KUALA LUMPUR, Jan 10 (Bernama) -- Petronas Chemicals Group Bhd’s (PCG) divestment of Petronas Chemicals Fertiliser Sabah Sdn Bhd (PCFS) will help the Sabah state government to reach its goal of securing potential investment in the industrial sector while continuing to be a major petrochemical player in Borneo region, said MIDF Research.
PCG entered into a heads of agreement to divest a 25 per cent stake in PCFS to SMJ Sdn Bhd, a state oil and gas company established by the Sabah state government.
The divestment is part of PCG’s effort to position itself as a preferred partner in developing and achieving its expansion plans for the petrochemicals industry in the state, MIDF said.
PCG has a 100 per cent interest in PCFS which has a production capacity of 1.9 million tonnes of ammonia and urea annually.
MIDF said the partnership will be “crucial” to PCFS’s expansion and at the same time, add value to the state’s oil and gas resources.
Sabah’s natural gas and crude oil reserves make up 12 per cent and 25 per cent of Malaysia’s total gas and oil reserves respectively, which represent an opportunity for the state to leverage its oil and gas sector, MIDF said.
It is not making any changes to PCG’s earnings estimates and is maintaining its target price of RM11.77 per share.
“We reiterate our positive stance with PCG as the epicentre for the local and regional petrochemical industry,” it said.
MIDF opined that PCG’s continuous actions for growth in terms of partnerships, production investments, and sustainability would remain robust throughout the year.
“Ahead of the tabling of Budget 2023 and considering an expected stable oil and gas market, we believe PCG will continue to share the benefit with petroleum-producing states and ensure that the local petrochemical industry will maintain its strong position in the region,” it said.
At lunch break today, PCG’s share price was 11 sen lower at RM8.24, with 3.14 million shares traded.
-- BERNAMA
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