Petronas Chemicals Group Bhd’s 9MFY11A results (it changed
its year-end from 31 Mar to 31 Dec) were
within expectations. This was
despite its 3QFY11A performance being affected by lower
sales volume and lower average selling prices of its petrochemicals products.
We continue to like the company’s strong backing from Petronas Group,
especially in keeping its feedstock prices low. Maintain Buy, with an unchanged
fair value of RM9.00, based on the existing PER of 18x FY12 EPS.
Within expectations.
The 9MFY11A results were within consensus and our expectations, making up 97%
and 95% of both FY11 forecasts respectively. Note that the group had earlier changed its
financial year-end to December and
that our FY11 forecasts only represent a 9-month
figure. The 3QFY11A revenue and net profit of RM3,904.0m and RM735.0m were
15.8% and 36.0% lower q-o-q due to the 15% drop in sales volume and 6% fall
in average selling price.
Meanwhile, its olefins plants
were affected by the softening in certain product markets and power disruption
at Petronas Chemicals Ethylene SB while the fertilizer and methanol plants were
constrained by gas supply limitations. Other than these, the contribution from
its associates in 3QFY11A sank 48.1% q-o-q due to lower production at one of
the associates and jointly controlled entity. Finally, on a YTD comparison, the
overall performance in FY11A was enhanced by the higher selling prices of
petrochemical products, although this
was partially offset by the
weakening of USD against ringgit.
Maintain Buy. Our fair value for Petronas Chemicals remains
unchanged at RM9.00,based on the existing PER of 18x FY12 EPS. We like the
company’s strong backing from Petronas Group, especially in keeping its
feedstock prices low. Nevertheless, the risks to our view are that the
company’s daily operation is subject to uncontrollable factors such as: i)
fluctuations in the international prices of petrochemical products, ii) global
economic conditions, and iii) utilization of its production facilities based on
demand.
Source: OSK188
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