High ASPs To Remain Firm As Supply Remains Limited
We are seeing a widening of gross profitability from high product ASPs and a slower
rise in raw material prices. We do not expect any significant new production capacity
for dimethylformamide and methylamine due to environmental concerns remaining at
the forefront of the Chinese government’s agenda, while ample supply of methanol will
put a cap on feedstock costs. Maintain BUY with higher target price of S$0.168 (from
S$0.138) after re-basing our valuation year from 2021 to 2022.