KUALA LUMPUR: Petronas Chemicals Group Bhd (PetChem) said its top and bottom line growth will be in “healthy mode” next year, with prices of its chemical products seen firming up.
Speaking at a media briefing yesterday, its president and chief executive Dr Abd Hapiz Abdullah said PetChem’s growth is also dependent on the state of the global economy, especially in the Asia-Pacific where most of its products are exported to.
“This year, the impact of the European crisis had a crippling effect on the economies of China, India and also Southeast Asia. So the outlook next year is going to depend on how far the economies of China and India pick up,” said Hapiz.
PetChem exports almost 60% of its products, 70% of which goes to Southeast Asian countries, he said.
With the opening up of Myanmar and the forthcoming ascension of Cambodia into the World Trade Organisation (WTO), Hapiz said PetChem is exploring ways on how the group could participate in these markets.
He said as both Myanmar and Cambodia are largely agricultural countries, there should be an opportunity for PetChem to export its fertiliser chemicals such as urea, ammonia and methanol to these countries.
Fertiliser chemicals make up about 30% of PetChem’s annual revenue of between RM15 billion and RM16 billion. Its olefin and derivatives business makes up the larger share of PetChem’s annual revenue.
Olefin is used to produce polymer, the chemical used in the production of plastics and plastic-based products. PetChem is the fourth largest polymer producer in the world in terms of production capacity.
PetChem has been touted to be the proxy for its parent Petroliam Nasional Bhd’s U$20 billion (RM61.2 billion) refinery and petrochemical integrated development (Rapid) project which is being built in Pengerang, Johor.
Since early this year, several heads of agreement have been signed between Petronas and international petrochemical companies including Germany’s BASF, Japan’s Itochu and Thailand’s PTT Global Chemical.
The Rapid project will enable Petronas, through PetChem, to enhance its petrochemical products portfolio through the production of specialty chemicals.
Hapiz said the group has put its overseas plan on hold for the moment.
This is because apart from having to commit to the Rapid project, PetChem is also building the US$1.5 billion ammonia and urea plant in Sipitang, Sabah.
PetChem shares closed 10 sen higher at RM6.19, having rebounded from a year-to-date low of RM5.66 on Dec 3.
Maybank Investment Bank has upgraded its call on PetChem to “buy” from “hold” with a target price of RM6.50 per share.
This article first appeared in The Edge Financial Daily, on Dec 19, 2012.