Journey to Wealth

Petronas Chemicals Group - No surprises in 2Q12 results

kiasutrader
Publish date: Wed, 29 Aug 2012, 10:52 AM

Period    2Q12

Actual vs. Expectations
 At 50% of our FY12 full year estimate and 48% of the consensus, the 1H12 net profit of RM1.02b came in fairly within expectations. 

Dividends   A 8 sen net DPS was declared in 2Q12 and to be paid on 16 Oct. (ex-date: 25 Sep).

Key Results Highlights
 The 2Q12 net profit contracted 16% QoQ to RM855m while revenue declined 11%. This was due to a lower sales volume by 12% on maintenance activities, resulting in lower plant utilisations. However, the quarter's net profit was 8% higher YoY as revenue rose 16% due to an  improved operational performance. 

 The sharp decline in the QoQ results were led by Olefins & Derivates (O&D), where its revenue and EBITDA dropped 15% and 25% to RM2.73b and RM863m respectively on lower ASP due to weak demand. 

 However, Fertilisers & Methanol (F&M) saw its revenue rose 6% to RM1.21b on a higher ASP supported by strong demands although EBITDA dropped slightly by 2% to RM488m.

 Strong demand and higher ASP for F&M pushed PChem's 2Q12 earnings higher YoY despite O&D being hit marginally by a lower ASP on weaker market condition. 

 As such, F&M's revenue and EBITDA soared 27% and 39% from RM952m and RM352m respectively. O&D's 2Q12 revenue rose 14% from RM2.41m while EBITDA dipped 7% from RM932m previously. 

Outlook   Petrochemicals prices are on the rise due to seasonal factors in the 2H, especially for O&D on restocking, and this should help support PChem's 2H12 earnings.

Changes To Forecasts
 No changes to our FY12-FY14 forecasts.   
Rating  MAINTAIN OUTPERFORM
Valuation    We are retaining our price target of RM7.46/share, based on CY13 14.5x PER, which is its recent PER high in Oct. 2011 after normalising from the peak of 20x in Mar 2011.   

Risks   A weaker USD vs. MYR rate and a sudden drop in crude oil prices.    

Source: Kenanga
Related Stocks
Market Buzz
Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment