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Research by HLIB
Sell – TP M4.70

“Core numbers fall short"

PCHEM recorded 2Q24 core net profit of RM444m, bringing 1H24 core earnings to RM924m (-23%). The results were below ours and consensus expectations. The negative deviation stemmed from higher-than-expected opex from PIC. Core earnings declined 8% QoQ due to lower EBITDA contribution from O&D segment (-17%) owing to higher operational costs being expensed off in PIC from 2Q24 onwards as most plants have done performance test runs (PTR) and are close to achieving COD. We note that LBITDA from PIC in 2Q24 expanded to c.RM100m from c.RM10m in 1Q24. Post-COD in 2H24, PIC will likely record c.RM600m of net losses per annum, assuming it achieves EBITDA breakeven. Cut our FY24f/FY25f/FY26f forecasts by -9%/-7%/-7% and reiterate SELL call with lower TP of RM4.70 based on a PE multiple of 15x on FY25f EPS.

Analyst:
Brian Chin
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$KLSE-PCHEM
Research by HLIB
Sell – TP M4.70

“Core numbers fall short"

PCHEM recorded 2Q24 core net profit of RM444m, bringing 1H24 core earnings to RM924m (-23%). The results were below ours and consensus expectations. The negative deviation stemmed from higher-than-expected opex from PIC. Core earnings declined 8% QoQ due to lower EBITDA contribution from O&D segment (-17%) owing to higher operational costs being expensed off in PIC from 2Q24 onwards as most plants have done performance test runs (PTR) and are close to achieving COD. We note that LBITDA from PIC in 2Q24 expanded to c.RM100m from c.RM10m in 1Q24. Post-COD in 2H24, PIC will likely record c.RM600m of net losses per annum, assuming it achieves EBITDA breakeven. Cut our FY24f/FY25f/FY26f forecasts by -9%/-7%/-7% and reiterate SELL call with lower TP of RM4.70 based on a PE multiple of 15x on FY25f EPS.

Analyst:
Brian Chin
brianchy@hlib.hongleong.com.my

$PCHEM / 5183 (PETRONAS CHEMICALS GROUP BERHAD)