BUSINESS

KENANGA, CGSCIMB DOWNGRADE PETRONAS CHEMICALS AFTER 'UNDERWHELMING' 1Q RESULTS

30/05/2023 12:18 PM

KUALA LUMPUR, May 30 (Bernama) -- Petronas Chemicals Group Bhd (PetChem) has been downgraded by research houses after its “underwhelming” first quarter (1Q FY2023) results and on bleak prospects.

Kenanga Research said the company’s 1Q results “underwhelmed expectations” and that its “low volumes and product spreads will prevail in the near term given a weak demand outlook.”

Hence, the research house has cut its FY2023-FY2024 net profit forecasts by 62 per cent and 17 per cent, respectively, lowering its target price by 21 per cent to RM6.20 from RM7.80.

It also downgraded PetChem to “underperform” from “market perform.”

CGSCIMB also downgraded Petronas Chemicals from “hold” to “reduce” with a lower target price of RM6.18.

“The 2Q profit outlook looks even weaker than 1Q. The average high-density polyethylene, monoethylene glycols, urea, and methanol prices have declined so far in 2Q from the averages in 1Q.

“Meanwhile, Petronas Chemicals said during the results briefing that start-up costs for Pengerang will likely widen further in 2Q and 3Q from the RM100 million incurred in 1Q. This is because it only began the start-up process for four of the seven Pengerang plants during 1Q, with all seven plants likely to undergo start-up during the next two quarters, thus augmenting start-up costs,” it said in a note.

The company is also targeting commercial operations date for Pengerang by 4Q, “which means that in the next two quarters, it will likely expend even more pre-operating start-up costs for Pengerang that could depress profits,” CGSCIMB added. 

At 11.35 am, the counter eased two sen to RM6.85 with 1.23 million shares changing hand.

Petronas Chemicals’ share price has declined nearly 20 per cent in the last six months.

-- BERNAMA 

 


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