KUALA LUMPUR: AmResearch has maintained its Hold on Petronas Chemicals Group (PChem) with an unchanged fair value of RM5.30/share pegged to an FY15F EV/EBITDA of 7.5 times – a 15% premium to Thailand’s PTT Global Chemicals’ (PGC) 6.5 times.
PChem has booked an impairment loss of RM262mil in 4QFY14 on assets relating to its butane-MTBE chain due to weaker market conditions.
"Excluding the impairment loss, the group’s FY14 core net profit of RM2,727mil is within our and consensus estimates.
"Following the completion of major turnaround and maintenance shutdowns in 2013 and 2014, we expect its operations to improve with a higher plant utilisation of 83% in 2015 (FY14: 80%)," it said.
The strength in the US dollar also provides some reprieve to the group given its largely USD-denominated revenues, while only about 60% of its costs are denominated in USD.
Prices for WTI crude oil, naphtha, benzene, granular urea, paraxylene, polyethylene, methanol and polypropylene have declined by 26%-52% since 31 October 2014, while granular urea improved by 7%.
The outlook for petrochemical prices still appear mixed with ethylene expected to strengthen slightly while aromatics and urea will be under pressure from rising supply from China in 2HFY14, it added.
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