Kuala Lumpur: Petronas Chemicals Group Bhd (PCG) shares experienced a significant drop in early trade on Bursa Malaysia after the company announced a decrease in net profit for the financial year ended December 31, 2024 (FY2024). At 10:10 am, the stock fell by 8.69 percent, or 36 sen, to RM3.70, with 56.91 million shares changing hands.

According to BERNAMA News Agency, in a filing with Bursa Malaysia on Friday, PCG reported a net profit of RM1.175 billion for FY2024, down from RM1.696 billion the previous year. However, the company saw a rise in revenue to RM30.67 billion from RM28.67 billion, attributed to increased sales volumes across its three business segments.

Maybank Investment Bank Bhd (Maybank IB) has maintained its “sell” recommendation on PCG, reducing its target price to RM3.06 from RM3.82. The bank noted that PCG swung to a core net loss in the fourth quarter of 2024 (4Q 2024), missing expectations, and consequently, it has cut its FY2025 and FY2026 net profit forecasts by 20 percent and 21 percent, respectively.

The bank attributed the revision to narrower product spreads and weaker profit margins in the olefins and derivatives (O and D) segment, primarily due to ongoing losses at Pengerang Petrochemical Company Sdn Bhd (PPC). In 4Q 2024, PCG’s O and D segment reported a Loss After Tax of RM86 million. Maybank IB also highlighted that PPC did not receive any ‘special discounts’ in the quarter as Pengerang Refining Company Sdn Bhd was unprofitable.

Maybank IB further warned that the consolidation of PPC’s losses into PCG’s financial statements is expected to impact earnings in FY2025. The bank expressed concerns about the continuing challenges in the petrochemical sector and noted that PCG’s valuations remain high at 24 times the revised FY2025 earnings per share, given the sector’s challenging outlook.