Earnings Call: Q1 2021

May 27, 2021

Good day, and thank you for standing by. Welcome to the Petronas Chemicals Group Analyst Briefing for First Quarter 2021 Conference Call. And at this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. And please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today. First speaker for today, Ms. Alya. Please go ahead. Thank you, Annie. Hello, so much for ladies and gentlemen. Welcome to Petronas Chemicals Group's Berhad Analyst Briefing for the Q1 financial results for our financial year 2021. I'm Alia, Head of Investor Relations. Thank you for joining our call this evening. We apologize for the 5 minutes late start. You should by now be able to access and download As a health and safety precaution, today's briefing is conducted fully virtually, whereby all our management are attending remotely from our homes. As such, we would like to apologize in advance for any delays or glitches we may experience. Ladies and gentlemen, we are pleased to have the PCG Group Senior Management present today, led by Managing Director and Chief Executive Officer, Datuk Sazali Hamza, who will give highlights of the group's performance. As usual, our other speakers for today will be Cheaz Lee, our Chief Financial Officer and Chekabe, our Chief Manufacturing Officer and Chek Shaqil, our Chief Commercial Officer. Also present today is Nshith Agba, our Head of Strategy, Planning and Ventures. I shall now hand you over to Datuk Tazewale for the performance highlights. Thank you, Alia. Good evening, ladies and gentlemen. Thank you for joining us today. After the lows that we saw in the first half of twenty twenty, it has been released to see the economic rebound that took place in the second half of the last year continued into 2021. GDP for Q1 2021 was recorded at 3.31% compared to the negative 2.8% last year. Similarly, PMI expanded to 54.2% compared to 48.4% last year on positive base in development, easing operations as well as positive business outlook. With the return of business, the benchmark brand crude oil averaged 22% higher this year at USD60 per barrel compared to USD50 per barrel in the Q1 last year. It further supported by supply reduction following voluntary production cut by OPEC plus members, supply disruption in the U. S. Following an extreme cold weather in the Q1 or early of this year, which also impacted petrochemical product supply and rising years of tension in the Middle East. Following the higher crude oil price and improved economy, petrochemical product price averaged higher due to by higher feedstock cost and healthy demand amid supply tightness. While in all, we saw a much improved market year on year. Ladies and gentlemen, the COVID-nineteen pandemic was a strong reminder on the need to focus on long term sustainability over short term profit. As we continue to refine our sustainability framework, we will continue to share our journey with you based on the 3 pillars of our sustainability agenda that we have shared earlier, people, planet and profit. While we are ensuring our business sustainment and growth, we measure the energy intensity or energy use against our operation. This quarter was recorded 3% lower energy intensity at the same time recorded 4% lower BU at 90% compared to the same quarter 2020 as we undertook turnaround activities at some of our facilities in quarter 1. And this was a direct reduction in energy consumption given that we have some facilities offline during this period. So moving forward, we will continue to monitor and ensure reduction of energy used through our energy and loss management system, which aim to optimize energy use in our facility. Next, we look at our second pillar, which is planet, where we monitor our greenhouse gas emission intensity and volume. Year on year GHG volume is 8% lower and GHG emission intensity was also lower at 4% as compared to previous quarter. Our recycling rate fell to 72% in Q1 2021 compared to 85% in Q1 2020. This is mainly because of we collect higher volume of non recyclable waste during the plants and other activities at PC MTBE HBH as well as PC Metanol Plant 1. Several recycling opportunities have been identified to ensure that we reach our year end target of 81% recycled the weight that we generate. On PIPEL, we focused in the early part of the year on the planning and coordination of our TSR program. The planning cycle includes a number of engagements with ministries, government agencies, NGOs, trade associations and partners to discuss the coordination of the upcoming programs, which are scheduled to kick off in the Q2 of the year. Our program continues to focus on the environment, community well-being and development as well as education. Some of our key programs include our signature EcoCare, which is the main goal of rehabilitation along