After the successful listing of MMHE, Petronas is going ahead with the listing of another subsidiary - Petronas Chemicals Group Bhd (PCG). The IPO, which could raise as much as RM13.02bn (US$4.2bn), would be the largest in Southeast Asia, according to term sheet.
Below is the summary of the IPO:
- PCG is one of the leading integrated petrochemicals producers in Southeast Asia region, with 45% of revenue derived locally.
- Better profit margin in rising crude oil environment as prices of raw material was supplied by Petronas.
- The management has earmarked to 50% payout of its earnings, which translates to a dividend yield of about 4%.
Valuations...
At retail price of RM5.05, the historical price-earnings ratio (PER) works out to be about 16 times.
Upon listing...
- EPF and Kumplan Wang Persaraan will be cornerstone investors.
- To expand its business and synergistic-growth acquisitions for the next 5 years.
- To consolidate its petrochemicals activities to increase the efficiency and profitability of its operations.
- To expand its production capacity via plans to develop a Greenfield ammonia and urea production facility in Sabah
Top 5 KLCI stock?
With market cap of around RM40bn, PCG is set to be among top 5 stocks on KL market. Thus, register as a member of KLCI, right behind CIMB, Maybank, Sime Darby and Public Bank.
Conclusion:
Given the lukewarm respond to MMHE listing, PCG will set to repeat the spectacular debut listing. Undeniably, this is good BUY (if you can get it). However, I do not view this as an trading stocks given its mere 4% retail portion.
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