN Olin Corp

Analyst Certification
Each author of this research report hereby certifies that (i) the views expressed in the research report accurately reflect his or her personal views about any and all of the subject
securities or issuers, and (ii) no part of his or her compensation was, is, or will be related, directly or indirectly, to the specific recommendations or views expressed in this report.

Important Disclosures
Cowen and Company, LLC and or its affiliates make a market in the stock of Methanex Corp., Celanese Corp. and Olin Corp securities.
Cowen and Company, LLC compensates research analysts for activities and services intended to benefit the firm's investor clients. Individual compensation determinations for
research analysts, including the author(s) of this report, are based on a variety of factors, including the overall profitability of the firm and the total revenue derived from all sources,
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investment banking transactions or specific sales and trading or principal trading revenues.

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Additionally, the complete preceding 12-month recommendations history related to recommendation in this research report is available at https://cowen.bluematrix.com/sellside/
Disclosures.action

The recommendation contained in this report was produced at May 03, 2017, 07:02 ET. and disseminated at May 03, 2017, 07:02 ET.
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COWEN AND COMPANY EQUITY RESEARCH RATING DEFINITIONS

Outperform (1): The stock is expected to achieve a total positive return of at least 15% over the next 12 months

Market Perform (2): The stock is expected to have a total return that falls between the parameters of an Outperform and Underperform over the next 12 months

Underperform (3): Stock is expected to achieve a total negative return of at least 10% over the next 12 months

Assumption: The expected total return calculation includes anticipated dividend yield

Cowen and Company Equity Research Rating Distribution

Distribution of Ratings/Investment Banking Services (IB) as of 03/31/17
Rating Count Ratings Distribution Count IB Services/Past 12 Months
Buy (a) 441 58.57% 86 19.50%
Hold (b) 303 40.24% 14 4.62%
Sell (c) 9 1.20% 0 0.00%
(a) Corresponds to "Outperform" rated stocks as defined in Cowen and Company, LLC's equity research rating definitions. (b) Corresponds to "Market Perform" as defined in Cowen
and Company, LLC's equity research ratings definitions. (c) Corresponds to "Underperform" as defined in Cowen and Company, LLC's equity research ratings definitions. Cowen
and Company Equity Research Rating Distribution Table does not include any company for which the equity research rating is currently suspended or any debt security followed by
Cowen Credit Research and Trading.

Note: "Buy", "Hold" and "Sell" are not terms that Cowen and Company, LLC uses in its ratings system and should not be construed as investment options. Rather, these ratings
terms are used illustratively to comply with FINRA regulation.

Methanex Corp. Rating History as of 05/02/2017

powered by: BlueMatrix
(1):$62.00 (1):$65.00 (1):$68.00 (1):$52.00 (1):$50.00 (1):$43.00 (1):$40.00 (1):$48.00 (1):$51.00 (1):$57.00 (1):$60.00
01/13/15 02/19/15 05/11/15 09/09/15 11/23/15 01/28/16 08/04/16 11/30/16 12/28/16 01/30/17 03/06/17

80
70
60
50
40
30
20
Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17

Closing Price Target Price

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Celanese Corp. Rating History as of 05/02/2017

powered by: BlueMatrix
(2):$64.00 (2):$72.00 (2):$66.00 (1):$80.00 (1):$88.00 (1):$99.00 (1):$100.00
05/13/14 10/26/15 01/29/16 04/29/16 12/01/16 02/14/17 04/21/17

110
100
90
80
70
60
50
Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17

Closing Price Target Price

Olin Corp Rating History as of 05/02/2017

powered by: BlueMatrix
(2):$27.00 (2):$30.00 (2):$20.50 (2):$18.00 (1):$31.00 (1):$29.00 (1):$32.00 (1):$37.00
05/15/14 04/22/15 09/21/15 01/14/16 06/28/16 07/28/16 12/02/16 02/09/17

40
35
30
25
20
15
10
Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17

Closing Price Target Price

Legend for Price Chart:

I = Initiation | 1 = Outperform | 2 = Market Perform | 3 = Underperform | UR = Price Target Under Review | T = Terminated Coverage | $xx = Price Target | NA = Not Available |
S=Suspended

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Cowen and Company Methanex Corp.
Equity Research May 3, 2017

Points Of Contact
Analyst Profiles

Charles Neivert Jeffrey Rossetti

New York New York
646.562.1370 646.562.1335
charles.neivert@cowen.com jeffrey.rossetti@cowen.com

Charlie Neivert is a senior research Jeff Rossetti is an associate covering

analyst covering agricultural & agricultural and commodity chemicals.
commodity chemicals. He has a BA from He joined Cowen in December 2014.
University of Pennsylvania.

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