- We maintain our
HOLD call on Petronas Chemicals Group (PChem), with an unchanged fair value of
RM6.70/share, pegged to an FY13F EV/EBITDA of 7.5x which is at a 6% discount to
Thailand’s PTT Global Chemicals’ 8x.
- PChem’s heads of
agreement (HOA) with Germany’s BASF to set up a specialty chemicals facility
via a 40:60 joint venture at the Refinery and Petrochemicals Development
(RAPID) in Pengerang, Johor has been mutually terminated.
- But PChem said that
its 40:60 JV with BASF for the current complex in Gebeng is still studying the
feasibility of expanding its present glacial acrylic acid capacity and a new super
absorbent polymer division.
- But this does not
mean that Petronas is not going ahead with its RAPID project in Johor as there
are three other petrochemical companies that have indicated interest in setting
up operations in Pengerang.
- Recall that ITOCHU
Corporation and PTT Global Chemical Public Company have signed HOAs to jointly
own, develop, construct and operate two separate complexes for the production
of high value-added downstream chemicals. Also, Italy-based Versalis SpA has signed
a HOA with Petronas to build and operate elastomer plants at RAPID.
- We maintain
FY12F-FY14F earnings which have not accounted for any contributions from the
prospective RAPID JV with BASF. Even if this project had been successfully
launched, the construction period of 3-4 years would mean that production could
start only in FY16F.
- We expect the
group’s upcoming 4QFY12 results next month to be challenging due to an additional
RM560mil charge from the discontinuation of the group’s vinyl business. Also, petrochemical
prices had been generally mixed since the end of September. From October to
December this year, naphtha and polyethylene prices were down 2%, while
methanol fell 14%. But paraxylene and benzene prices were up 6%-17% during this
period.
- The stock currently
trades at a fair FY13F EV/EBITDA of 6.8x, which is at a 15% discount to PTT
Global Chemicals.
Source: AmeSecurities
No comments:
Post a Comment