FW: AmBank Research - Pertonas Chemicals : Higher crude prices support improved prospects BUY, 10 Nov 2017

 

 

STOCK FOCUS OF THE DAY         

Pertonas Chemicals : Higher crude prices support improved prospects   BUY

 

We maintain our BUY recommendation on Petronas Chemicals Group (PChem) with unchanged forecasts and fair value of RM8.35/share based on a FY18F EV/EBITDA of 8x, on par with its 3-year average.

 

Following our results update and the 3QFY17 analyst briefing yesterday, we note that: 1) Average plant utilisation slipped to 86% from 90% in 2QFY17 due to Kerteh statutory and major maintenance at PC Olefins; 2) The fertilizer and methanol plant utilisation rate at PC Ammonia in Kerteh was flat QoQ at 88%; 3) Management expects to achieve an overall average plant utilization rate of over 90%, similar to 91% in 9MFY17; 4) The group’s FY17F  capex is expected to be over 20% higher than RM4bil last year vs. RM3.5bil in 9MFY17; 5) The group's 40%-owned US$500mil Aroma plant with BASF in Gebeng, Kuantan has commenced operations progressively from September. It produces citral and its precursors, such as citronellol and L-menthol for the flavor and fragrance industry, and are used in home and personal care products, fine fragrances, food and pharmaceutical applications.

 

The stock currently trades at an attractive FY18F EV/EBITDA of 7x, below its 3-year average of 8x, while dividend yields are fair at 4%.

 

Others:

MPI : Trimming legacy businesses; introducing automation                          HOLD

 

 

STOCKS ON RADAR

Comfort Gloves, DRB-HICOM, Malaysian Bulk Carriers, Dialog Group

 

 

ECONOMIC HIGHLIGHT

Malaysia : BNM preparing for rate hike?

 

 

NEWS HIGHLIGHTS

Malayan United Industries: Malaysian party keen to buy Khoo’s stake

Zecon: To develop RM11bil project in Kuching

Construction Sector : Financing a key consideration for MRT3

S P Setia: 3Q profit jumps 88.9%

 

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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