PCHEM (5183): Company Warrants, Structured Warrants and Preference Shares

*Looks like MIDF revised Target Price is in line with Mabel’s earlier estimate for PCHEM Pre QR*

Revised earnings estimates. Considering the lower earnings in 9MFY24, in tandem with the unrealised forex loss and expected softened demand for O&D and Specialties, we decrease our earnings forecasts for FY24-26 by -49%/-31%/-24% respectively. As such, we revised our target price of RM4.89 (previously RM7.54) and our call to NEUTRAL. Our new target price is based on pegging a PER of 18x to a revised EPS25 of 27.2sen. The PER is based on -1SD to PCG's 5-Y historical PER.

While we anticipate the headwinds for each segments to persist until end-year, we also expect that the overall PCG operations to remain stable. PCG also continues to be supported by the reliability of its plant operations. The recent extension of existing gas sales agreement for the supply of ethane and propane feedstocks at PC Olefin for the next 5 years, signals that PCG continues to uphold its operational and growth excellence. Additionally, the commissioning of its pentaerythritol plant in Sayakha, India, and the beginning of commercial operations in Pengerang Petrochemical Complex bode well on the demand trajectory for petrochemicals in the long run. Nonetheless, we exercise caution on the subsector, given the ongoing geopolitical tensions, volatile oil prices and unfavourable forex against the USD. We maintain our view that, while recovery for the subsector is slower than expected, it is nevertheless imminent.

Source: MIDF Research - 21 Nov 2024

This was Mabel’s earlier valuation before Mabel a reetry at RM 4.53..

With PCHEM EPS of MYR 0.25 (as per the latest data) and the PE ratio of 19.02:

PCHEM Fair Value Price = 0.25 ×19.02 = RM 4.76

Today it is trading between RM 4.53 and RM 4.64 with about 3 million shares traded as per writing..

15 hours ago

HLIB tp RM4.00 achievable?

15 hours ago

Mabel is queuing at RM 4.52, RM 4.51 and RM 4.5

Let see how it goes...

Meow

15 hours ago

Hoho interesting le … P/B 0.89 … after latest QR loss … P/B is increased to 0.99 …..

15 hours ago

Leesa688

prettygal

So basically they accumulated all the Forex paper loss of the 2019 US 9.8 billion loans for the Pengerang project, letting them out 1 shot at this quarter. Weird weird weird accounting.

So so agree.

15 hours ago

Johnchew5 Hoho interesting le … P/B 0.89 … after latest QR loss … P/B is increased to 0.99 …..
21/11/2024 10:32 AM

Haha Sifu Mickey, don't be despaired...

Based on PCHEM latest QR, after latest QR loss, P/B is increased from 0.89 to 0.99.

The increase in the Price-to-Book (P/B) ratio despite the latest quarterly loss can be attributed to changes in the company's market capitalization and book value. Here's a simplified explanation:

Market Capitalization: The P/B ratio is calculated by dividing the market capitalization by the book value. If the market capitalization (stock price multiplied by the number of shares) remains relatively stable or decreases less than the book value, the P/B ratio can increase.

Book Value: The book value represents the net asset value of the company. A significant loss can reduce the book value, as it decreases the company's retained earnings. If the book value decreases more than the market capitalization, the P/B ratio will increase.

In PCHEM's case, the latest quarterly loss likely reduced the book value significantly. If the market capitalization did not decrease proportionally, the P/B ratio would increase from 0.89 to 0.99.

The latest quarterly loss for Petronas Chemicals Group Bhd (PCHEM) has mixed implications for shareholders like Mabel:

Negative Aspects:
First-Ever Loss: This is the first time PCHEM has reported a loss since its IPO, which can be concerning for shareholders.

Forex Losses: The significant unrealized foreign exchange losses have impacted the company's financial performance.

Dividend Impact: Lower profits might lead to reduced dividends, which could affect income-focused investors.

Positive Aspects:
Market Reaction: The current stock price already reflects the quarterly loss, suggesting that the market has priced in the bad news.

Future Reversal: If the US Federal Reserve cuts rates as expected, the forex losses could be reversed, potentially improving future financial results.

Operational Performance: Despite the financial loss, the operational performance of PCHEM's core business has improved, with higher plant utilization and sales volumes.

In summary, while the immediate financial results are not favorable, there are potential positive developments on the horizon that could benefit us in the long run.

To Our Success !

Meow

14 hours ago

Hoho Repost :

Hoho this is interesting… let’s see coming QR result ended September….an opportunity for Entry or CutWin ???

