CGS International Securities said Petronas Chemicals Group Bhd (PCG) could see significant benefits if Petroliam Nasional Bhd (Petronas) eventually takes full control of Pengerang Petrochemical Co Sdn Bhd (PPC).
In a research note, the brokerage said the move would be positive for PCG as PPC is expected to continue recording large losses.
The view follows Petronas’ recent statement that full ownership of PRefChem would allow the group to improve operational alignment and flexibility across its value chain.
CGS International said the statement suggests Petronas may eventually seek full integration of both Pengerang Refining Company Sdn Bhd (PRC) and PPC, collectively known as PRefChem.
Recently, Petronas and Saudi Aramco announced that Aramco would dispose of its 50% equity interest in PRC and PPC to Petronas.
Following the transaction, Petronas will fully own PRC, while Petronas and PCG will each hold a 50% stake in PPC.
According to CGS International, if PCG were no longer exposed to PPC’s operations, the company could return to focusing on its more profitable ethane- and methane-based feedstock business, instead of being tied to the loss-making naphtha-based operations in Pengerang.
The brokerage estimated that without its 50% stake in PPC, PCG’s core net profit forecast for the financial year ending Dec 31, 2026 could be 46% higher than current estimates, with further gains projected for FY2027 and FY2028.
However, CGS International noted that there is currently no immediate impact on PCG as the group still retains its 50% stake in PPC and is expected to continue working closely with Petronas at the Pengerang complex.
The brokerage also said PCG’s share price has recently faced pressure due to concerns over weaker petrochemical selling prices and feedstock prices, alongside ongoing plant turnaround losses at Kertih.
Despite this, CGS International maintained an “Add” rating on PCG with a target price of RM6.58, citing expectations of a strong earnings recovery in the second quarter of 2026.
It added that any eventual disposal of PCG’s stake in PPC to Petronas could further improve market sentiment towards the stock.
