PCHEM announced that its wholly subsidiary, PRPC Polymers has awarded an Engineering , Procurement, Construction and Commissioning (EPCC) contract for a 900 ktpa polypropylene (PP) plant within the RAPID petrochemical project to a consortium for a lump sum contract value of US$482m. The consortium comprises TECNIMONT SpA, Huanqiu Contracting & Eng Corp, TECNIMONTHQC, and TecnimontHQC S.c.a.r.l. Completion date is expected to be 15 April 2019.

Comments: PRPC Polymers is one of the three project companies that PCHEM acquired from PETRONAS Refinery and Petrochemical Corp early this month to expand its capacity in existing products and to diversify into differentiated and specialty chemicals. PCHEM had earlier guided that the three project companies will require a total investment of US$3.9bn and will expand the capacity of the group by 2.7mtpa. The group has scheduled an analyst briefing to provide more guidance on the three project companies, including possibly funding and equity structures, on 26 November 2015.

We maintain our SELL rating on PCHEM (RM6.56, TP RM5.30).

Source: Affin Hwang Capital Research - 24 Nov 2015