Petronas Chem down after deal with BASF falls through

KUALA LUMPUR, Jan 23 – Shares in Petronas Chemicals Berhad were down after the firm’s preliminary agreement with Germany’s BASF for a chemical plant in Johor state fell through.

“This is definitely a negative surprise as BASF is the key partner of Petronas Chemicals,” Kenanga Research said in a note yesterday.

The plant was to have been part of a RM60 billion project which falls under an ambitious plan to turn Malaysia into a high income nation by 2020. Petronas Chemicals is expected to look for new partners for the venture.

Kenanga, however, said the development is unlikely to affect Petronas Chemicals’ financials in the near term. The news is not expected to affect the company’s other ventures.

Barclays Capital meanwhile said a fall in Petronas’ share price presents a good buying opportunity as the firm offers good value.

Barclays has a target price of RM7.40 per share for Petronas Chemicals and maintains an “overweight” rating on the stock while Kenanga has a target price of RM6.86 per share and an “outperform” call.

At 10:21am Petronas Chemcicals was down 2.25 per cent at RM6.08 per share while the benchmark composite index was down 1.11 per cent at 1617.26 points.

Kenanga starts Perdana Petroleum with ‘outperform’ Kenanga Research initiated coverage on offshore marine services provider Perdana Petroleum Bhd with an ‘outperform’ call, citing the company’s strong order book and positive earnings.

“Perdana’s turnaround in its 2012 net profit and the slew of offshore marine contracts awarded since the beginning of the year has led us to believe that the industry is back on track,” said Kenanga in a research note yesterday.

The brokerage pegged a target price of RM1.62 for Perdana, which it said implies a 38 per cent upside to the stock’s current levels.

“We like the stock for its optimal product mix and young fleet,” said Kenanga. Perdana’s diverse asset fleet comprising anchor handling tug supply and accommodation marine vessels are able to serve different parts of the value chain, said Kenanga.

Shares of Perdana were down 2.56 per cent at RM1.14 as of 9:14am, as stocks on the local bourse continue to slide on the back of election jitters. – Reuters



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