METHANEX RECOMMENDATION : HOLD PRICE TARGET : C$ 78.00, SHEIKH SADIK Research Associate - Materials

2 INDUSTRY ANALYSIS Section Title Use this area to provide an optional section subtitle or explanation Section Title Use this area to provide an optional section subtitle or explanation Section Title Use this area to provide an optional section subtitle or explanation COMPANY OVERVIEW & INVESTMENT RISK FINANCIAL ANALYSIS & VALUATION RECOMMENDATION & CONCLUSION

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation WHAT IS METHANOL? A Global Liquid Commodity Produced From Natural Gas and Coal 60% Demand Comes From Chemical Derivatives – Formaldehyde, Acetic Acid 40% From Energy Application – DME (di methyl ether), Biodiesel and MTBE

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Energy Applications Demand Driver – Global Energy Prices -Sensitive to Methanol Price End Products: Gasoline Additive Cooking Fuels DME, MTO, Biodiesel, Marine Fuel Chemical Derivatives Demand Driver- Housing Starts, Wood Production, Consumer Spending, Automobile & Durable Goods Production - Insensitive to Methanol Price End Products: Plywood & Particleboard Foams & Plastics Paints & Paint Removers Herbicides & Explosives

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Product and Geographic Breakdown

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Forecasted Industry CAGR of 8.0%, Will be Led by Energy Additive Production Demand In The Future Is Expected To Outpace Supply Demand Has Been Continually Growing in China, Almost 6.5 Million Tonnes of Demand for Fuel Application A Steep Cost Curve Structure North American Industry is on The Bottom End of The Curve. Primarily Produced from Natural Gas, Better Affordability Than Coal. Industry Growth

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Producers Benefits From The Disengagement Between Oil & Gas Price Enables The Producers To Purchase Natural Gas On a Low Cost Basis High Price of Oil Increases Demand For Methanol Influenced Applications. Recent Oil Price Slump Created A Decline In Demand For Energy Applications Q Methanol Demand is Estimated To decline by 3.5% China Production Is Expected to Slow Down Due To Shutdown of Gas Plant & High Pricing of Coal Source: Bloomberg

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Rivalry Among Existing Firms MODERATE Threat of Substitutes MODERATE Bargaining Power of Buyers MODERATE Bargaining Power of Suppliers MODERATE TO HIGH Barriers of Entry HIGH The Five Forces

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation NOW…. World Leader in Methanol Production Three Well Defined Strategy – Global Leadership, Low Cost Structure & Operational Excellence 8.5 Million Tonnes Represents More Than 15% or Global Methanol Demand Methanex Reference Prices Are Used As A Benchmark For Global Methanol Price.

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation PRODUCTION CAPACITY AND FACILITIES Source : Company Website

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Product Types & Distribution Source : Company Website An Extensive Marketing & Distribution System Marketing Offices in Vancouver, Dallas, Santiago, Hong Kong, Shanghai, Tokyo, Beijing, Seoul, Dubai Sales Segment: Methanex Produced Methanol Purchased Methanol Commission Sales from Minority Interest

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Revenue Segment by Geography Stable Demand From Asian Region Especially China Big Chunk of Revenue Is Derived From Europe & United States Due to High Demand For Chemical Derivatives

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation The Management & Governance Mr. John Floren President/CEO: Mr. John Floren Chairman of the Board: Mr Thomas Hamilton Total Members of the Board: 11 Board Meeting Attendance: 100% (Peer : 78%) Average Tenure: 10 Years No Significant RPT Except For Management Compensation Mr Thomas Hamilton

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Risk Analysis Default Risk : Rating BBB- Altman’s Z Score Test: 2.9 > 1.8 Liquidity Risk: Strong Balance Sheet with 900M of Cash Extended Term of Revolving Credit Facility Geopolitical & Economic Risk: Exposed to Methanol Price Fluctuation Geopolitical Concerns May Hinder Supply Chain Operational Risk: Power Failures Equipment Breakdown Natural Disasters Currency Risk: Underlying Costs are Exposed to Exchange Rate Fluctuation LOW LIKELIHOOD HIGH HIGH IMPACT LOW

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Financial Analysis Recent Slump In Oil Price Has Driven The Methanol Price Down, Which In Turn Resulted A Lower Q Revenue Compared to Previous Q4 A Market Correction Has Been Estimated In Order to Forecast a Better Topline In the Years To Come.

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Financial Analysis An Increase In Asset Turnover will Definitely Drive The ROE Up. The Company Has Solid Record Of Cash Flow To Cover Their Strategic Capital Expenditure

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Valuation Assumptions & Forecasts: Implied Growth Rate: 2.00% Risk Free Rate : 5 Year Canada Bond Rate Market Risk Premium : 5.8% Revenue Forecasted Based on Regressed Relation with Methanol Price.

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Valuation Free Cash Flow to Firm & Equity: Perpetuity Method : C$ Exit Multiple Method : C$ Perpetuity Method FCFE: C$81.00 EVA Per Share: C$ (28% of Actual Profit Retained)

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Strong Economic Moat for Years To Come

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Valuation Recommendation FCFE Perpetuity: C$81.00 FCFF Perpetuity: C$89.00 FCFF Exit Multiple : C$ Economic Profit: C$25 per share Equally Weighted Average Price: C$ Upside: C$26.00%

Industry AnalysisRecommendation Company Overview & Risk Financial Analysis & Valuation Recommendation Wide Economic Moat With Cost Advantage Network Effect Due To Global Leadership Excellent Progress on Expansion Initiatives Strong Balance Sheet For Future Investment Underpriced by 26.00% HOLD