PCHEM’s  1QFY13  net  profit  of  MYR1.11bn  was  in  line  with  our  but above  consensus  estimates,  accounting  for  25.9%  and  28.9%  of  the respective full-year forecasts. Its EBIT of MYR1.59bn was stronger q-o-q and  y-o-y  due  to  improved  gas  supply  to  its  methanol  facilities,  which offset  the  higher  maintenance  activities.  Pending  its  analyst  briefing this evening, we retain our NEUTRAL call and FV of MYR6.40, pegged to 12x FY13 EPS. 
 
- Results  in line.  Petronas  Chemical  (PCHEM)’s 1QFY13 net profit rose to  MYR1.11bn  (+22.5%  q-o-q,  +8.4%  y-o-y),  which  was  in  line  with  our but  above  consensus  expectations,  accounting  for  25.9%  and  28.9% of the  respective  full-year  estimates.  The  sturdier  profit  was  mainly attributed  to  improved  product  margins  and  higher  product  prices, coupled with lower feedstock costs. Meanwhile, revenue rose 1.7% q-o-q and 1.5% y-o-y to MYR4.46bn owing to higher product prices.

-  Fertilizer, methanol prop up revenue growthz. PCHEM’s fertilizer and methanol division expanded 12% compared to the preceding quarter due to improved gas availability, which translated into higher sales volume. In contrast,  revenue  from  its  olefins  and  derivatives  division  dipped  2% against that in the preceding quarter due to lower sales volume

- Strong  operating  performance.  The  Group’s  EBIT  of  MYR1.59bn (+110.9% q-o-q, +12.1% y-o-y) strengthened on improved gas supply for its  methanol  facilities,  which  offset  the  higher  maintenance  activities undertaken during the quarter.

- Maintain NEUTRAL. We retain our NEUTRAL recommendation for now pending the company’s briefing for analysts this evening. Our  MYR6.40 FV is premised on 12x FY13 EPS. We like the stock’s attractive dividend yield  of  4.1%  for  FY13  and  4.3%  for  FY14, assuming  a  50.0%  dividend payout ratio.

Source: RHB