PCHEM (5183) : AllianceDBS Research maintains Fully Valued on PetChem, cuts target to RM4.25
KUALA LUMPUR (Dec 9): AllianceDBS Research has maintained its “Fully Valued” rating on Petronas Chemicals Group Bhd at RM5.14 with a lower target price of RM4.25 (from RM5.30) and said petrochemical prices were weakening on lower crude oil prices.
In a note Tuesday, the research house said petrochemical prices had taken a sharp turn downwards following lower crude oil prices.
It said based on the Asian ICIS Petrochemical Index (IPEX) which reflects prices of olefins and aromatics, petrochemical prices had declined 13% since October to early December, adding that with additional capacity still coming on-stream in China and sluggish demand, it expects more price weakness ahead.
“Cutting FY15-16F earnings by 10-12%.We cut FY15FY16 earnings by 10% and 12%, respectively, to reflect weaker olefin and aromatics prices.
“The lower prices will be slightly mitigated by the positive impact of improved utilisation and lower naphtha feedstock costs.
“Therefore, we continue to expect mildly positive earnings growth for FY15-16. Group utilisation will improve to 82% in FY15 and FY16 (from est. 77% in FY14F) as Petronas Chemicals (PChem) has completed a major plant turnaround over FY13 and FY14.
“Lower naphtha prices will lead to lower overall feedstock costs of the group as naphtha feeds into the aromatics business,” it said.
http://www.theedgemarkets.com
KUALA LUMPUR (Dec 9): AllianceDBS Research has maintained its “Fully Valued” rating on Petronas Chemicals Group Bhd at RM5.14 with a lower target price of RM4.25 (from RM5.30) and said petrochemical prices were weakening on lower crude oil prices.
In a note Tuesday, the research house said petrochemical prices had taken a sharp turn downwards following lower crude oil prices.
It said based on the Asian ICIS Petrochemical Index (IPEX) which reflects prices of olefins and aromatics, petrochemical prices had declined 13% since October to early December, adding that with additional capacity still coming on-stream in China and sluggish demand, it expects more price weakness ahead.
“Cutting FY15-16F earnings by 10-12%.We cut FY15FY16 earnings by 10% and 12%, respectively, to reflect weaker olefin and aromatics prices.
“Therefore, we continue to expect mildly positive earnings growth for FY15-16. Group utilisation will improve to 82% in FY15 and FY16 (from est. 77% in FY14F) as Petronas Chemicals (PChem) has completed a major plant turnaround over FY13 and FY14.
“Lower naphtha prices will lead to lower overall feedstock costs of the group as naphtha feeds into the aromatics business,” it said.
http://www.theedgemarkets.com
