KUALA LUMPUR: MIDF Research believes that Petronas Chemical Group Bhd's (PetChem) near-term future is bright, revising its yearly earnings forecast for the company's financial years 2022 (FY22) and FY23.
MIDF Research revised the forecasts by by three per cent and four per cent respectively in tandem with the current commodity price trends.
"In line with the revised earnings estimates, we also revised our target price from RM10.68 to RM11.10 for PetChem," it said.
Regardless of the uncertainties of Covid-19-related global economic recovery, supply chain disruptions and price inflation, MIDF Research said PetChem maintained its focus on plant operations and safety, recording best-in-class plant utilisation rates of 93 per cent.
As a result, PetChem ended FY21 with record earnings of RM7.3 billion, and had declared its highest dividend payout of 66 sen.
"Despite sharing the same view with PetChem that an end to the (Ukraine) war could stabilise the feedstock prices by the end of calendar year 2022 (CY22), we believe the uncertainty on how and when the war would end remains.
"Even with the conflict resolved, the issue of inflation and tight global supply of hydrocarbons, as well as the ongoing Covid-19 pandemic, could still be risks that could maintain the volatility of feedstock prices," it said.
Nevertheless, MIDF Research has reiterated its positive stance with PetChem and its competitive benefit, based on its resilient balance sheet and broad portfolio, strong local and regional footprint and diverse product range.
The positive stance also includes exceptional relationships with partners, clients, suppliers and workers and continuous focus on sustainability and safety in its operations and initiatives.
"All in, maintain our Buy call on PetChem with the revised target price of RM11.10 per share," it added.