KUALA LUMPUR (June 26): Petronas Chemicals Group Bhd’s (KL:PCHEM) upcoming results could be “poor” due to a much larger currency translation loss and operational challenges, CGS International flagged.

Foreign exchange (forex) translation losses alone could total up to RM400 million in the second quarter ending June 30, 2025 (2QFY2025), according to CGS International’s estimates, which would be wider quarter-on-quarter and year-on-year.

Investors should just “write off” the results, though the next quarter could be better for earnings, CGS International said without providing a forecast for the quarter.

For the full FY2025, CGS International is forecasting net profit at Petronas Chemicals to fall to RM600 million from RM1.18 billion a year earlier.

The US dollar has lost nearly 5% against the ringgit, Petronas Chemicals’ reporting currency, from the end of March to date. Petronas Chemicals exports its products mainly in the US dollar and some of its borrowings are also denominated in the greenback.

Further, the Pengerang Integrated Complex was also offline for the entire quarter due to technical production issues since February from the lack of feedstock.  

Pengerang Petrochemical Company Sdn Bhd, a 50:50 joint venture with Saudi Aramco that operates the petrochemical plants at Pengerang, could report a wider operating loss in the second quarter, CGS International noted.

Petronas Chemicals’ olefins-and-derivatives division, meanwhile, was affected by unplanned shutdown and its fertiliser-and-methanol division could also be dragged by pitstops at its Bintulu and Labuan plants, the research house noted.

“If there is any rebound in earnings, we expect this to materialise in 3QFY2025,” CGS International said. The house also upgraded its call to ‘hold’ from ‘reduce’ following the recent decline in Petronas Chemicals' share price.

Shares of Petronas Chemicals have lost more than one-third of their value since the start of 2025 as investors and analysts turn increasingly bearish after a weaker-than-expected first quarter.

‘Sell’ and ‘hold’ together outnumber ‘buy’ calls 19 to two, according to analysts tracked by Bloomberg. The average 12-month target price is now RM3.34, relatively unchanged from the current share price of RM3.30.

Read also:
Petronas Chemicals extends decline as investors, analysts turn increasingly bearish after weak 1Q