Amresearch maintains Hold on PChem despite SAMUR project delay

by **Cals** Mon 10 Feb 2014, 13:28

Business & Markets 2014

Written by Jonathan Gan of theedgemalaysia.com

Monday, 10 February 2014 11:36

KUALA LUMPUR (Feb 10): AmResearch has reiterated its “Hold” rating on Petronas Chemicals Group Bhd (PChem) with an unchanged fair value (FV) of RM7.2 per share following the comnpany's announcement regarding a fire on board one of its vessels.
According to the research report, the vessel was carrying equipment bound for the Sabah Ammnonia and Urea (SAMUR) project and could disrupt the delivery of critical equipment, leading to potential project execution delays.
The project to build this fertiliser plant is estimated to cost about RM5 billion and is located on a 166 acre land in Sipitang Industrial Park, Sabah.
The research house is uncertain at this point how long the disruption would delay the completion of the project but is optimistic that it should commence by FY16.
Analyst Alex Goh of AmResearch said this incident would not have any material impact on their forecast as they have not yet incorporated any of the significant contributions from the SAMUR project.
Goh adds that the recent weakening of the ringgit against the US dollar might have a slightly net positive impact on PChem’s revenues.
“...the weakening of the ringgit versus USD by 2% since 30 Sept 2013 may have a slightly net positive impact on PChem given its largely USD-denominated revenues,” said Goh.
At 10:09am, PChem was up 3 sen to RM6.74 per share with 108,200 shares traded.