KUALA LUMPUR (Feb 11): Petronas Chemicals Group Bhd fell as much as 1.3% among top decliners after the firm said fourth quarter net profit dropped 50% from a year earlier. The weaker results have invited analysts' downgrades for the company.

At 9.59am, Petronas Chemicals was traded at RM6.69 with 231,100 shares done. The stock had earlier fallen as much as nine sen to RM6.66.

TA Securities Holdings Bhd wrote in a note today that the firm had downgraded its earnings forecast for Petronas Chemicals by 13% and 3% for financial years ending December 31, 2014 (FY14) and 2015 respectively.

The earnings downgrade which takes into account lower utilisation rates for Petronas Chemicals' production facilities, and higher energy cost, has in turn led to a downward revision for the stock.

"We downgrade our Hold call on PChem to Sell with a reduced TP (target price) of RM6.28 (previous: RM7.21) based on unchanged 14x FY14 P/E. We are concerned that the group will be plagued by extended maintenance activities and feedstock supply shortage in FY14 that prevents arecovery in production volumes.

"In addition, a soft outlook for petrochemical prices, coupled with heightened maintenance costs will also weigh down on the group’s bottomline," TA said.

TA's note follows the announcement of Petronas Chemicals' fourth quarter and full-year financials yesterday.

Petronas Chemicals said net profit fell 50% to RM450 million in 4QFY13 from RM902 million a year earlier. Revenue declined to RM3.35 billion from RM4.38 billion.

Full-year net profit dropped to RM3.15 billion from RM3.52 billion a year earlier. Revenue was lower at RM15.2 billion compared to RM16.6 billion.

Despite a weaker bottom line, Petronas Chemicals plans to pay a dividend of 12 sen a share for the quarter in review. This brings full-year FY13 dividends to 20 sen a share.

Today, TA said Petronas Chemicals' FY13 core net profit of RM3.3 billon was within TA's forecast but below consensus estimates.

Petronas Chemicals' FY13 core net profit accounted for 100% and 89% of TA's and consensus full-year forecast respectively. "Core net profit excludes a one-off amortisation charge of RM56mn recognised in 3Q13 and net FX (foreign exchange) losses," TA said.

For comparison, Kenanga Investment Bank Bhd analyst Teh Kian Yeongsaid Petronas Chemicals' FY13 net profit of RM3.15 billion came in at 13% and 14% below Kenanga's and consensus forecast respectively.

Looking ahead, Teh said Petronas Chemicals' FY14 earnings outlook remained challenging due to its plant maintenance.

"We are keeping our FY14 estimates unchanged for now, pending a conference call with management this evening. TP is maintained at RM6.97/share, based on CY14 14x PER which is its 2-year average valuation," Teh said.

Kenanga has kept its "market perform" call for Petronas Chemicals shares.