wew...KLCI break 1600points def...olefins & other derivatives weak demand by half and low production and schedule maintenance...how long to take to recover from downturn cycle?
If use Malaysia all index compare to other country SG , US , CN , TW , HK , KR , JP , VN , TH , EU , Indonesia , India all index , you will know how rubbish malaysia are . International must warning foregein investor do not invest in Malaysia ! !
wah lau.....results really bad leh. 50% reduce in profit. I think i will ciao 1st coz i think it is still at current level because got invisible hand supporting the index so that it will not be so ugly. Tomorrow is different story a'dy. Technical chart also show berish sign.
true but market will somehow will show some reaction on this bad news. Not everyone aware of the maintenance nor everyone is aware of the poor result release today. It will be in tomorrow news & i guess there will be some reaction. Of course pchem is good company n wun go bankrupt
The nature of PCHEM is that, like all companies in the natural gas refining industry, its the question is if you're geographically blessed or not.
Natural gas cost to extract, is either insanely expensive, or pretty cheap. You have places like Qatar, where the refinery can make 80% ROE, or typical oil rigs where natural gas is considered waste and burned.
And because of this "Geographically Blessed" factor, supply is always less than demand.
Having said that, there will always be a need for natural gas, and i don't mean in electricity generation (which most people use it for), but for the production of ammonia and thus fertilizer.
Currently, there is no way to produce ammonia other than via natural gas, and the Haber-Bosch process (Which requires Hydrogen, that is obtained via the Methane in Natural Gas). And this has been the case since 1910, and currently, there is no significant breakthrough in finding a replacement process.
Without a cheap and efficient process of creating ammonia ammonia, we would all starve (and we almost did before the Haber-Bosch process was discovered). And Haber-Bosch process is not efficient at all, taking up about 2% of the world energy supply.
PCHEM analysis can be broken down very simply to.
1) Will PCHEM always be geographically blessed, with direct pipelines to Petronas Gas Production? How much gas reserves does Petronas/Malaysia have left?
2) Is there a better and cheaper way of creating ammonia, other than the Haber Bosch Process coming up, that would not require the use of natural gas? This is more minor-ish, as only 10% of Natural gas is used for ammonia production, but i personally think this use of natural gas is far more important.
Funny, such short term thinkers. Has IPIC started operations yet?
For those who are not traders and short term investors, let me clarify what I look at in the earnings report: look to A11. Significant and subsequent events. We are still waiting on completion of PIC with no news on any delay, cancellation or problems. So my original reasoning in purchasing PIC is still interact, thus: discount day.
Look to B1.
The Group recorded lower plant utilisation at 81% from 100% in the preceding quarter, mainly due to statutory turnaround and higher level of maintenance activities undertaken in the current quarter. Sales volume was lower in line with lower production. Overall average product prices were slightly higher despite lower crude oil price. Revenue decreased by RM668 million or 15% at RM3.7 billion largely due to lower sales volume. EBITDA was lower by RM606 million or 40% at RM915 million mainly due to lower revenue and higher maintenance costs during turnaround period. Profit after tax decreased by RM554 million or 50% at RM558 million.
If you look carefully, due to the fire at IPIC there was a slew of maintenance and turnaround activities that quarter to make sure that mistakes do not reoccur. It was better to do something to reduce profit and increase safety and long term performance. Obviously with lowered production of 19% we also end up with lower revenue (down 15%) and lower earnings.
BUT IS IT A LONG TERM EVENT OR A SHORT TERM ACTIVITY? You may ask yourself if they do maintenance turnaround every quarter and see if sales figures will recover or not.
For the answer to that, look to
COMMENTARY ON PROSPECTS The results of the Group’s operations are expected to be primarily influenced by global economic conditions, foreign exchange rate movements, utilisation rate of our production facilities and petrochemical products prices which have a high correlation to crude oil price, particularly for the Olefins and Derivatives segment.
The utilisation of our production facilities is dependent on plant maintenance activities and sufficient availability of feedstock as well as utilities supply. The Group will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation level at above industry benchmark. Olefins and Derivatives The Group anticipates product prices for Olefins and Derivatives segment to stabilise in the coming quarter. This is in view of supply limitation following planned regional turnarounds. Fertilisers and Methanol The Group expects that Fertiliser and Methanol product prices to also stabilise due to limited supply amidst soft demand from the end products.
Simplified, buying PCHEM for the LONG TERM relies on understanding these factors:
Will 1. Malaysia ringgit drop versus USD ( sad to say, a surety) 2. Pchem complete IPIC ( let's say chances are much higher than jaks completion of power plant) 3. Will production and turnaround activities end and lead to higher profits? ( If you believe this quarter is temporary, then you can rely on the last 10 years earnings for pchem to give you forward)
Now, who is willing to bet with me that next quarter results will be at least a billion in earnings and a big far 15 cents of dividends?
Is it above market benchmark? You can compare lctitan results and performance with PCHEM to know who will be around 10 years from now and which is undervalued at these p prices.
I like to ask a foolish question. Can u trade olefin? If u trade the commodity u don't have to worry about plant shutdown, forex loss, accident like fire and all sorts of managerial problems. Less variables in the equation.
QoQ bottomline dipped by 58%, mainly due to: (1) product price rout for olefins and methanol led to margin compression, and (2) plunge in sales volumes due to statutory plant turnaround (TA) activities.
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Posted by MCA_ > 2019-11-13 14:53 | Report Abuse
Sales drop also some1 must hide? Why cheat like PH?