Zigler: I spent maybe 5 seconds analyzing Methanex, and saw all I needed to know in one number - free cash flow (cash flow after capital expenditures) for 1996 was only $49.5 million (I guess US money.) It has debt of about a half billion. Despite strong results in the chemical industry generally, it is not making a lot of money, and its stock reflects that.
Given the many tens of thousands of service stations out there, my gut feel of buildout expenses to allow them to sell methanol would be in the many hundreds of millions or billions, in today's dollars. That will be a tall order for Methanex.
Again, that is gut feel, not based on any specific knowledge. If anybody knows how much it might cost to convert a station, that would help.
But even if Methanex had no debt and billions in the bank, it would still think twice about spending hundreds of millions or billions (and losing interest on that money) to put into equipment which would be standing relatively idle for a long time, until there are enough fc cars around for there to be enough demand to earn a decent return. Until there was critical mass of cars, the loss of interest income (if it had the money) or the interest it would have to pay to borrow money (if it didn't), plus the depreciation on the equipment, would wipe out earnings.
That is why I wouldn't bet Methanex would spend the money, even if it had it, without substantial subsidies from Ballard/DB. I will look into the company closer when I get a chance; it might be a better play on the possible success of fc cars than Ballard. |
