Positive For PCG If Petronas Assumes Full Control Of PPC - CGS International
KUALA LUMPUR, May 28 (Bernama) -- The implications will be enormously positive for Petronas Chemicals Group Bhd (PCG) if Petronas eventually seek full integration of Pengerang Petrochemical Co Sdn Bhd (PPC), as PPC is expected to continue delivering large losses for PCG.
In a statement on May 25, 2026, national oil company Petroliam Nasional Bhd (Petronas) said: “Full ownership of PRefChem enables Petronas to further enhance operational alignment and flexibility across its value chain.”
Brokerage CGS International Securities said today that the wording on that Petronas statement suggested that it may eventually take full control of PPC as well, thereby ensuring full integration of both Pengerang Refining Company Sdn Bhd (PRC) and PPC, collectively PRefChem.
“Without PPC, PCG could return to the previous glory days of producing from ethane and methane gas feedstock based on very lucrative feedstock pricing arrangements and will no longer have exposure to the loss-making naphtha-based feedstock operations at Pengerang,” CGS International said in a research note today.
Petronas and Saudi Aramco announced recently that Aramco will dispose of its 50 per cent equity interests in PRC and PPC to Petronas.
Consequently, Petronas will own 100 per cent interest in PRC, while Petronas and PCG will have a 50:50 interest in PPC.
Assuming that PCG did not have a 50 per cent interest in PPC, PCG core net profit forecast for the financial year ending Dec 31, 2026 (FY2026) would be 46 per cent higher than its current estimate.
There will also be uplifts of 67 per cent in FY2027 and 96 per cent in FY2028, the brokerage said.
“If our supposition is incorrect, then our status quo forecasts for PCG remain unchanged,” CGS International said.
The brokerage said the transaction will not have any immediate impact on PCG as it retains its existing 50 per cent stake in PPC. And PCG will likely continue its close operational and shareholder cooperation with parent company Petronas at the Pengerang units.
The brokerage noted that PCG’s share price has come under pressure in recent weeks, with market expectations that the potential reopening of the Strait of Hormuz would trigger declines in petrochemical selling prices and feedstock prices, which are the downside risks for PCG.
Other downside risks include larger-than-expected losses at Kertih due to the ongoing plant turnarounds.
“Nevertheless, we view the likely sharp quarter-on-quarter recovery in PCG’s earnings in the second quarter of 2026 as the key potential re-rating catalyst. This underpins our “Add” rating and target price of RM6.58.
“Additionally, if PCG does indeed dispose of its 50 per cent stake in PPC to Petronas, we expect the market to be very pleased and rerate the stock accordingly,” said CGS International.
-- BERNAMA
