By Ying Xian Wong

Petronas Chemicals Group shares fell as analysts cut their target prices, casting doubts on the company's near-term outlook after quarterly profit missed expectations.

Shares of the Malaysian petrochemical company slid as much as 5.2% and were recently 2.7% lower at 6.80 ringgit, on track for their biggest one-day percentage loss in three months. Malaysia's benchmark Kuala Lumpur Composite Index was 0.3% higher on Tuesday.

Petronas Chemicals said Monday afternoon that its fourth-quarter net profit fell sharply to MYR112 million ($23.4 million) from MYR481 million a year earlier, weighed by lower product prices and sales volume. Quarterly revenue declined 17% to MYR7.21 billion.

TA Securities on Tuesday cut Petronas Chemicals' target price to MYR7.45 from MYR7.47 while keeping a hold rating, citing the company's challenging outlook in the near term given still-weak demand.

However, product spreads could improve once demand picks up by the end of 2024, TA analyst Ong Tze Hern said in a research note. He attributed the expectations of higher demand to China's recent interest-rate reduction, aimed at bolstering its sluggish economy, and advanced economies' potential rate cuts in the coming months as inflation approaches central banks' targets.

Affin Hwang Investment Bank pointed to the chemicals market's sluggish recovery as it lowered the target price on Petronas Chemicals to MYR4.90 from MYR5.00 with a sell rating.

Product prices may remain subdued amid increased supply availability from new capacities in China and cautious demand in downstream industries, Affin Hwang analyst Steven Chan said in a note. Still, Petronas Chemicals could post sequentially better first-quarter earnings, supported by an improved plant utilization rate, he said.

Maybank Investment Bank maintained a sell rating on the stock but trimmed the target price to MYR5.05 from MYR5.75 after the earnings miss.

Write to Ying Xian Wong at

(END) Dow Jones Newswires

02-26-24 2159ET