Monday, August 29, 2011

Petronas Chemicals active, up in early trade

KUALA LUMPUR: Petronas Chemicals Group Bhd shares rose in active trade on Monday, Aug 29 on some mild bargain hunting after the heavy selldown last week and despite that its earnings were below analysts' expectations.

At 9.20am, PetGas was up eight sen to RM6.11 with 1.12 million shares traded.

PetChem posted net profit RM737 million on the back revenue RM3.35 billion for the period ended June 30, 2011, due mainly to strong prices seen across most petrochemical products, partially offset by a stronger ringgit versus the US dollar. Earnings per share were nine sen and net assets per share was RM2.54.

Last Friday, Aug 26,'' PetChem said during the quarter, there was methane gas supply limitation for the fertiliser and methanol segment, which affected the production of fertiliser, methanol and ammonia.

Maybank Investment Bank Research said on Monday PetGas' 2Q11 result was negatively impacted by maintenance shutdowns that crimped product volumes substantially. It said the shutdown was a mandatory four-year cycle whereby the process catalyst is changed.

A nationwide natural gas curtailment had also impacted production rates of the fertiliser and MTBE division, it said.

'Management asserts that all the heavy maintenance work is complete for the year, and 2H's utilisation rates should be back to its normal more than 90% levels. Maintain Buy, with an unchanged TP of RM8.15 based on 13.5 times 2012 price-to-earnings ratio (PER),' it said.

Meanwhile, CIMB Equities Research said it was maintaining its Outperform on PetChem but reduced its target price from RM9.70 to RM7.90.

The research house explained it continued to rate PChem an Outperform as it could be catalysed by the recovery of utilisation and margins from 1H11's depressed levels.

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