Overview. PChem 4Q20 core profits more than double to RM577m mainly due to improving product spread. Revenue declined by 9% yoy to RM3.8bn due to weaker average selling price (ASP) and sales volume. However, EBITDA margin improved to 32% (4Q19: 16%) on lower maintenance and feedstock costs. On qoq basis, earnings are flattish as it was impacted by large losses at JV/associate line due to cessation of Butanediol (BDO) complex. The BDO complex was ceased due to overcapacity concern from new supply of coal-based BDO production.
Key highlights. 4Q20 plant utilisation (PU) was higher at 94% (4Q19: 89, 3Q20: 90%) on lower maintenance activities. This includes turnaround at MTBE plant.
Against estimates: Inline. FY20 core profit of RM1.7bn (-41% yoy) was largely within both our and consensus’ forecast at 102% respectively.
Dividend. A 2nd interim DPS of 7 sen was declared which is similar to 4Q19 DPS. This brings FY20 DPS to 12 sen (FY19: 18 sen) implying payout of 57% and dividend yield of c.2%.
Outlook. Pengerang Integrated Complex (PIC) start-up is further delayed to 2H21 due to integration issues. While product prices are still rising upwards, we remain wary of potential new supply from the US as well as China’s self-sufficiency target which could limit further upside to ASP.
Our call. Maintain SELL with unchanged DCF derived TP of RM5.50. This implies FY21F PE of 20x. While we continue to favor the stock on a longer term perspective for growth potential in specialty chemical space, we believe the upside is limited amid current downcycle in petrochemicals. Look to accumulate at lower level.
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 3393 views | 3 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....