RHB Research Institute Sdn Bhd has maintained a ‘buy’ rating for Petronas Chemicals Group Bhd (PChem) with a higher target price (TP) of RM11.23 from RM11.18 previously.
The research firm said PChem’s booked core profit of RM1.4 billion in the second quarter (2Q) 2018, which would bring the first half (1H) 2018 core earnings to RM2.6 billion, was within its expectations but above consensus.
“The stronger profit was primarily on higher plant utilisation at the fertiliser and methanol ((F&M) wing and stronger product prices.
“The olefins and derivatives (O&D) division is likely to remain stable in 2018, with firm oil prices providing support for product prices while methanol prices are likely to firm on a potential supply shortage,” it said in a research note today.
On the same note, Kenanga Investment Bank Bhd said although the 1H2018 earnings were stronger than expected, PChem’s 2H2018 earnings were expected to be weaker on lower plant utilisation due to four turnaround activities against one statutory turnaround in 1H2018.
“We believe all positives are already priced in after a good price run-up since the beginning of the year,” it said.
Kenanga retained a ‘market perform’ rating with a revised TP of RM9.00 from RM8.65 previously.
Risks to its rating include a sudden surge in crude oil prices.