KUALA LUMPUR: While product prices have come off their peaks in 1H22, Petronas Chemicals Group Bhd is expected to continue to post strong results in its coming quarters following the completion of major planned plant turnarounds for the year.
Hong Leong Investment Bank (HLIB) Research in a report said coupled with a targeted blended utilisation rate of at least 90% for the year, it said PETRONAS Chemicals is on track to another good year in 2022.
In 2Q22, PETRONAS Chemicals recorded a net profit of RM1.85bil, which brought 1H22 sum to R3.83bil.
"We deem the results to be within expectations at 57% and 50% of ours and consensus full-year forecastsrespectively as our findings have indicated that product spreads (HDPE, LDPE, LLDPE, urea and methanol) have come off from its respective peaks in 1H22, it said.
It added that the expected completion of the acquisition of Perstorp in October 2022 and China's potential reopening will help to bolster PETRONAS Chemicals' product spreads and earnings in 4Q22.
"All-in, we maintain 'buy' on PETRONAS Chemicals with an unchanged target price of RM11.76/share – based on a price-earnings multiple of 14x of FY22 forecast earnings – in line with its five-year mean valuations," said HLIB.,,电报群 科学上网（www.tg888.vip）是一个Telegram群组分享平台，飞机群组内容包括telegram群组索引、Telegram群组导航、新加坡telegram群组、telegram中文群组、telegram群组（其他）、Telegram 美国 群组、telegram群组爬虫、电报群 科学上网、小飞机 怎么 加 群、tg群等内容，为广大电报用户提供各种电报群组/电报频道/电报机器人导航服务。
Meanwhile, TA Securities Research is taking a more conservative stance on the stock against the backdrop of softer near-term average selling prices.
"In 3Q22-to-date, average Brent oil price has retraced to USD102/bbl (2Q22 average: USD112/bbl).
"In tandem, we expect this to lead to softer ASPs for Pet Chem’s products in 3Q22. This reflects a normalisation following a meteoric rise since 2Q20.
"As such, this implies tapering earnings momentum for the Group after a record FY21," it said.
However, it noted that easing oil prices bode well for PETRONAS Chemicals' upcoming naphtha cracker at Pengerang Integrated Complex on the back of lower naphtha feedstock price.
TA lowered the stock's target price too RM8.90 from RM11.40 previously, and revised its recommendation to "hold".