Malaysia’s PETRONAS Chemicals faces continued headwinds amid volatile earnings and weak polyolefin prices
Shares of PETRONAS Chemicals Group Bhd continued to lose ground after analysts cut their forecasts following a weaker-than-expected third quarter of 2025 and persistent volatility across key business lines
Shares of PETRONAS Chemicals Group Bhd continued to lose ground after analysts cut their forecasts following a weaker-than-expected third quarter of 2025 and persistent volatility across key business lines. The group’s widening net losses, driven by prolonged weakness in the olefins and derivatives (O&D) segment and higher joint-venture contributions, marked its worst quarterly performance since listing in 2010.
Analysts now project a core net loss of MYR 378 million for fiscal 2025, a sharp reversal from earlier expectations of a MYR 900 million profit. Core net profit estimates for 2026 and 2027 have also been reduced by 55% and 58% respectively, reflecting lower assumptions for olefin prices and softer EBITDA margins as global oversupply weighs on spreads.
The consolidation of loss-making Pengerang Petrochemical Co Sdn Bhd has added further earnings volatility, prompting analysts to shift valuation metrics from price-to-earnings to price-to-book and to maintain a bearish stance with a lower target price of MYR 2.38 per share. Forecasts for 2025 have been pushed deeper into loss territory, with expected losses widened to MYR 484 million from MYR 316 million, underscoring the impact of weak polyolefin spreads and higher joint-venture losses.
Still, some see potential for gradual improvement. China’s “anti-involution” policy is expected to help ease structural oversupply in polyolefins, with early signs of price stabilisation and firm speciality chemical margins pointing to a possible recovery in 2026.
Others take a more measured view, noting quarter-on-quarter gains in both the O&D and speciality segments since the second quarter of 2025. They argue that the stock’s 37% year-to-date decline has already priced in much of the downside risk, supporting a shift to a neutral recommendation with an unchanged target price of MYR 3.01.
Overall, the outlook for PETRONAS Chemicals remains cautious. Depressed polyolefin prices, operational uncertainties at the Pengerang Integrated Complex, and global oversupply continue to pressure near-term earnings. While some segments are showing incremental improvements, the broader sector downcycle has yet to bottom, leaving investors bracing for continued volatility.
Written by: Aiman Haikal
Edited by: Farid Muzaffar