PetChem faces ongoing oversupply, HLIB cuts earnings forecast
Hong Leong Investment Bank Bhd (HLIB) said the group's specialty segment is also likely to be weighed down by weak residential construction demand, rising costs, and persistent oversupply.
"The creditor reliability test for Pengerang Petrochemicals Company Sdn Bhd (PPC) commenced on June 26, with the plant currently operating at a utilisation rate of around 80–90 per cent.
"Quarterly losses before interest, taxes, depreciation and amortisation at PPC narrowed slightly in the second quarter of 2025, improving from RM140 million to RM135 million.
"Ongoing impairment testing could further result in asset write-downs if market conditions fail to improve, reflecting lower projected cash flows and diminished asset recoverable values," it added.
As such, HLIB slashed its financial year 2025 (FY25), FY26 and FY27 forecasts by 43 per cent, 27 per cent, and 20 per cent, respectively, factoring in lower plant utilisation and sales volumes for the olefins and derivatives segment.
The firm expects the segment to remain loss-making due to subdued product prices amid persistent regional oversupply, weak downstream demand, and continued margin compression from unfavourable paraxylene–naphtha spreads.
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