All-round optimism for Petronas Chemicals on good FY18

KUALA LUMPUR: Analysts remain sanguine on prospects of Petronas Chemicals Group Bhd (Petronas Chemicals) following the release of its fourth quarter of financial year 2018 (4Q18) net profit of RM1.29 billion, which brought FY18 net income higher to RM4.98 billion.

Kenanga Investment Bank Bhd (Kenanga Research) saw that Petronas Chemicals’ high utilisation led its 4Q18 earnings towards offsetting lower average selling prices (ASP).

“To note, 4Q18 net profit rose by two per cent quarter on quarter (q-o-q) to RM1.29 billion on the back of a five per cent hike in revenue, despite lower ASP as crude oil price declined.

“This was largely due to higher plant utilisation (PU) of 94 per cent on only one statutory turnaround activity as compared to four heavy turnaround activities previously,” Kenanga Research said.

“As such, sales volume soared 19 per cent to 2.68 million metric tonnes (MT) from 2.24 million MT while revenue was also boosted by the weakening of the ringgit against US dollar.”

On the other hand, the firm saw that Petronas Chemicals’ effective tax rate rose to 12 per cent from five per cent due to de-recognition of unutilised business losses and RA pursuant to Finance Act 2018.

“However, it continued to benefit from Global Incentive for Trading (GIFT) under Labuan Financial Services and Securities Act 2010.”