Petronas Chemicals reported a 1Q26 EBITDA beat driven by surging urea and methanol prices amid Middle East supply shocks. Goldman Sachs maintains a Neutral rating as the stock's valuation is currently trading at historical highs, pricing in the favorable spread environment.
Key Takeaways
- 1.Petronas Chemicals' 1Q26 core EBITDA of RM1.2bn exceeded consensus estimates by 5%, driven by a sharp recovery in product prices due to Middle East supply disruptions.
- 2.The Fertilizers & Methanol (F&M) segment saw a 49% QoQ EBITDA increase with 103% plant utilization as urea and methanol prices surged.
- 3.While the Olefins & Derivatives (O&D) segment remains loss-making, losses narrowed significantly despite a drag from Pengerang Petrochemical Company (PPC).
Table of Contents
- Strong Fertilizers & Methanol (F&M)
- Olefins & Derivatives (O&D) remains loss-making, though improving; PPC the key drag
- Specialties recovery largely sustainable
- 2Q26 operating rates decline on maintenance but EBITDA run rate looks stronger
- What to do with the stock
- Key upside/downside risks to our view
- Investment thesis - Petronas Chemicals Group
- Price Target Risks and Methodology - Petronas Chemicals Group
- Disclosure Appendix
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Authors
Nikhil BhandariJohn TsangRandy Lau
Securities
PCGB
Themes
Middle East Supply DisruptionGas-based Feedstock Cost Advantage
Regions
Asia PacificMalaysia