the table. For community development, we continue to advocate safety by sharing and educate on the safety handling of chemical at school. Adding to this, we will continue with our community relief program. And under Our aim is to reach at least 10,000 community members by end of the year. This also includes assistance that we also give throughout the pandemic COVID-nineteen period. While continuing with the program we have identified, we are also working to develop our net zero emission by 2,050 roadmap in line with Pekana's sustainability agenda. This will be a big part of our sustainability journey moving forward. And this roadmap, we target to compete at least by end of this year. Ladies and gentlemen, moving on to our performance for the quarter. As I mentioned earlier, improvement we saw in the second half of twenty twenty have continued into the Q1 of this year. As guided late last year and even earlier this year, in 2021, we begin another 3 year cycle of heavy turnaround annually. During the quarter, we started the turnaround operation for the PDH unit at PC MTBE and PC methanol plant. And for PDH unit, we coordinate closely with our partner BASF for BPC plant where they also shut down at the same time to reduce the amount of total duration of the whole value chain. Both turnaround were conducted while observing strict HSE and COVID-nineteen SOP on-site. As you're aware, this turnaround was conducted during the peak period of COVID-nineteen where a lot of effort had been made to ensure that the disruption is not severe to execute our turnaround. As a result of the 2 turnaround and proactive maintenance work at our urea unit line utilization for the quarter was recorded at 90% compared to 94% in the corresponding quarter. Consequently, production volume fell 5% year on year at 2,500,000 tonnes due to this turnaround of the 2 plants. Sales volume was comparable year on year as bad weather caused some December 2020 shipment to spillover into 2021. Following that, I am very happy to share that our revenue for the quarter rose 20% to RMB4.7 billion mainly due to higher product prices. EBITDA and PAT more than doubled to RMB1.7 billion and RMB1.5 billion, respectively, on expanded product margin and higher share of profit from JV and associates. We recorded a healthy EBITDA margin of 36% for the quarter. For further detail of the financial performance, I would like now hand over to PJ Adli further elaborate on our financial performance. Vijay Adli? Thank you, Doctor. Azali. Ladies and gentlemen, very good thank you for joining us. So, let's start with the group performance, financial performance on Slide number 6. So let's start with the comparison for the performance for the Q1 2021 against Q1 2020. So as previously mentioned by Ritu Sathali, Q1 2021 was exceptionally better quarter overall. At plant utilization of 90%, we were lower compared to the same period last year mainly due to the maintenance activities undertaken during the quarter. Although production volume was lower, our sales volume was comparable and in light of this group revenue increased by about RM800 1,000,000,000 or 20 percent to RM4.7 billion boosted by higher product prices. Our EBITDA surged to RM1.7 billion mainly contributed by higher spread and write back of inventory value. And as a result, our EBITDA margin increased to RMB0.36 compared to 20% in the same quarter last year. Our PAT, profit after tax tripled to RM1.5 billion following higher EBITDA. So moving on to Group's financial performance against preceding quarter, that is Q4 2020. So on the operation front, our group recorded a lower plant utilization rate of 90% compared to 94% in the preceding quarter, mainly due to maintenance activities undertaken during the quarter. As a result, our both production and sales volume were decreased. Nevertheless, if you will compare quarter to quarter, our group revenue increased by more than RM800 1,000,000 or 22% boosted by higher product prices. Our EBITDA improved by close to half close to 50% to IH1.7 billion due to higher spread, lower maintenance costs and write back of inventory due to higher net deliverable value. Our profit after tax increased more than 100% quarter over quarter at RMB1.5 billion following higher EBITDA. So ladies and gentlemen, in the interest of time, I will not go through the group performance by segment as much of this analysis overlaps with what I've just mentioned within the group. So as is our practice, we will provide the slides on the group performance by segment at the end of the deck for your own consumption. So if you have any further clarification, I will gladly provide further information at the end of this presentation. So moving on to the balance sheet and cash flow on Slide 78. So there's not much major changes with regard to our balance sheet. Few things I want to mention at least what happened during the quarter is the total asset increased by RMB1.5 billion. Our total asset stood at RMB41.3 billion. This primarily driven by 2 things. 