Petronas Chemicals allocates RM3b capex this year

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KUALA LUMPUR (April 13): Petronas Chemicals Group Bhd has set aside RM3 billion for capital expenditure (capex) this year. The bulk of the capex will be channelled to its Sabah Ammonia Urea (SAMUR) project and aroma and specialty chemical complex in Gebeng, Pahang.

Petronas Chemicals (fundamental: 2.7; valuation: 1.4) president and chief executive officer Datuk Sazali Hamzah said the capex would strengthen operations at both projects. Sazali said Petronas Chemicals expected to maintain overall plant utilisation at between 80% and 85% this year.

"The bulk of our capex will be channelled to enhance most of our projects and strengthen our operation in SAMUR and Gebeng," Sazali told reporters after Petronas Chemicals' annual general meeting here today.

Last year, the company spent US$696 million (RM3.1 billion) for capex to ensure reliability of its plants, according to him.

Today, Sazali said the completion of the Dalak methane pipeline would further raise Petronas Chemicals' plant utilisation to above 85%.

The Dalak pipeline is the second methane-supply channel that ensures reliability of the feedstock. It is being constructed by Petroliam Nasional Bhd's (Petronas) upstream unit, Petronas Carigali Sdn Bhd.

"We are waiting for the Dalak pipeline to complete in 2016. Once this is achieved, our (Petronas Chemicals) plant utilisation will increase to above 85%," Sazali said.

At 3:25pm, Petronas Chemicals shares rose six sen or 1.1% to RM5.70, for a market capitalisation of RM45.6 billion.

A total of 538,500 shares changed hands.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)