Period 1Q12
Actual vs. Expectations
PCHEM reported 1Q12 net profit of RM1.02b, which beat our
estimate but was in line with consensus. The reported results accounted for 30%
of our full FY12 estimate and 25% of street’s estimate.
Variance between the actual result and our estimate was due
to the stronger than expected earnings from the Fertilisers & Methanol
(F&M) segment and lower depreciation charges.
Dividends No dividend was declared as expected
Key Results Highlights
QoQ, 1Q12 net profit jumped by 39% on the back of
a 12% hike
in revenue. This
was driven by a higher sales
volume by 23% despite the average product prices dipping by 6% and a weaker USD
vs. MYR.
Olefins & Derivatives (O&D) posted a 1Q12 EBITDA
which rose 26% QoQ while revenue grew 10% over the quarter. This was due to improved
demand in 1Q12 as well as the fact that 4Q11 results were partly affected by a
power interruption at its ethylene crackers.
EBITDA from F&M
jumped 26% QoQ
in 1Q12 as revenue gained 15% due mainly to improved methane
gas supply that helped improved the plant utilisation for its methanol
facility.
YoY, the 1Q12 net income rose 12% while revenue improved
marginally by 1%. The higher profit was mainly due to a lower minority interest.
At the PAT level, earnings contracted by 2% due to a lower taxation last year
on tax benefits in one of its associate companies.
O&D reported EBITDA which dipped by 5% YoY in 1Q12 while
revenue slid 1% YoY due to a downward pressure on prices.
F&M’s 1Q12 EBITDA meanwhile surged 59% YoY while revenue
rose 7% YoY on the back of strong urea and methanol prices. In addition, the
F&M’s facilities reported a higher plant utilisation with improved plant
performance.
Outlook In view of the weak crude oil prices of late,
which has led partly to a drop in petrochemicals prices, 2Q12 is likely to be a
weak quarter. That said, we believe PCHEM is likely to beat our estimates in FY12.
Change to Forecasts
Keeping our estimates for now pending the company’s
conference call with analysts tomorrow.
Rating MAINTAIN MARKET PERFORM
Valuation Retaining our price target of RM7.02/share
based on CY12 16.5x PER for now pending the conference call tomorrow.
Risks Weaker USD vs. MYR and a sudden drop in crude
oil prices.
Source: Kenanga
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