Thursday 28 Mar 2024
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KUALA LUMPUR (July 11): Maybank IB Research has maintained its “Buy” rating on Petronas Chemicals Group Bhd (Pchem) at RM7.09 and unchanged target price of RM8.10 and said Pchem’s 2Q17 results will be a windfall underpinned by strong average selling price (ASP) and higher volumes on the full operations of SAMUR plant.

In a note July 10, the research house said 2017 is shaping up to be a record year with stronger-than-expected product margin and sturdy global demand.

It said earnings and dividends could potentially surprise positively.

“Maintain Buy with an unchanged target price of RM8.10, based on 8.5x 2017 EV/EBITDA — on par with global peers,” it said.

Maybank IB Research said it estimates a core PATAMI of RM1,000 million in 2Q17 (+50% y-o-y, -23% q-o-q) based on 18.5% higher y-o-y ASP of estiamted RM3,404/tonne.

“We forecast 2Q17 factory utilisation rate to be down to 90% (-5ppt y-o-y, -9ppt q-o-q); this is due to a 42 day closure of the MTBE plant for planned maintenance.

“The cumulative 1H16 PATAMI of estimated RM2,306 million represents 58% and 67% of our and consensus full-year 2017 forecasts.

“We believe earnings upgrades are forthcoming post the 2Q17 results,” it said.

Maybank IB Research said that year to date, ASPs have risen by by an estimated 18.2% y-o-y to RM3,377/tonne.

“This is well ahead of our 10% full-year growth assumption and the near-term outlook remains robust.

“Our FY17 earnings forecast as well as consensus is looking conservative should PChem’s ASPs continue to track at these levels.

“The market is not appreciating the possibility that earnings will beat expectations and PChem will deliver stronger than expected dividends. Buy,” it said.

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