1 is the higher cash and cash equivalents generated mainly due to profit generated during the period. Our cash balance at close to about RM700 1,000,000 over this period. Secondly, there's a higher property, plant and equipment mainly due to CapEx spend on PIC, Petrochemical Posala Integrated Complex as well as the turnaround cost incurred during the quarter. Also to note that our trade receivable balance increased slightly in line with higher revenue. Nevertheless, our over dues in terms of total credit receivable balance is about 1% to 2% of total receivable balance, which very manageable. So the cash in term of cash, moving on to Slide number 8, our cash generated from operations, CFFO stood at RM1.4 billion, which is 80% higher compared to the same period last year. In terms of net cash in investing activities, it was primarily driven for the CapEx spend on Panorama as well as the turnaround activities. For the cash flow used in financing activities primarily due to the interim dividend that we paid in March amounting to RMB560 1,000,000. So at the end of the 3 months period, our cash balance remains strong at approximately RMB13.4 billion. So that is all on the financial performance for the Q1 of 2021. So I would like to hand over the session to Mr. Kabi to highlight on the manufacturing segment. Over to you, Kabi. Thank you, Mr. Azli. Good afternoon, everyone. Gabby here. Let me share the operational highlights for the quarter. Our operation in quarter 1 was doubled despite turnaround at PDH plant in Geibeng and Metano plant 1 in Labuan. We recorded a quarter performance of 90% plant utilization following good reliability in Olefin and Derivative segment. Ethylene producer, namely PC Olefin and PC Ethylene, sustained high reliability without any shutdown activity for the quarter. However, the Q1 of 2021 utilization rate at Fertilizer and Methanol segment was impacted as our urea facilities required corrective maintenance. Through planned threat and wet active management program, this corrective maintenance activity has been completed With current focus is to continue running towards sustainable operation. We are expecting greater urea volume in the following months. Next, for Olefin and Derivative segment, plant utilization performance for the quarter was high at 100% despite plant turnaround at our PDH plant. The turnaround was executed in compliance with standard operating procedure, SOP, following Movement Control or the MCO. We are very strictly follow the procedure in case of the COVID-nineteen happening seriously in Malaysia. And high ethylene production was recorded at PCethylene, PC Olefin and PCethylene were operating well, with reliable ethene supply, resulting in convertible ethene volume for the quarter. So next, for fertilizer and methanol. Line utilization for fertilizer and methanol segment for the quarter was at 84%, which was lower compared to preceding and corresponding quarter. This was due to several activity conducted at our facilities during the quarter such as turnaround at PC Metano Plant 1. Steps in early March, turnaround was conducted with no serious safety incident recorded. Next was maintenance activity at all Urea plant, namely ABF, PC Fertilizer Kedah and PC Fertilizer Sabah. Next, moving on, on the progress of our project, PIC Petchem. As for PIC Petchem, the objective remains to achieve safe and successful start up and ultimately stable and sustainable operation. This is the most critical milestone in completing the project. In order to achieve this, PIC management implemented targeted Green Bubble, called TGB, initiative with the intent to protect everyone in PIC including their family members by proactively detecting COVID-nineteen cases during the quarantine phase and prevent the spread to work areas. The targeted green bubble initiative provided confidence to workers and family members that PIC is safe and great workplace to work. Next, for conclusion, quarter performance, we sustained 90% plant utilization for the quarter. We achieved strong performance for Olefin and Derivatives segment without any shutdown activities at our ethylene production facilities. We also successfully completed turnaround at PDH plant in Ghebeng and Mentano plant in Labuan, together with completion of corrective maintenance activity at Urea plant. We are expecting greater production volume for the group in the following months. And lastly, we are strengthening our PIC startup activities by implementing targeted Green Blue initiative without neglecting our process safety rules. Moving forward, we are going to carry out our plant turnaround at