Kenanga Revises PCG's FY2025 Profit Forecast Up By 10 Pct, Reflecting Higher Polyolefin Prices
KUALA LUMPUR, Dec 26 (Bernama) -- Kenanga Research has revised its financial year 2025 forecast (FY2025F) core profit for Petronas Chemicals Group Bhd (PCG) upward by 10 per cent, reflecting higher polyolefin price assumptions and improved speciality division profits.
The revision is based on an increase in polyolefin prices, now projected at US$1,150 (US$1 = RM4.47) per tonne, up from the earlier estimate of US$1,000 per tonne.
In a note today, the research firm said that 2025 marks the third year of the polyolefin price cycle, suggesting a potential uptrend.
It also highlighted that the United States (US) Institute for Supply Management’s Purchasing Managers Index (PMI) has been in a downtrend since 2022, consistently remaining below the 50 level throughout 2023 and 2024, indicating prolonged industrial contraction.
“The positive PMI trend has moved in tandem with the year-on-year improvement in polyolefin prices leading us to believe that investors should look out for a potential inflection point in 2025,” it said.
Therefore, Kenanga upgraded its call from ‘market perform’ to ‘outperform’ and increased its target price to RM5.47 per share from RM5.00 for PCG.
On the speciality chemical division, the research firm expects a sustained recovery in margins and volumes, driven by a gradual recovery in the European economy, which is expected to be supported by initial rate cuts by central banks moving into FY2025.
“Additionally, China’s vague plans for accommodative economic measures could further bolster demand for speciality chemicals.
“Reflecting this improved outlook, we revise our FY2025F profit forecast for PCG’s speciality division to RM165.1 million, up from the earlier assumption of RM30 million,” said Kenanga.
Meanwhile, the research firm also foresees a potential slight tightening in petrochemical capacity in 2025, similar to 2018, particularly for PCG, which is set to undergo a major turnaround for its PC olefins cracker.
Kenanga noted that plant turnaround activities are expected to increase compared to the 2023−2024 period, driven by deferred maintenance and ageing infrastructure globally.
“Notably, 40−50 per cent of global petrochemical capacity is sourced from plants over 20 years old, with Europe and North America accounting for a significant proportion due to their earlier industrial maturation.
“While this ageing capacity remains below the historical peak of 60−70 per cent seen in the 1990s, and exact maintenance schedules are opaque for competitive reasons, the market could face tighter supply conditions in 2025,” it added.
-- BERNAMA
