|
PETRONAS CHEMICAL - COMPANY VISIT
|
||||
|
STOCK
|
DATE
|
PRICE
|
BUY/SELL
|
TARGETPRICE
|
|
PCHEM (5183)
|
15/10/2012
|
RM 6.43
|
Defensive
HOLD
|
-
|
|
Business
Update and Outlook
-
Blended plant utilisation is at
83.3% ytd compared to 76% last year. As there was schedule maintenance for
Olefins last year and Gas supply limitation.
-
FY13 will see a major maintenance
for its Olefins/derivatives division.
-
Polymer in China has seen improve
demand with inventory beginning to fall although margins have not improve
much.
-
Glycol inventory has normalised to
500k MT compared to peak of 800k MT.
-
Urea which is seeing big expansion
in Qatar saw an initial price fall before seeing recovery following increased
demand in India.
-
Believes PCHEM is strategically
position in ASIAN region where transportation cost is cheaper compared to
Middle Eastern or European suppliers.
-
Plants have the ability to shift
feedstock to higher margin products should there be any weakness in product
prices. Any slowdown in China demand is offset by demand in Indonesia.
|
||||
|
CAPEX / Growth
|
|
CAPEX
-
RM600mil annual maintenance for refinery
plants.
-
SAMUR (USD1.5bn): 1st year: 20%,
2nd: 50%, 3rd: 30%
Next
growth
-
SAMUR urea plant: in Sipitang Sabah
which will only come in 2015 and will double urea capacity from 1.2mil MT to
2.4mil MT
-
Rapid, Johor: Project led by
Petronas where decision is slated to be made in mid 2013 for possibly another
integrated petrochemical plant worth USD10bn. Petronas has signed 4 HOA for
RAPID. Expect HOA to reach 10.
-
Do not see shale gas as a threat at
least until 2016
|
|
|
|
Others
-
Current foreign shareholding has
fallen to 8% from peak of 18%. Seeing pickup in interest from foreign
parties.
-
Dividend maintained at 50% net
profit.
Conclusion:
Defensive Hold. We see limited near term catalyst as
the next capacity expansion will only come on stream in 2015.
|