PCHEM – Fundamental Analysis (24 Mar 2015)

*** In Annual Report 2014, PCHEM made a slight change to Cash Flow Statement. I have updated the figures. The impact is very slight change to valuation.

PCHEM Analysis:-

Excel – http://1drv.ms/1FNgAcR

Notes – http://tinyurl.com/mtrh67a

My View:-

  • Valuation:
    • 10-Y DCF:
      • Good Scenario: 5.05 (Fair value uncertainty: HIGH)
      • Base Scenario: 4.36 (Fair value uncertainty: VERY HIGH)
      • Bad Scenario: 3.79 (Fair value uncertainty: VERY HIGH)
      • Ugly Scenario: 3.33 (Fair value uncertainty: EXTREME)
      • At current price (5.12), based on RDCF, assumption of FCFF growth rate in the next 10 years is 12.4%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.341) – Fair value 6.15 (Fair Value Uncertainty: MEDIUM)
        • R4Q (EPS: 0.308) – Fair value 5.56 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY15 (EPS: 0.329) – Fair value 5.94 (Fair Value Uncertainty: MEDIUM)
        • FY16 (EPS: 0.373) – Fair value 6.73 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (5.12): 0.284
  • Valuation of PCHEM is quite attractive now.
  • Though revenue surged in 4Q14, it was unable to lift 12M14’s revenue as the latter fell by 4% y-o-y to RM14.59 billion vs. RM15.2 billion in 12M13, hampered by heavy maintenance including several statutory turnarounds coupled with softening in prices for both the olefins & derivates and fertilisers & methanol in 2Q14.
  • The Group recorded improving operational performance during the quarter with higher plant utilisation rate of 88% compared to 66% in 4Q14. The stronger performance was attributable to completion of heavy statutory turnaround and maintenance activities, improved methane gas supply and utilities supply as well as better plant reliability across both segments.

Latest Financial – Annual Report 2014 (19 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1908181

At the time of writing, my family member owned shares of PCHEM.


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