Summary

  • Stocks of alternative energy producer Methanex Corporation (TSX:MX) and bio-based chemicals manufacturer EcoSynthetix (TSX:ECO) are currently trending high on the TSX.
  • The Canadian government earmarked a quarter of a C$ 10-billion infrastructure investment plan for clean power initiatives earlier in October.
  • The S&P/TSX Renewable Energy and Clean Technology Index is up over 35 per cent year-to-date (YTD).

Companies indulging in alternative technology have made a stride in the stock markets this year. The S&P/TSX Renewable Energy and Clean Technology Index recorded a growth of over 35 per cent year-to-date (YTD). Stocks of alternative energy producer Methanex Corporation (TSX:MX) and bio-based chemicals manufacturer EcoSynthetix (TSX:ECO) are trending on the Toronto Stock Exchange (TSX) this week.

The Justin Trudeau government has always pushed its renewable and alternative technology initiatives before the public. Earlier in October, the government earmarked a quarter of a C$ 10-billion infrastructure investment plan for clean power initiatives. Canada also announced a C$ 100-million fund on Thursday, October 22, to support the Clean Resource Innovation Network, which seeks to reduce the country’s greenhouse gas emissions by 100 megatonnes by 2033.

Let’s take a closer look at these two alternative chemical stocks to understand their performance better.

 

Methanex Corporation (TSX:MX)

Current MX Stock Price: C$ 40.52

 

Canadian company Methanex Corporation, as the name suggests, deals in the manufacture and distribution of methanol, which is said to be a clean-burning alternative fuel that causes less smog-causing emissions. It claims to be the largest producer and supplier of methanol in the world, catering to markets in North and South America, Asia Pacific and Europe. Apart from Canada, the company has production sites in the United States, New Zealand, Trinidad, Chile and Egypt.

The global methanol industry has expanded in the recent years, especially with the implementation of the 2020 International Maritime Organization (IMO) regulations. Apart from end products such as a high-octane fuel and biodiesel, Methanex also has customers in sectors that use methane to produce adhesives, solvents, windshield washer fluids, foams, etc.

Around mid-September, Methanex announced the sale of 5.125 per cent senior unsecured notes for US$700 million in aggregate principal amount. The company said that it plans to use the net proceeds generated from this offering to pay off debts, maintain capital expenditure and as working capital.

Also Read: Renewable Energy Stocks on Rise as Canada Nurtures CleanTech Dream

 

MX STOCK PERFORMANCE

Shares of Methanex are ranked high on the TSX among stocks with the largest price gains in the last 30 days. The scrips currently record a decline of nearly 17 per cent this year.

Methanex stocks toppled to a low of C$13.88 (March 23) amid the pandemic-triggered market crash back in March, as operations and production took a beating due to lockdown restrictions. However, it has since bounced back by over 190 per cent,

In the last six months, the scrips have gained 112 per cent in the and up nearly 53 per cent in three months.

Methanex YTD stock performance (Source: Refinitiv/Thompson and Reuters)

 

MX SECOND QUARTER RESULTS

Methanex Corporation estimated a drop of five per cent quarter-over-quarter in the global methanol demand in the second quarter ending 30 June 2020. Its quarter report said that most parts of the world saw a significant decline in methanol demand due to fluctuating oil prices and the coronavirus pandemic, other than China.

Methanex’s had a cash liquidity of US$ 783 million as of June 2020. It recorded an adjusted net loss of US$ 64 million in Q2 2020, as against an adjusted net income of US$ 8 million in Q1 2020.

After reducing its dividend payout by 90 per cent back in April, the company paid a quarterly dividend of US$ 0.0375 per share for a total of US$ 3 million in Q2 2020.

 

EcoSynthetix (TSX:ECO)

Current MX Stock Price: C$3.02

 

Canadian renewable chemicals producer EcoSynthetix specializes in bio-based materials that can be used in the place of non-renewable products such as formaldehyde and styrene-based chemicals. It currently has two flagship products, EcoSphere® biolatex® and DuraBindTM biopolymers.

Based in Burlington, Ontario, EcoSynthetix’s commercialized green technology business has a presence in the United States, Europe, the Middle East and Africa (EMEA) and the Asia Pacific.

Also read: Canada Sets-Up C$100M Fund For Cutting-Edge Energy GHG Emissions

ECO STOCK PERFORMANCE

EcoSynthetix stocks are up nearly 12 per cent this year. When the onset of the pandemic in March pulled down the stock markets to record low levels, EcoSynthetix shares plummeted to C$ 1.54 (March 18). But since then, the scrips have rebounded by 96 per cent and have climbed higher than their pre-pandemic levels.

Its stock price rose about 65 per cent in the last six months and nearly 26 per cent in three months.

 

ECO SECOND QUARTER RESULTS

EcoSynthetix’s net sales of US$ 3.1 million were down 39 per cent year-over-year (YoY) in its second quarter ending 30 June 2020. The company attributed this substantial drop to the “rapid decline” in demand in its paper segment due to the COVID-19 pandemic. It also saw an adjusted EBITDA loss of US$ 0.2 million in Q2 2020.

As of the end of June 2020, the company had with cash and short-term investments of US$ 42.3 million.

The company will release its third-quarter 2020 results on November 5.

 

 

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