AmBank Research says it remains bullish on Petronas Chemicals Group (PChem) expecting a stronger second half of the financial year 2021 earnings delivery.
“Even though petrochemical price trends were mixed amid the upswing in crude oil prices in 2Q2021, we remain bullish on PChem’s earnings prospects given the strong correlation to its share price as rising naphtha costs should eventually lift petrochemical product prices.
“Hence, we expect these higher product prices to propel PChem’s FY21F net profit by 2.6x YoY to RM4,850mil, which is similar to the normalised earnings achieved by the group in FY18 when Brent crude oil averaged US$73/barrel,” the research firm says.
AmBank reiterates its ‘Buy’ call on PChem with an unchanged fair value of RM10.60/share, pegged to an FY21F EV/EBITDA of 10x.
“Pending the announcement of PChem’s 1HFY21 results on August 25, we maintain our FY21 forecast–FY23 forecast earnings, which are 18%–24% above consensus despite street estimates rising by 13%–31% over the past 3 months,” it says.