fertilizer plant in Kadah and Bintulu and plant shutdown activity at 1 of our ethylene plant in Kerte. That's all I have for the operational highlights. I would like to hand over to Mr. Shaker for the market performance and outlook. And over to you, Mr. Shaqe. Thank you, Jakabe. Good evening. Shaqeel here. Let's proceed with the market highlights. In Q1, 2021 product prices were higher compared to previous quarter amid improved energy market plant outages mainly from Middle East feedstock shortages and U. S. Experiencing intense polar storm as well as regional production cuts. This is further supported by healthy downstream demand as global economy slowly recovers. Now let's move on to the market outlook. The 3 months forecast, ethylene price is expected to stabilize as supply is seen to be sufficient balanced by startup of crackers in Northeast Asia which is expected to take place between May July 2021. Furthermore, despite restart of U. S. Plants from previous shutdowns due to the U. S. Storms, there is still lack of deep sea supply as West to Asia arbitrage remains closed. Demand is expected to be supported from large capacity growth in China domestic downstream, MEG and steady monomer sectors. Moving on to polymers, 3 months forecast. Polymer prices have climbed up drastically in quarter 1 especially for LDPE where it reached 10 year historical high at USD 1700 per metric ton level. However, prices are now gradually undergoing correction and stabilizing in view of increasing supply due to capacity additions in Southeast Asia and China between quarter 2 and quarter 3, 2021. Regional demand was temporarily subdued due to Ramadan and Eid holiday. However, it is expected to improve as buyers slowly replenish inventory after Eid holiday as well as continued economic market growth on the back of COVID-nineteen vaccine rollout. Next for MEG, 3 months forecast. The MEG price is expected to be stable due to ample supply as Middle East producers are ramping up production after completion of maintenance activities. Further adding to the supply is start up of 2 new plants in China with total capacity of 2,600,000 metric ton. On the demand side, downstream polyester operation was higher amid improving sales and falling inventories providing support to the prices. As for Palazylene, 3 months forecast, PX price is forecasted to be stable as many PX units in Northeast Asia and India will undergo turnaround with estimated production loss of about 500,000 MT. Demand is also expected to be reduced as downstream PTA plants will be also undergoing planned turnaround. However, 3 new downstream PTA facilities in China are expected to start up which may help to keep PX demand healthy. Now let's proceed to fertilizer and methanol segment starting with urea, 3 months forecast. Urea price is forecasted to be stable on the back of sufficient supply as Middle East producers are running at optimal rate after turnaround. In India, MMTC which is Metals and Minerals Trading Corporation is expected to issue tender for estimated 1,500,000 MT for July shipment. Demand is expected to improve as India prepares for its main application season in the coming months. Apart from India, demand will also be supported by upcoming planting seasons in Thailand, Australia and New Zealand. Moving on to ammonia 3 months forecast. Ammonia price is projected to be firm as limited supply remains amid plant turnaround in Middle East. A strong dilution demand is expected in South Korea as producers of acrylonitrile and caprolactam are up and running well while applications of ammonia ramped up in the U. S. For its spring season especially for corn planting. Lastly on methanol, 3 months forecast. Methanol price is expected to be stable with sufficient supply as most producers are running at optimal rate despite few plant outages. In China, MTO demand is expected to be stable with the return of its MTO plants in May and higher operating rates may continue in upcoming months. Likewise in South Korea as its Formaldehyde and MTB units are running well. Over to you, Alia. Thank you. That was from my side commercial. Thank you. Thank you, Tisha Kiel. We can now proceed to the Q and A session. Annie, over to you. Sure. Thank you. Bobby, Alia, I'll repost. Sorry, not to yes. Okay. Thank you, Alia, and thank you, Hakim. So ladies and gentlemen, we have had a good start to the year and so far with positive news on the vaccination rollout globally. And if you can see it looks like that we should be in a better year. Although concern remains as we see countries such as India and also Malaysia continue to fight against rising COVID-nineteen infection. And even here is it we are now going into a 3rd lockdown. So that's why we will continue to remain cautious in our business approach to continuously build on our strong