PCHEM – Fundamental Analysis (10 May 2015)

PCHEM Analysis:-

Excel – http://1drv.ms/1AP2ul4

Notes – http://tinyurl.com/mtrh67a

My View:-

  • Valuation:
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.341) – Fair value 6.34 (Fair Value Uncertainty: HIGH)
        • R4Q (EPS: 0.29) – Fair value 5.4 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY15 (EPS: 0.324) – Fair value 6.02 (Fair Value Uncertainty: HIGH)
        • FY16 (EPS: 0.368) – Fair value 6.85 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (5.86): 0.315
  • Valuation of PCHEM is a bit attractive.
  • PCHEM’s 1Q15 earnings slumped by -19%yoy to RM605m. The decline was largely due to the drop in profitability of the olefins and derivatives segment. While product prices are expected to improve latter this year, uncertainty v
  • 8 May 2015 – PCHEM’s group plant utilisation rate (PUR) in 1Q15 improved remarkably to 90% from 80% a year earlier. This was above the world-class performance threshold of +85%. Segment-wise, the PUR of olefins and derivatives was at 95% whereas the fertilisers and methanol division chalked a PUR of 87% in the quarter.
  • 8 May 2015 – The Sabah ammonia urea plant, which would increase production capacity from 1.4 million tonnes per annum (mmtpa) to 2.6 mmtpa, is on track for completion by 1QFY16.
  • 8 May 2015 – Additionally, PCHEM will incur borrowings going forward to fund its future projects, including the refinery and petrochemicals integrated development, with a maximum EBITDA level of 2 times.

Latest Financial – Q1 2015 Financial Report(7 May 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4729525

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

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