It's been a good week for PETRONAS Chemicals Group Berhad (KLSE:PCHEM) shareholders, because the company has just released its latest quarterly results, and the shares gained 5.1% to RM9.08. Revenues were RM7.0b, 20% shy of what the analysts were expecting, although statutory earnings of RM0.24 per share were roughly in line with what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from PETRONAS Chemicals Group Berhad's 15 analysts is for revenues of RM28.1b in 2023, which would reflect a reasonable 3.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to drop 20% to RM0.79 in the same period. Before this earnings report, the analysts had been forecasting revenues of RM33.5b and earnings per share (EPS) of RM0.82 in 2023. Indeed, we can see that sentiment has declined measurably after results came out, with a real cut to revenue estimates and a minor downgrade to EPS estimates to boot.
The analysts made no major changes to their price target of RM10.27, suggesting the downgrades are not expected to have a long-term impact on PETRONAS Chemicals Group Berhad's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values PETRONAS Chemicals Group Berhad at RM12.10 per share, while the most bearish prices it at RM7.20. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that PETRONAS Chemicals Group Berhad's revenue growth is expected to slow, with the forecast 2.6% annualised growth rate until the end of 2023 being well below the historical 6.5% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.6% annually. Factoring in the forecast slowdown in growth, it looks like PETRONAS Chemicals Group Berhad is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for PETRONAS Chemicals Group Berhad going out to 2024, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for PETRONAS Chemicals Group Berhad you should be aware of, and 1 of them makes us a bit uncomfortable.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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