KUALA LUMPUR (March 30): PETRONAS Chemicals Group Bhd (KL:PCHEM) rose to a near two-year high in a blistering rally that raised questions on how much further the stock can run amid the Middle East conflict.

Analysts, including Hong Leong Investment Bank and BIMB Securities, are now contemplating revisions to their target prices for PETRONAS Chemicals as the US-backed Israeli war against Iran marked its one-month milestone without any end in sight.

“We are still discussing whether to further revise our target price, pending our house view on oil prices and the intensity of the war,” said BIMB Securities analyst Nurzulaikha Azali, who maintained a 'hold' call on the stock.

Nurzulaikha had raised its target price last week for PETRONAS Chemicals by 64% to RM5.71, banking on better margins from higher product prices.

On Monday, the stock closed at its intraday high of RM6.13 — its highest level since July 2024 — up 33 sen, or 5.69%, from last Friday’s close of RM5.80, making it the fourth highest gainer on Bursa Malaysia.

At RM6.13, PETRONAS Chemicals is valued at RM48.69 billion. The counter saw some 27.67 million shares change hands. 

Shares of PETRONAS Chemicals posted their best monthly performance since the group’s 2010 listing, reversing declines of over 7% in February and 11% in January. The stock has more than doubled since the outbreak of the US-backed Israeli war against Iran.

The rally has lifted PETRONAS Chemicals’ share price far above more than half of the target prices set by 20 analysts covering the company that manufactures olefins, polymers, fertilisers, methanol and speciality chemicals. The average 12-month target price is RM4.82, according to Bloomberg.

Hong Leong Investment Bank analyst Thye May Ting said her target price of RM4.55 may be raised in line with management guidance that petrochemical prices are expected to stay elevated this year.

“While we may revise (our target price higher), we will maintain a ‘hold’ call, as the market has largely priced in” improvement to average selling prices in 2026 while there is “limited visibility” for 2027, she added.

Before the outbreak of the conflict in the Middle East, shares of PETRONAS Chemicals have been underperforming since 2025 amid persistent losses as product prices fell across the industry from a global glut.

Nomura, in a March 18 note, warned that “should the Middle East conflict ease materially, the structural overcapacity in the petrochemicals sector will persist and will not ease significantly” despite ongoing anti-involution policy efforts in China and capacity consolidation in South Korea.