KUALA LUMPUR, Aug 25 — AmInvestment Bank Bhd remains bullish on Petronas Chemicals Group’s (PChem) earnings prospects given that rising naphtha costs should eventually lift petrochemical product prices.
In a note today, the research firm said the bullish sentiment is due to the strong correlation to PChem’s share price and Naphtha as a valuable feedstock for the petrochemical industry.
“We raise PChem’s financial year 2021-2023 forecast earnings by 19-20 per cent from a 5.0 per cent increase in product price assumptions as the group’s first-half financial year (1HFY2021) results exceeded expectations.
“Given a one to two-month time lag between product price movement and recognition in PChem’s revenue, we expect the company’s 2HFY21 earnings to stage a stronger delivery as Brent crude oil prices are at or above the US$70 (RM295) per barrel threshold currently versus a second quarter 2021 average of US$69 per barrel,” it said.
AmInvestment Bank also reiterated its ‘buy’ call on PChem with an unchanged fair value of RM10.60 per share. — Bernama