business fundamental as we navigate our way forward. Our continued focus on operational and commercial excellence have ensured strong operation and sales delivery even in the toughest time. We will continue and refine these initiatives as the business grows. Supporting the operation and commercial excellence is our strong HSE culture where the safety of employees take precedence. So as well as we continue to be committed to quickly control our to apply our financial discipline and cost optimization throughout the period. Despite the setback, partly caused by the pandemic, we are committed to ensure the Pengerang integrated complex will be ready for start up in the second half of this year. We are working towards most execution of our growth projects that have been FID so far and as well as building our first pilot plant for bio based chemical in Petronas Research Center. We will continue to evaluate business opportunities to expand our Specialty Chemical offering as well as looking into more R and D in the green chemical space in line with our sustainability commitment. So that brings me to the end of our presentation. So I would like now open for Q and A. Back to you, Alia. Thank you, Rato. Apologies, Alia. Annie, over to you for the Q and A. Yes. Thank you. Our first question comes from the line of Bennett Lee of Citigroup. Your line is open. Please go ahead. Hi. You hear me? Yes. Okay. Thank you. Thank you for the opportunity to ask questions and also congratulations on the solid results. So I have a couple of questions. First one is for the Rapid project. What is the latest start up timing expected for crude fit in into CDU? How long will the naphtha cracker or PKAM's downstream start after the CDU starts? Second question is how much higher will the CapEx go up as compared to the original budget given the extended delay? 3rd question is could you remind me again what was the unit under turnaround in Q1 and what will be the key unit under turnaround for 2nd, 3rd, Q4 separately? Final question is how much inventory gain were recorded for the segment O and D and F and M in Q1? Thank you very much. Okay. For the first question, Benoit, thank you for the question. And I would like to apologize for the the beginning this time because this is the first time that we use online market analytics. Hopefully, we learn something from here and improve going forward. Okay. Your first question is on Brexit. We talked about when is the latest timing proof of CDO. So we are working on the second half around month of June to August. So we will keep into this timeframe. However, bear in mind that we still have some challenges in terms of COVID-nineteen pandemic cases. And at the same time, we took closure of some of the litigation work that we need to do. So we put a target is still within the second half of this year. And your second question is when actually we can start the cracker after we start to do. Roughly it will take about 3 weeks, within 2 to 3 weeks after we start we will be able to start the cracker provided that the plant is running smoothly. But bear in mind that this plant has been idle for some time more than a year. And when we start up back the unit, we may face some fitting issues. So depending on how smooth the startup is, then it can drag, whether there is some issue that we face along the way. So we're still targeting also to start the back end within the second half of this year. In terms of CapEx, what I would say that we still work within the FID number that we have EIC number that we have allocated at the beginning of the project is still manageable. And at this moment, I would say that other than the extended cost, other than that, I think it's already in the control. So at the end of cost mainly because of we need to do preservation before we can do the oil in. So that is on the second question. The third question is on the turnaround. As what is the turnaround in quarter 2, 3 and 4? In quarter 2, we don't have any turnaround. We are going to have quarter 3 late. This is actually quarter 2 late or early Q3. Our PTFK plan, we target to do the turnaround sometime end of June. And then another plant of ethylene in quarter 3. And another one, Kaveit, if you can add, what is the other one, Kaveit? ABX, the fertilizer. The one answer that the question, can you repeat again the question number 4? I think the question is about how much is the inventory gain. If you can refer to the our gross announcement that we published today, our inventory write back to the NRV for the quarter is ringgit 34,000,000. I hope that answers all 4 of your questions. Bennett? Thank you. For the inventory gain, can you split it into segments, O and D and F and M? Mostly due to O and D. Okay, got it. Thank you. Thanks. Thank you, Matt. Thank you. Next question is from the line of