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Investing.com - Morgan Stanley (NYSE:MS) upgraded Petronas Chemicals Group (KLSE:PCHEM) from Equalweight to Overweight on Tuesday, raising its price target to MYR4.30 from MYR3.83.
The upgrade reflects updated year-to-date price trends across chemicals and fertilizers, along with a revised target multiple of 8.5x, up from the previous 6.5x multiple.
Morgan Stanley values Petronas Chemicals using a sum-of-parts valuation that includes the company’s EBITDA and EBITDA relating to its stake in downstream chemical associates.
The higher multiple reflects the recovering cycle to below mid-cycle 2026 earnings, while maintaining a 7.0x multiple to value the associates, in line with chemical peers operating in similar product lines.
The firm’s valuation also incorporates Petronas Chemicals’ expected 2025 net cash position, with the overall approach using EV/EBITDA multiples to eliminate discrepancies caused by finance costs, depreciation, amortization, and depletion costs.
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