Broker Name: CGS International Securities
Date of Report: March 5, 2026
Excerpt from CGS International Securities report.
- Report Summary:
- Petronas Chemicals Group (PCG) is set to benefit significantly from the closure of the Strait of Hormuz due to the US/Israel-Iran war, which has disrupted 20-30% of the world’s seaborne oil, LNG, and LPG trade.
- Global petrochemical prices have surged, with naphtha up 26% and spot LNG prices rising more than 50%, putting naphtha-based producers at a disadvantage and likely causing a 20-25% reduction in global petrochemical production and demand.
- PCG’s advantage comes from sourcing domestic Malaysian gas feedstocks at stable and favorable prices, insulating it from the turmoil affecting competitors dependent on Middle Eastern feedstocks.
- Negative impacts are expected to be limited to PCG’s Pengerang plants, which rely on imported crude; losses here are forecasted but are outweighed by gains at Kertih O&D and the Fertilisers & Methanol (F&M) divisions.
- The analyst upgrades PCG from Reduce to Add and raises the target price to RM4.45, with FY26F forecasted to return to a small net profit (RM143m), reversing previous losses.
- Product price increases for urea, methanol, and polymers are expected to sustain for at least six months, even if the war resolves quickly, due to supply chain disruptions and restocking needs.
- PCG’s ESG efforts include aiming for net zero emissions by 2050, investing in advanced chemical recycling plants, and pursuing sustainable methanol production through innovative projects.
- Risks include a quick resolution of the conflict and reopening of the Strait of Hormuz, which could reverse the supply squeeze and price gains.
- PCG is positioned as a beneficiary among Asian petrochemical producers, with strong financials and market dominance if competitors like Lotte Chemical Titan face operational disruptions.
- The report includes financial forecasts, key ratios, and sector comparisons, highlighting PCG’s resilience and growth potential amid geopolitical volatility.
Above is an excerpt from a report by CGS International Securities. Clients of CGS International Securities can be the first to access the full report from the CGS International website : https://www.cgs-cimb.com
