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A. Stotz Investment Research

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CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Equity Bottom-Up

Petronas Chemicals Group / Equity Bottom-Up

<ul>
<li>Low correlation, good price momentum, and low correlation with western stock markets relative to its sector</li>
<li>Stable demand from major global petrochemical end users is keeping utilization rates high, revenue up by 20% YoY in 2Q18</li>
<li>Longer-term growth should start realizing in 2019 as its RAPID project facilities gradually start commercial operations</li>
<li>Trades above ASEAN Materials at 18CE* 2.5x PB, ROE is in line with the sector, and PCHEM is net cash</li>
<li>Risks: Unexpected softening in crude oil price to depress average selling prices, delays in planned maintenance work, unplanned shutdowns</li>
</ul><p><em>* Consensus Estimates</em></p>


Low correlation, good price momentum, and low correlation with western stock markets relative to its sector
Stable demand from major global petrochemical end users is keeping utilization rates high, revenue up by 20% YoY in 2Q18
Longer-term growth should start realizing in 2019 as its RAPID project facilities gradually start commercial operations
Trades above ASEAN Materials at 18CE* 2.5x PB, ROE is in line with the sector, and PCHEM is net cash
Risks: Unexpected softening in crude oil price to depress average selling prices, delays in planned maintenance work, unplanned shutdowns
* Consensus Estimates

PCHEM (PCHEM MK): RAPID Project to Start Operations in 2019