We came across a bullish thesis on Celanese Corporation (CE) on Substack by Kyler Johnson. In this section, we will summarize the bull thesis on EC. The company Celanese Corporation (CE) was 76.50 $ as of November 25th. CE’s trailing and forward P/E were 7.62 and 7.97 respectively according to Yahoo Finance.
A large chemical factory, with smoke billowing in the background.
Celanese Corporation, a global materials and chemicals company founded in 1918 and headquartered in Texas, operates 58 manufacturing facilities worldwide. The company is divided into two divisions: Engineered Materials and Acetyl Chain. Engineered Materials, which accounts for 56% of revenue, is project-focused and offers a range of engineered products in a variety of industries, including the automotive, electronics, medical, and utility industries. The Acetyl Chain, which makes up the remaining 44% of the revenue, produces chemicals used outside and inside Celanese’s operations, supporting applications in paints, pharmaceuticals, agriculture, and construction. Serving a wide range of industries, the company’s operations are closely linked to global production and consumption patterns.
Celanese’s market value has fallen sharply from its all-time high, fueled by concerns about declining demand and a heavy debt load, particularly from its $11 billion purchase of Dupont’s Mobility and Materials (M&M) division. While the acquisition added about $5 billion in revenue and about $400 million in incremental free cash flow (FCF) by 2026, the expansion raised concerns. The administration has outlined measures to reduce costs and improve performance to address the situation, including idle production facilities, reducing operating expenses, cutting dividends by 95% starting in 2025, and increasing temporary loans to manage debt obligations. These moves aim to bring liquidity and stabilize the balance sheet amid a tight production environment.
The company’s debt is particularly problematic, with $630 million maturing over the next three years. With $800 million in cash on hand and annual FCF most recently at $840 million, the exit strategy is dependent on cost control, increased FCF improvement, and potential divestitures. The management projects that the operations will implement, combined with the synergy from the M&M acquisition, will strengthen the cash flow by 2026, enabling the Celanese to settle a billion dollars in debt that year. However, the larger $3.14 billion that matures in 2027 will likely need to be paid off, sell assets, or a combination of both. Celanese’s strong credit rating and the prospect of lower interest rates may make financing a viable option, but execution risks remain.