KUALA LUMPUR: RHB Research remains bullish on the near-term earnings of Petronas Chemicals Bhd as the long-awaited Pengerang Integrated Complex kickstarted in May.

       The valuations of the petrochemicals producer, which booked solid quarterly earnings in 1Q22, continues to be attractive below its five-year mean, said RHB.

       This is despite the research firm anticipating average selling prices to moderate moving forward, in line with its forecasts for the price of crude oil.

       According to RHB, the petrochemical plant at Pengerang is expected to commence operations in phases following the PIC start-up in early May.

       "Management is targeting the plant to achieve 50-60% utilisation in 2H22 and subsequently ramp up to the optimal level of 90% in 2023.

       "We believe the plant will record minimal losses in 2H22 during the ramp-up phase," it said.

       During this time, RHB expects petrochemical prices to remain elevated due to the geopolitical uncertainties and high gas prices.

       In addition, the the broker expects the acquisition of Perstorp for RM7bil to enable the group to strengthen its petrochemicals portfolio and selectively diversify into derivatives and speciality chemicals.

       For the recent past quarter, Petronas Chemicals recorded core earnings of RM2bil, after stripping out a RM30mil forex gain and RM21mil inventory write-back.

       The performance came within RHB"s and consensus expectations at 28% and 29% of their full-year estimates respectively.

       "We maintain our earnings estimates and TP at MYR12.21, pegged to an unchanged 9x FY23F EV/EBITDA, ie its 5-year mean," said RHB, while reiterating its "buy" call.