Alex Guo of AM Bank. Please go ahead. Your line is open. Thank you so much for the opportunity. I have a number of questions. Perhaps I just run through 1 at a time, so it's easier for you to also respond. My first question is regarding your associate and JV contribution. It was a significant turnaround to $133,000,000 profit. I'm just wondering what is causing that? Is that largely a function of the improved product prices? Was there any lumpy items in them? Or was there in any way any Panoram contribution in? I understand you're starting off in the second half, but was there anything coming from that? Okay. Thank you, Alex. That's a very good question. I think that for share of profit from associates and JV, there are 2 main contributors for the increase. 1 is profit from BSF Petronas Chemicals, BPC. So, majority of the improvement is due to PPC. If you compare with Q4 2020, we have a loss in terms of contribution from the JV because of the closure of video as well as impairment on some of the unit. So that improvement in BSRP-two hundred is mainly due to improvement in products. So the key 2 products that contributed to the better results for EPC is the acrylic acid as well as oxal alcohol. So that's majority derived from PPC. The second part is basically also improved margin from plastic assets. So, in terms of profit, it was double compared to the quarter 4 of 2020. So that's why you see in terms of in total, our share of profit for SNC Venture it puts significantly compared to the last quarter as well as the same period last year. So it's mainly due to the better spread in product. I hope that answers your question, Alex. That's wonderful, but can I say that this RMB133 1,000,000 is going to be recurring, which is the main point I want to get? Whether I'm just trying to figure out was there any lumpiness? Given the fact that oil price have gone even further up after your 3rd after this Q1 numbers, should we expect a stronger JV and SSA contribution? In terms of outlook, I think yes, we expect in terms of price and spread, it will be on the upward trend at least for the coming quarter. But in terms of the second half of the year, I think it's safe to say that we remain cautious on outlook because in light of the recent recession of COVID, so we remain vigilant on the outlook because we want to assess the impact of the decision to the market just like how we've been doing so far. Okay. All right. And coming back to PIC, you mentioned that you're now looking at a second half start up. During the previous quarter, you've indicated you are looking at a starting start to start off in the Q1. What which month are you looking at in actually starting off Tongurang, the actual commercial operation? And what is the outlook now given that product prices have gone up, would you expect this division now to be able to breakeven, at least on a net profit level? Okay. As Vinay mentioned earlier, the outlook for this year, I would say that there will be there is contribution from PIP will be none. I would say that because one is that we are in the start up mode and the start up will happen mid or late of second half of this year. And if that also depending on the equation of as I mentioned, the completion of the mechanical verification as well as the readiness of plan that we modified after the incident. But we are quite confident that we will start within this second half, sometimes in the middle of late of this second half. So the impact of the contribution from the IC will be negligible this year. So when you talk about commercial operations, I would say that it is good to assume that starting next year we will reach the stable commercial operation. So, this question can be posed again in the next quarter review, then we have a better picture of the question of BSE. Okay, Yes. Given the fact that product prices have done so well since the beginning of this year, are you revisiting your earlier expectation that you will probably make a loss on your net on your after increasing depreciation and interest costs next year? Let us say your PIC actually is fully launched. This is part of what PIC, right? So PIC, it did not reach year stabilized at more than 90%, I think it's still quite tough because at this moment, the bigger portion of PIC is also on the refining side. So refining margin if you see has improved, but not as what before the crisis. So we still have to observe the price trend. And if you see the lockdown of our stations all over the world have resulted also the demand of fuel, petroleum fuel have yet to pick up as what we expect. So that's one question that I think is still a big factor for us. Okay. And now given the fact that you have so much turnaround programs this year and this year, are you still expecting your overall plant utilization to be above 