KUALA LUMPUR (April 12): Petronas Chemicals Bhd (PetChem) declined 17 sen or 1.9% in early trade today after an explosion and fire broke occured at the Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang this morning.

At 10.36am, the counter was trading at RM8.79 with some 1.08 million shares traded. The stock was Bursa Malaysia’s second largest decliner.

Two local workers were reportedly injured in the explosion that occurred at 1.25am this morning, which appeared to have been caused by a leaking gas tank.

Petroliam Nasional Bhd (Petronas) said in a statement today that its Emergency & Fire Response Team was deployed and the fire was contained within 30 minutes.

“We will provide additional information in due course as investigation is still being carried out,” it said.

AmInvestment Bank maintained its ‘buy’ recommendation on the stock at an unchanged fair value of RM10.40 per share as management has expected minimal contributions from the RAPID plant this year.

"Likewise, our 2019 financial year forecasts have not incorporated any increase in PetChem’s output given that the group has guided that average plant utilization could remain flattish above 90%,” it said in a report today.

However, if the RAPID investigations defer production next year, the research house expects a six-month delay to cause PetChem’s 2020 earnings to decline slightly by 3%.

“Given Petronas' strict adherence to health, safety and environment requirements, we expect an extensive investigation into the causes of this incident, which could delay the commencement of petrochemical production,” AmInvestment Bank said.