Petronas Chemicals Group's maleic anhydride (MAn) plant in Gebeng.
PETALING JAYA: MIDF Research has upgraded its earnings estimates for Petronas Chemicals Group Bhd
(PetChem) following its investment in the construction of Asia’s largest advanced chemical recycling plant in Pengerang, Johor.
“In consideration of this update and the possible prospect of a better climate for the petrochemical market in calendar year 2024 in regards to the elevated Brent crude prices, we upgrade our earnings estimates for financial year 2024 (FY24) and FY25 up by 13% and 6%, respectively,” it said.
The research house also upped its target price on the company to RM7.61 from RM6.72 previously, with a “buy” call from “neutral” previously.
Its target price is based on pegging a price-to-earnings ratio of 18 times to revised 2024 earnings per share of 42.4 sen.
The plant, which will have a capacity of 33 kilotonnes per annum, is expected to be operational by 2026.
It is a collaboration between PetChem’s subsidiary and Plastic Energy Ltd while the project’s key shareholders include Petroliam Nasional Bhd, Employees Provident Fund and Amanah Saham Nasional Bhd.
MIDF said the plant is aligned with Malaysia’s Plastic Sustainability Roadmap 2021-2030 and the country’s ambition to reduce single use plastic.
It also addresses the increasing demand for sustainable packaging and the reduction of plastic pollution in Asia.
The plant’s primary purpose is to facilitate chemical recycling of plastic waste in Malaysia by converting end-of-life plastics into pyrolysis oil, which can then serve as a chemical feedstock for the production of environmentally friendly plastics of food-grade.
“This will also support the reduced dependency of feedstock imports for the process of certain petrochemical products in the future.
“We also believe this is the right step in reducing plastic pollution in Asia by increasing plastic waste recycling and expanding recycling infrastructure in the region,” MIDF Research said.