90% for this financial year? Yes. This year, we're still targeting about 90%. As I mentioned, our aim now building can be turnaround is when we will target for more than 80%. As of now, we believe that it's scalable and that will require also the benefit when the market is good in the Q1, Q2. I see. Could you also guide us now what is your CapEx for this year and next year? So as usual, I think in terms of our CapEx run rate, it's about RMB2.5 billion and RMB2.6 billion. So I think from year to year that will be our number as a guidance for moving forward. All right. Just coming back again to your inventory gains of about $34,000,000 Can I assume that this entire $34,000,000 was a complete profit for you in this quarter? Can you repeat that again, the second part of your question? The inventory gain of $34,000,000 that you recognized in this Q1, was that did you fully pass down to your to the P2X level? Yes. I see. Okay, great. Thank you very much. That's all for me. And congratulations for the amazing set of numbers. Thank you. Thank you, Ankit. Thank you. Next question is from the line of Yayati Kayagi of UBS. Please go ahead. Your line is open. Hi. Thank you for the opportunity. So I just have left with one question now after the previous question. I want to know for the effective income tax rate, so despite the profit that has increased in this quarter, the effective tax rate is quite lower compared to the previous quarter. So, what would be the reason for that too? Thank you. So, I think thank you for the question. So, our effective rate for the year, we expect our effective rate is between 10% to 15%. So of course as our product prices get better yield, better netback and better margin. So some of those profits are being taxed at LaPointe as such a more lower tax. So that's why as a guidance moving forward for 2021, our EPR is within 7%. Okay. So the way I understood is that the units that are tax efficient or maybe tax are contributing more volume and revenue, is that it? Yes, because we have our tax rate is a blend between Labuan's tax and the corporate tax regime. So, depending on market condition, so some income that we generate for our marketing which is Labuan based will impact the effective tax rate accordingly. So in a situation where product prices are low and income generated by Labuan declined, our ETR will also be higher will get higher proportionally. So, in this case where product prices are higher, our income generated at Labuan gets higher. That's why our effective tax rate will be lower because Labuan has lower tax rate as opposed to corporate tax regime. I understand. Thank you so much. Thank you, Lil Yap. Thank you. Our next question is from the line of Raymond Yap of CIMB. Please go ahead. Your line is open. Hi, good afternoon, everyone. So just one question for me. In terms of the polymer prices, we have been seeing a gradual trending downwards over the past couple of weeks. Generally, if I see spot prices trending down, how quickly does it get reflected into your sales segment? Thanks. Yes. Raymond, Shatin here. Okay. Just to have a bit more clarity, you're saying that target is trending down. Looking at the impact of sales for the Yes. So because I'm trying to get a sense of how quickly spot prices get reflected into your revenue and sales lines. So that would depend on whether you are selling with a lag as in whatever that you sell this month is based on last month's prices or things like that, some kind of commercial arrangements, which might delay the impact of reducing spot polymer prices onto your actual P and L? Okay. I think what's happening now is after we see the first 4 months of the year, 4 to 5 months, we see high price of polymers. I think, yes, you are right, it's trending down, but we do have our mix of term contract and spot contract to address the market. So basically, it was I mean in anticipation of price weakening. So we have our basically the flexibility to maximize on film so that we can protect our volume from being impacted by the supply price. I think similarly, when the prices move up, we maximize more on spot. So we have that flexibility. Okay. Yes, roughly. So if you could just give me a little bit more clarity on the duration of your term contract, how often is it rolled over? Our contract are 1 annual contract, so basically Gen to ZEC immediate contract. Okay. This is a term contract for volume, not for price, am I right? Yes, yes. It's a volume contract, yes. You're right. Okay. So I'm specifically trying to pin down on the pricing aspect. If spot prices are dropping, let's say, if it dropped this month relative to last month, how quickly would that drop this month get reflected into your opinion? Will it get reflected next month or 2 months later or something like that? It is right. Raymond, if you