KUALA LUMPUR: Petronas Chemicals Group Bhd’s financial year 2017 may be its “best year of its life” with its earnings set to beat expectation, said Maybank Investment Bank.
“2017 is looking to be a record year for PetChem’s earnings and dividend per share. 2018 is also looking positive despite higher turnaround activities and the prospect of price escalation for its Methane feedstock supply,” the research house said in a note.
According to Maybank IB, PetChem said the current petrochemical price outlook is positive on strong global demand, supply disruptions due to Hurricane Harvey and rising crude oil prices.
In the fourth quarter of this year, Maybank IB said Methanol Plant 1 will undergo a turnaround but all the other plants are fully operational.
The research house expects PetChem’s utilisation rates to be above 90 per cent in the quarter.
For 2018, Maybank IB said the outlook looks to be much better than the initial expectations.
Maybank IB said PetChem has guided that the turnaround activities in Kertih Integrated Petrochemical Complex (IPC) should result in less than two months of downtime.
The Aroma and HR-PIB plants are expected to be ready and contribute to the group in 2018, Maybank IB said.
The impending joint venture signing with Saudi Aramco on the RAPID project will also provide PetChem with USD1 billion of cash as part of the 50:50 project cost-sharing agreement, it added.
“This means PetChem’s balance sheet will become even stronger and raise the possibility of higher dividend payouts.”
Maybank IB has a “buy” call on PetChem with a higher target price of RM8.75 from RM8.10 previously.