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Celanese Presents Attractive Risk-Adjusted Return For Patient Investors
Summary
- Celanese Corporation, a global chemicals company, derives 54% of its revenue from engineered materials and 46% from the acetyl chain, with high-margin operations.
- Celanese's Engineered Materials segment is highly differentiated, while its Acetyl Chain segment has considerable cost and scale advantages. Both segments are highly profitable on a cross-cycle basis.
- Despite a 52% market cap loss in 2024 and a 95% dividend cut to reduce debt from the Dupont M&M acquisition, long-term gains are possible.
- Conservative deleveraging models suggest Celanese could achieve attractive IRRs of 21.2%-23.25% by 2028, assuming debt paydown and gradual EBITDA margin recovery.
- Risks include potential Chinese economic downturns, high leverage, and concerns about internal control following the Dupont M&M acquisition.
After graduated from MIT with a PhD degree in 2017, with a dissertation that focuses on leveraging data analytics to understand and dissect the commodities structural market, I started managing third party money at a $1+ billion hedge fund under a profit-sharing agreement in China. Since early 2022, I set up my own RIA (registered investment advisory) firm in Massachusetts to manage client money ranging from high net worth individuals to family offices as its Chief Investment Officer. I like to identify deep value opportunities at cyclical troughs and/or with clear and present event-driven catalysts.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of CE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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