understand, I think depending on market, because you don't look at just 1 quarter, I think when you talk about attractive, it's about 4 quarters in a year. So it gets adjusted by itself along the year. Okay. I mean, some companies I know they basically sell, let's say, whatever they sell for May is based on April prices. So basically, it's a 1 month lag. Does it apply to P Chem as well? Yes. We have flexibility depending on products. Like I mean some products are basically will take 3 or 4 weeks prior to the lifting some around the end. So I think we have F and M and also O and D. The pricing approach is different between products, but in the end, when it average out, it is good for the company. Sorry, if you average it out, what kind of delay are we expecting? I mean, in the end, I think it's about how you price your cargoes, but I'm going to answer exactly. I mean Okay. How about if you look at polymers if you just look at polyethylene, what kind of delay should we expect in terms of the whatever price today being reflected into the P and L? You see now between the time we conclude the price and also delivery, it takes between 3 to 4 weeks, right? Okay. So like I said earlier, in a price upward market, you will have the security and assessment, what you achieved will be lower than when the market is on the up price. On the other way, when the market goes down, what we have achieved the month before will be reflected higher in the following month, So which is what I see it is adjusted quarter to quarter. Okay, sure. So it sounds to me like it's about 3 or 4 week delay, right, between the time you contract the price and the time you deliver. So you only record the sale in your P and L when you deliver. So it's essentially going to be a 1 month lag approximately. That's what I seem to understand from what you said. Yes. Okay, sure. Thank you. Thank you very much. Thank you. Thank you. Yes, we have a question from the line of Ashok Singhi of JPMorgan. Please go ahead. Hi, can you hear me? Yes, Pashup. Yes, I had a couple of questions. So the first one is you've mentioned that there are 3 turnarounds left for the year. Could you tell us how many days will those last, each one of them? Yes. In terms of turnaround, typically our turnaround number of dates reach between 40 days, Ashok. Okay. So this is for the ethylene plant as well as the ABS, the fertilizer plant in October, all these are going to be around 40 days? Yes, 40 days. Okay. For PFK, we have about 40 days. And for ABF, actually, we have 50 days. But during quarter 1, we already do the major overhaul on the compressor. So we will reduce the numbers of this, also about 40 days. And also for our PCOGD, we only defer to next year. And PDH is about 40 days already completed. Methanol about 45 days already completed. And the ethylene plant? Ethylene plant, this is the peak stock is about 27 days in June. Okay. 27 days in June. Okay. My last question is, could you give us an update on the specialty chemical projects, which are ongoing right now under construction? What's the progress on this? At this moment, Ashok, our branch project, basically this is the blending silicone plant in their bank. This is now under construction. Another project is on the costly plant in Krutis that also contract EPCC contract already now under contraction. So civil construction already started. And then the 3rd project is our Nutmeg, our partner with LG. So this project we just what the CCC contract essentially then they are go ahead with the DC Engineering and also construction as well. So these three projects is currently ongoing for our specialty chemical. And when are they supposed to COD, the Jibang and the Carte? For the butadiene latex project down in Pengerang, we are looking at initial acceptance in 2023. We're talking about the Q1 and then for Arumang is easy, so the impact slate plan in Curtae that will also be completed by Q4 of 2022. And for the plant in Kuantan, the silicone blending plant, we are looking at initial acceptance round about so the commissioning was back towards the end of this year. Okay, got it. Thank you so much. Yes. Thank you. Thank you, Achal. Thank you. As there are no further questions, I'd now like to hand the conference back to the presenters. Please continue. Thank you, Annie. Thank you, ladies and gentlemen, for participating today. We apologize, Yippie, again for the glitch we had earlier. We apologize for the inconvenience caused. Please reach out to us if you have any follow-up questions. And we look forward to receiving the analyst reports once published. Thank you, everyone, and good evening. Thank you. Thank you, everybody. Take care. Thank you. Thank you. Thank you. Ladies and gentlemen, this concludes today's conference call and thank you for participating. You may now disconnect.