Referred Pchem :

> QR ended June 2024 :

Exchange Rate :

USD / MYR

Average Rate 4.7323
Closing Rate. 4.7205

>> 30/9/2024 4.12557

USD /MYR is depreciated by 12.85 %

>> As at 31/10/2024 4.37901

USD /MYR is depreciated by 7.47 %

>>> As at 8/11/2024 4.38259

Remember Do 3 Own : Own Homework, Own Analysis and Own DecisionS as only you know your Risk level .

DecisionS: is changed Upon new information, new facts n figures.

14 hours ago

USD to MYR Chart
-4.23%
(1Y)
US Dollar to Malaysian Ringgit
1 USD = 4.46817 MYR
Nov 21, 2024 at 03:11 UTC

14 hours ago

Phoebe

Economists predict that the Malaysian ringgit will strengthen to RM 3.80 per US dollar by the end of the year. I doubt this is possible with less than two months to go. However, if Malaysia continues to aim for a rate below RM 4, it may be possible to achieve with enough time. Furthermore, if the Fed lowers interest rates again, and the Middle East and Russia war ends, the Malaysian ringgit may resume its upward path. Will Pchem have to declare another forex loss? This is truly a catch-22 situation.

14 hours ago

ironrobe3388

so many commentators with strong fundamental background are promoting this stock. it is a good sign.

14 hours ago

nicholas99

Forex loss.. interest low = breakeven. Then, oil go down = material cost goes down = earn

14 hours ago

ironrobe3388

don't rise so fast , I want to buy 1 b shares.

14 hours ago

Today so strong goreng 4.89

14 hours ago

RM 4.89 oledi...

14 hours ago

Goreng like this hardly sustains

14 hours ago

nicholas99

EPF back in and... uncle jump in kua.

14 hours ago

Fell down from 5.70, mau balik sana kah?

14 hours ago

This morning Q 4.53, cannot get. Now already up so much :(

13 hours ago

RM 4.9 oledi so apy managed to get in last week at RM 4.53...hihihi

13 hours ago

Leesa688

Ha, so now we know who are the shorts!

13 hours ago

ironrobe3388

bought a huge sum at RM4.55 yesterday. thanks for good QR.

13 hours ago

I missed the boat

13 hours ago

fortunefire

parking at 4.5x think it will come down again

13 hours ago

https://www.malaymail.com/news/malaysia/2024/11/20/federal-laws-take-precedence-in-sarawaks-oil-and-gas-dispute-experts-assert-video/157503

You can’t go back and forth, you know. An agreement is an agreement..

The federal government’s position on oil and gas (O&G) resources off Sarawak’s shores remains grounded in the Petroleum Development Act 1974 (PDA), which grants Petronas full ownership and exclusive rights to all petroleum resources in Malaysia, both onshore and offshore. If they take this position for Kelantan why make it soooo special for Sarawak?

13 hours ago

kl_guy

look like the sell down have bottom out. Next stop rm5.00

12 hours ago

kl_guy look like the sell down have bottom out. Next stop rm5.00
21/11/2024 12:54 PM

Indeed KL!

PCHEM make a remarkable recovery climbing more than 6% today (went up as high as RM 4.9 today from opening RM 4.57) despite RM789 million loss this quarter. Essentially, they accumulated all the Forex paper losses from the 2019 US $9.8 billion loans for the Pengerang project and released them all at once this quarter, which is quite unusual accounting.

Those who sold from 5.50 to 4.50 might have engaged in insider trading, as the quarterly loss was announced, but insiders had already taken action weeks before the official announcement yesterday.

However, the good news is that the current price already reflects the quarterly loss. With the US Federal Reserve planning to cut rates to zero in the next 6-12 months, all the Forex paper losses will be reversed...

Thanks to Mabel's Marvelous Capital A, Mabel managed to catch her flight at RM 4.53 last week..

To Our Success !

Meow Meow Meow

12 hours ago

williamh

Local government funds rushing back to cover their short positions knowing that usd is coming back strongly from the low of 4.12 , it likely go back to 4.80+ before the year end and all the unrealistic forex papers lost will be reversed and profit will be rocket sky high, its time to corner the local funds and make them pay heavy, ff is acting

11 hours ago

abcb

Hold tight,TP6.00

10 hours ago

ultranippon18

How about the Sarawak state government issue ? Petchem got leg to stand on, 50/50 or lose ? Abang jo sound impossible to negotiate

10 hours ago

kl_guy

Look like Pchem is strong , call warrant also 10 million share . Big boy are going big on this counter.

