PCHEM (5183) : Petronas Chemicals upgraded to Buy at Maybank Research
KUALA LUMPUR: Maybank Investment Bank Research has upgraded Petronas Chemicals (PetChem) to a Buy from Hold as the recent share price selloff has offered an attractive entry price.
It said on Thursday stock currently trades at just 12.7 times 2015 price-to-earnings ratio (PER).
“Target price of RM6.50 is unchanged, premised on FY15 PER of 15.0 times, which is in line with global peers. Furthermore, PetChem’s FY15 dividend yield of 3.9% is attractive for yield seekers,” it said.
Maybank Research said PetChem’s share price has plunged by 22% since August, and 9% down on Dec 1 alone (-9% year-to-date).
“This is due to the oil and gas sector derating following the fall in crude oil prices, and also Petronas’ statement that it will cut its projected Capex by 15-20% in FY15,” it said.
The research house said the current level is a good buying opportunity, as the blanket de-rating of the oil and gas sector overshadows many of PetChem’s attributes.
Firstly, petrochemicals’ average selling price have held up much better relative to crude oil prices, suggesting that profit decline will be much more modest than market’s expectations.
Secondly, the weaker ringgit against the US dollar is beneficial to PetChem, as the revenue is quoted in US$ whereas only 65% to 70% of its cost is denominated in US$.
“PetChem’s balance sheet is also healthy, in net cash. We keep our earnings forecasts unchanged as we have already factored in a declining ASP,” it said.
http://www.thestar.com.my
KUALA LUMPUR: Maybank Investment Bank Research has upgraded Petronas Chemicals (PetChem) to a Buy from Hold as the recent share price selloff has offered an attractive entry price.
It said on Thursday stock currently trades at just 12.7 times 2015 price-to-earnings ratio (PER).
“Target price of RM6.50 is unchanged, premised on FY15 PER of 15.0 times, which is in line with global peers. Furthermore, PetChem’s FY15 dividend yield of 3.9% is attractive for yield seekers,” it said.
Maybank Research said PetChem’s share price has plunged by 22% since August, and 9% down on Dec 1 alone (-9% year-to-date).
“This is due to the oil and gas sector derating following the fall in crude oil prices, and also Petronas’ statement that it will cut its projected Capex by 15-20% in FY15,” it said.
The research house said the current level is a good buying opportunity, as the blanket de-rating of the oil and gas sector overshadows many of PetChem’s attributes.
Firstly, petrochemicals’ average selling price have held up much better relative to crude oil prices, suggesting that profit decline will be much more modest than market’s expectations.
Secondly, the weaker ringgit against the US dollar is beneficial to PetChem, as the revenue is quoted in US$ whereas only 65% to 70% of its cost is denominated in US$.
“PetChem’s balance sheet is also healthy, in net cash. We keep our earnings forecasts unchanged as we have already factored in a declining ASP,” it said.
http://www.thestar.com.my
