OSK Research maintains Neutral on Petronas Chemicals

According to the OSK Research today, its still maintaining Neutral on Petronas Chemicals Group Bhd and retains its FY11-12 forecasts following the latest corporate development involving its parent Petroliam Nasional Bhd and BASF.

Based on the MoU last Friday, Petronas and BASF will undertake a joint feasibility study to produce specialty chemicals in Malaysia and are considering investing RM4.0 billion (€1.0 billion).

OSK Research target price for the company remains at RM5.51 based on a PER of 16 times FY12 EPS.

The research house said BASF is an established petrochemical company and it would also be more commercially viable to jointly undertake the investment since the specialty chemicals may need RM4.0 billion in investments.

It also said that the development of a new specialty chemical products portfolio is in line with Petronas Chemicals’ goal to further grow the downstream petrochemical business as part of its integrated plan to be a key player in the region as well as to spur domestic investment in the O&G and petrochemical industries.