10 hours ago

speakup

Bursa ni is a scam. Big loss company naik tapi profitable company turun. Sebab nilah FF semua lari dari bursa

9 hours ago

yeinemesis

If QR loss can still spike so high in one day, meaning it can also fall hard in coming days. Beware ya...

9 hours ago

madmusrz

Small freebies by epf..but only few lucky ppl got..beware as the price will not increase anymore for some time

7 hours ago

yeinemesis

Standby on pc, notebook, hp tomorrow. Just in case if many take opportunity to sell and take profit tomorrow. Some may be afraid to hold their shares as the price may stay low for a very along time. Bitcoin is way much faster.

7 hours ago

$PCHEM (5183.MY)$ was the top gainer, rising 5.69 percent to close at RM4.830.

7 hours ago

#speakup Bursa ni is a scam. Big loss company naik tapi profitable company turun. Sebab nilah FF semua lari dari bursa
21/11/2024 4:07 PM

The stock market can be quite unpredictable, and several factors can influence share prices beyond just the company's financial results. Here's a breakdown of why PCHEM's share price went up despite a big loss, and why Nvidia's share price went down despite great results:

PCHEM (Petronas Chemicals Group Bhd)
Sometimes, the market has already priced in the expected losses. If the actual results are better than the worst-case scenario that investors feared, the share price can go up.

Investors might be optimistic about the company's future prospects, such as potential recovery in the next quarters or favorable market conditions such as reversal of the forex loses due to Fed further cutting interest rates.

Nvidia
Nvidia's strong results might have already been anticipated by the market. If the results, despite being good, do not exceed the high expectations, the share price can drop.

Global AI chip giant $NVIDIA (NVDA.US)$released its FY25 Q3 results after the US market closed on November 20, significantly exceeding market expectations. The company's revenue for this quarter was $35.1 billion, up 92% year-over-year, surpassing the consensus estimate of $33.25 billion. Non-GAAP EPS was $0.81, up 103% year-over-year, exceeding the consensus estimate of $0.74.

The reason why so much focus was on NVIDIA's earnings is because they are a bellwether for understanding if the AI spending spree continues, or if it has begun to cool down. Obviously, one company can't speak for them all. But given their importance in the AI space, a look at their sales shows no slowdown in demand, and that the AI boom is still alive and well.

NVIDIA also raised their Q4 revenue outlook to $37.5 billion vs. the consensus for $37B. That would represent another 70% quarterly sales growth vs. last year. Very impressive.

In a nut shell, NVIDIA has now beaten earnings 19 out of the last 21 quarters

*Why the soft response after the report*?

Unlike PCHEM, let’s not forget that they are up 194% YTD. That's on top of last year's 239%. If you had jumped on that AI and semiconductor giant 5 years ago, you’d already be up over +3,000%. We'll see how they trade in the regular session. But it was another stellar quarter. And their position in the "age of AI" (quote attributed to CEO Jensen Huang), couldn't be better.

Yesterday's earnings actually got off to a rough start after Target posted a negative EPS surprise of -19.2%, and a negative sales surprise of -0.94%. Their cautious outlook didn't help matters, which saw the stock down by -22% in the regular session.

But also before the open, Williams-Sonoma posted a positive EPS surprise of 11.4%, and a positive sales surprise of 1.47%. They soared 27.5% in the regular session following their earnings.

Mabel is still holding it because she believe the ride isn’t over yet as AI is transforming every industry, company and country in the next 20 to 30 years. Enterprises are adopting agentic AI to revolutionize workflows. Industrial robotics investments are surging with breakthroughs in physical AI. And countries have awakened to the importance of developing their national AI and infrastructure.

Even our plantation is moving into AI...

https://www.thestar.com.my/news/nation/2024/11/20/ai-boost-for-palm-oil-production

The first palm oil mill in the world using artificial intelligence (AI) technology has been launched here in Malaysia.

With Malaysia’s standing as the world second largest producer of palm oil, the cutting edge smart technology is expected to reduce cost and enhance efficiency.

Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani launched the adoption of the technology at Minsawi Industries Kuala Kangsar Sdn Bhd in partnership with technology provider Artificial Intelligence Robotics Engineering Industries (Airei Sdn Bhd).

Johari said the mill will be able to reduce workforce, especially foreign labour, between 30% and 35%. If all 446 palm oil mills in the country were to adopt this technology, he said foreign workers could be reduced by almost 8,000.

Meow

3 hours ago

...and as expected Nvidia is back on target..

2 hours ago