Wednesday, August 24, 2011

CIMB Research maintains Outperform on Petronas Chemicals

KUALA LUMPUR: CIMB Equities Research is maintaining its Outperform rating on Petronas Chemicals as it believes that a recovery of industry margins in 2H11 will spark a share price recovery.

It said on Wednesday, Aug 24 that while there is some validity to market worries over the oil price decline, increasing macro risk and the shortage of gas supply from Petronas in 2Q-3Q11, PChem's 13% share price correction since Aug 1 is overdone.

'We estimate the impact of the gas shortfall to be just 1% of FY11 earnings and retain our forecasts and target price of RM9.70, which is based on 10x CY12 EV/EBITDA.

'Volume recovery post shutdown and margin rebound in 2H11 should be key share price catalysts. We maintain our OUTPERFORM rating,' it said.

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