PETALING JAYA: Petronas Chemicals Group Bhd
’s (PetChem) earnings are expected to improve in the second half of financial year 2026 (2H26) as plant utilisation recovers.
Analysts, though, notably offered divergent stock calls, based on limited room for margins to expand as petrochemical prices normalise and demand remained subdued.
Hong Leong Investment Bank (HLIB) Research said there were early signs that key product prices were stabilising, while higher utilisation should support PetChem’s operations after major turnaround activities in 1H26.
“Moving into 2H26, we observe early signs of average selling prices stabilisation and anticipate an improvement in overall utilisation rates, alongside a recovery in urea prices,” it said.
TA Research, however, was more cautious, describing the second quarter as the likely peak in earnings following an exceptional spike in petrochemical prices during the Strait of Hormuz disruption.
It expects pricing conditions to become less supportive in 2H26.
PetChem reported core net profit of RM593mil for the second quarter of FY26 (2Q26), up 2.7 times quarter-on-quarter (q-o-q) and reversing from a core net loss of RM83mil a year earlier.
This brought 1H26 core net profit to RM809mil, compared with a RM4mil core net loss in 1H25.
Revenue increased 13% q-o-q to RM7.9bil, helped by stronger contributions from its Fertilisers and Methanol (F&M) and Specialties businesses.
However, both research houses noted that the six-month earnings performance remained below expectations, largely because of lower plant utilisation caused by scheduled maintenance.
Hong Leong Investment Bank Research said the earnings shortfall was mainly attributable to turnaround activities at the Kertih Integrated Petrochemical Complex and Asean Bintulu Fertiliser plant.
It consequently cut its financial year 2026 (FY26) earnings forecast by 22%, although it left its FY27 and FY28 estimates unchanged.
The Olefins and Derivatives segment remained the main weakness.
Its revenue fell 7% q-o-q as sales volume dropped 33%, with plant utilisation declining to 56.3% from 87.4% in the first quarter following the Kertih turnaround.
Nevertheless, improved product spreads allowed the segment to return to an earnings before interest, tax, depreciation and amortisation profit of RM22mil, from a RM91mil loss in 1Q26. F&M provided the strongest earnings support.
Revenue rose 38% q-o-q to RM3.66bil on higher selling prices for urea, ammonia and methanol, despite an 11.5% decline in sales volume.
