KUALA LUMPUR: Petronas Chemical Group Bhd's (PetChem) improvement in its fourth quarter (Q4) 2023 earnings will primarily be driven by higher overall plant utilisation (PU) as a slew of unplanned outages in Q2 and Q3 2023 were resolved.
There were a slew of unplanned outages in Q2 (PC Methanol Labuan and PC Fertiliser Sabah) and Q3 (PC Methanol Labuan and PC Olefins Kertih), which dragged the company's overall PU to 82 per cent and 77 per cent, respectively.
Hong Leong Investment Bank Bhd (HLIB) said that PetChem's overall PU should improve to 85 per cent in Q4.
These outages would have been resolved by end-October, although it was noted that there were some planned maintenance activities being performed in Q4 2023.
"Therefore, we view that the recovery in Q4 2023 will be PU-driven as there were no significant movements in PetChem's key product prices," it said in a note.
HLIB said PetChem's Q4 2023 core bottom line is expected to come in at the range of RM550–575 million, which will in turn bring the financial year 2023 (FY23) core earnings to range from RM2,163 million to RM2,188 million.
This represents 100 per cent to 101 per cent of its full-year FY23 forecasts, the bank said.
"We trim our FY23/FY24/FY25 earnings forecasts by -1 per cent/-1 per cent/-3 per cent after some minor adjustments to utilisation and average selling price (ASP) assumptions.
"Post earnings adjustments, we maintain our sell rating with a slightly lower target price of RM6.04 from RM6.11," it added.
