By Ying Xian Wong
Petronas Chemicals is scheduled to report results for its fourth quarter alongside annual results on Monday afternoon. Here’s what you need to know:
NET PROFIT FORECAST: The Malaysian petrochemical company is expected to post a net profit of 2.17 billion ringgit ($454.2 million) for 2023, according to the median forecast compiled by data provider FactSet in a survey of analysts. That compares with a profit of MYR6.32 billion in 2022. For the first nine months of 2023, Petronas Chemicals posted a net profit of MYR1.58 billion. Fourth-quarter earnings could continue to be weak, amid expectations that product spreads will stay soft, Maybank Investment Bank analyst Jeremie Yap said in a note.
REVENUE FORECAST: Full-year revenue is expected at MYR27.85 billion, according to a FactSet poll, down from MYR28.95 billion in 2022. Revenue for the first nine months of 2023 rose 6% on year to MYR21.45 billion.
WHAT TO WATCH:
–OLEFINS & DERIVATIVES: Prices of olefins and derivative products likely stayed soft in the final three months of 2023 due to lower downstream demand, Affin Hwang Investment Bank analyst Steven Chan said in a note. The segment could post weaker on-quarter earnings due to off-peak demand, but reduced regional production could offset lower ethylene and polyethylene prices, Citi analysts Oscar Yee and Desmond Law said in a note.
–FERTILIZERS & METHANOL: Fertilizers and methanol product prices may have stabilized in the fourth quarter due to limited supply in the region, Affin Hwang’s Chan said. Regional urea prices haven’t had a significant response to uncertainties over China’s fertilizer export restrictions since the first half of November, the Citi analysts said. Citi expects segment profitability to have improved on quarter due to higher shipments and steady methanol prices, as well as stronger ammonia prices.
–FOREX: The strength of the U.S. dollar versus the ringgit during the fourth quarter could have aided the company’s profits. The ringgit has weakened against the greenback in recent months, with USD/MYR 12-month gains at 7.7%.
Petronas Chemicals shares have been volatile in the past few months, dropping by about 12% since October last year and sitting 2.8% lower so far this year. This decline can be attributed to weak average selling prices of petrochemical products and low demand amid global economic uncertainties.
Write to Ying Xian Wong at yingxian.wong@wsj.com
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