KUALA LUMPUR: CIMB Securities Sdn Bhd (CIMB Securities) has revised down its forecasts for Petronas Chemical Group Bhd (PetChem) after the olefins and derivatives (O&D) segment underperformed and joint venture losses increased.
The research house has revised its financial year 2025 forecast on the company, now projecting a core net loss of RM432.9 million compared with its earlier estimate of an RM693.3 million core net profit.
It said the weakness in O&D product spreads is expected to continue into the fourth quarter of 2025, as global petrochemical oversupply keeps average selling prices (ASPs) under pressure.
“We expect weak margin conditions in the O&D segment to persist through 2026 and 2027, underpinned by incremental new capacity from China, further intensifying the global oversupply situation.
“Furthermore, 2026 will also be heavier in terms of turnaround activity, with plant turnarounds scheduled at ABF Fertiliser Sabah in the first quarter of 2026, the integrated Kertih complex in the second quarter, and PCFK plus PC Methanol in the third quarter, limiting full-year utilisation to 88 per cent to 90 per cent,” it said.
PetChem remains positive on its fertilisers and methanol (F&M) division, supported by stronger urea prices during India’s planting season and tighter supply in the region.
“Overall, we expect 2026 to be a mixed year, with sustained margin headwinds in the O&D segment partly cushioned by resilient F&M segment contributions.
“Consequently, we have trimmed our financial years 2026 and 2027 earnings estimates by 62.4 per cent and 32 per cent, to RM315.5 million and RM679.9 million, respectively,” it said.
After the earnings downgrade, CIMB Securities lowered its target price for PetChem to RM3.41 from RM3.45 while maintaining a ‘Hold’ rating.
The research house noted that South Korea‘s plan to reduce naphtha cracker capacity by 2.7–3.7 million tonnes per year and China‘s efforts to upgrade old petrochemical plants show some regional supply discipline.
However, it added that these cuts are not enough to balance the large new capacities coming online, especially from China, the Middle East, and Southeast Asia.
“As a result, we expect the global supply overhang in the O&D space to persist in the near term. For PetChem, this means product spreads may remain subdued, limiting upside potential to ASPs and earnings,” it added.
© New Straits Times Press (M) Bhd
