We derive our P$14.0/share target price through a sum-of-the-parts model, with the Polyester business valued through a 2025E EBITDA multiple of 6.0x (5.0x 2026 mid-cycle multiple). We value the company’s P&C business through a 2025E EBITDA multiple of 5.0x mid-cycle multiple.

The following risks could cause our target price to materially underperform or outperform: (1) Production costs: US polyester prices are based on an input cost-plus formula, meaning Alpek’s margins are directly tied to the company’s ability to lower its production costs. The company is working on a series of vertical integrations to increase margins; results would be affected if those projects are delayed or fail to generate the expected results; (2) Supply disruptions: Alpek’s Plastics & Chemicals segment depends on external supply of propylene, ethylene, among others. Supply disruptions could materially impact production; (3) Currency risk: Alpek’s revenues are mostly in US dollars. An appreciation in the US dollar would have a positive impact on Alpek’s results, while dollar depreciation would have a negative impact on results; (4) Mexican reforms: Mexico’s government is undertaking a series of structural reforms, including fiscal and energy reforms. While we expect positive long-term impacts, there could be negative short-term impacts, particularly from the fiscal reform; (5) Feedstock cost volatility could lead to lower margins or inventory losses. Feedstocks are primarily linked to international crude prices.