AffinHwang Capital maintains Add on Petronas Chemicals, lowers target price to RM6.30

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KUALA LUMPUR (Nov 7): AffinHwang Capital Research has maintained its Add rating on Petronas Chemicals Group Bhd (Pchem) at RM6.11 with a lower target price of RM6.30 (from RM7) and said PChem’s 9M14 net profit fell by 27% year-on-year on lower plant utilisation and weaker selling prices.

In a note Friday, the research house said the results were below consensus and house expectations due to worse-than-expected methane gas supply disruption in 3Q14 and narrower price spreads.

“Management expects softer olefins and derivatives prices in 4Q14 on lower feedstock costs and weak demand.

“We cut our 2014-16E EPS forecast by 8-10%, and lower our target price to RM6.30 (from RM7.00) based on an unchanged target PER of 15x. Maintain Add,” it said.