Good day, thank you for standing by. Welcome to PETRONAS Chemicals Group Analyst Briefing for first quarter 2022. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. Now I'd like to hand the conference over to Zaida Alia Shaari, Head of Investor Relations. Thank you. Please go ahead. Thank you, Agnes. Hello, and assalamualaikum, ladies and gentlemen. Welcome to PETRONAS Chemicals Group Berhad Analyst Briefing for the first quarter financial year 2022 financial results. I'm Zaida Alia Shaari, Head of Investor Relations. Thank you for joining our call this evening. You should by now be able to access and download the financial results from the Bursa Malaysia website, as well as our presentation materials through our corporate website or in the links provided in the event invitation. Ladies and gentlemen, based on our usual quarterly results format and flow, today's briefing by the PETRONAS Chemicals senior management will be led by our Managing Director and CEO, Mr. Mohd Yusri Mohamed Yusof. Our CFO, Mohd Azli Ishak, will brief on the details of the financial performance, followed by Mr. Kabir, our Chief Manufacturing Officer, who will brief on our manufacturing operations, and this will be followed by a brief on the market by our Chief Marketing Officer, Mr. Shakeel. At the end of the briefing, we shall open the line for the questions and answers session. Also in attendance today is our Head of Special Projects, Mr. Akbar. Without further ado, I shall now hand you over to Mr. Yusri for the performance highlights. Thank you, Zaida. Very good evening, ladies and gentlemen. Thank you for joining us today. Let's go to our first slide. We entered 2022 expecting, you know, a still volatile year amidst continued global growth and expansion. We did not, however, expect a major geopolitical conflict to be the center of that volatility. If we were to look back at quarter one, 2022, the Russia-Ukraine conflict dominated the news, market movement, and sentiments alongside rising inflationary pressure. Nonetheless, we see the world economy has shown sufficient resilience and continued its recovery, with GDP coming in at 4% in the first quarter this year, compared to 3.8% in the same quarter last year. While COVID-19 remains a risk, we believe the pandemic is expected to retreat as vaccination rates continue to rise and effective treatments are becoming widely available worldwide. Global PMI slipped from 54.2% in first quarter 2021 to 53.3% this year on weaker growth, lower rate of new works, and decline in international trade volumes and prolonged supply chain disruptions. We see crude oil rally gain momentum with the Russia-Ukraine conflict and peak in early March with the announcement on the ban on Russia energy import by the U.S. and the U.K. Year-on-year on crude oil, we see a 67% increase in an average crude oil prices. With the higher crude oil price, healthy demand amid supply chain challenges, petrochemical product prices were higher across the board compared to corresponding quarter of 2021. That brings me to our performance highlight for this for quarter one, 2022. Let's go to the next slide. Ladies and gentlemen, we started the year with plant turnarounds for our plants in the olefins and derivatives segment, namely the propylene plant at PC Olefins, PC Derivatives, and PC Aromatics. With three major turnarounds and a few pit stops for our group, the plant utilization for the quarter was lower year-on-year at 87% versus 90% in the corresponding quarter. Basically it's on higher shutdown days. We have a lot more scheduled shutdown days. Production volume was also lower at 2.4 million tons against 2.5 million tons last year. Nonetheless, we see sales volumes was comparable at 1.9 million tons. On the market front, we had initially expected a mixed market for first quarter 2022, with O&D segment remained fairly strong on firm demand and high feedstock prices. The F&M segment was too moderate with planting seasons ending, thus reducing the demand for urea and methanol. However, the war between Russia and Ukraine saw the outlook change overnight. With supply concerns, crude oil price and natural gas prices rose, and it has remained elevated. Consequently, petrochemical product prices rose due to higher feedstock prices, strong demand amidst supply limitation. Following the higher product prices, we achieved another strong quarter as revenue rose 42% to MYR 6.6 million against first quarter 2021. EBITDA and PAT were both higher at MYR 2.4 billion and MYR 2.1 billion respectively on expanded product spreads with notable contribution by BRB International. EBITDA margin remains healthy at 7%. I'll have Azli next to take you through the details of financial performance. Thank you, Yusri. Ladies and gentlemen, good evening, and thank you for joining us. Let's start with the group performance on slide four, beginning with the comparison of the first quarter 2022 against first quarter 2021. As you heard from Yusri earlier, quarter one was filled with the news of the Russia-Ukraine conflict and the subsequent events and impact from the same event. The crude oil rose on supply concern, further pushing up prices for petrochemical products. With three turnarounds undertaken at our Olefins and Derivatives segment, the group's plant utilization was lower year-on-year at 87% compared to 90% last year. However, sales volume was comparable as lower production from O&D segment was offset with higher production in the F&M segment, as well as higher contribution from our BRB International. As a result, group revenue grew 42% from MYR 4.7 billion in first quarter 2021 to MYR 6.6 billion this year, mainly on higher product prices. EBITDA surged 43% from MYR 2.4 billion against MYR 1.7 billion last year, mainly contributed by higher spread and margin from BRB. EBITDA margin also increased to 37% from 36% in the same quarter last year. Following that, we recorded our best performance yet for the quarterly profit after tax at MYR 2.1 billion against MYR 1.5 billion in 2021 on higher operating profits and higher contribution from BRB. Now moving on to the group's financial performance against the preceding quarter, that is, against quarter four last year. During the quarter, petrochemical product prices were assessed higher than preceding quarter on higher feedstock costs and healthy demand. On the manufacturing front, our plant utilization was lower at 87% in 2022 against 89% in quarter four 2021 due to higher turnarounds as well as maintenance works undertaken. With the lower production and sales volume, group revenue dipped 5% to MYR 6.6 billion. Nonetheless, EBITDA improved from MYR 2.3 billion to MYR 2.4 billion on improved spread, further supported by higher contribution from BRB and product margins. PAT moved up 2% from MYR 2 billion to MYR 2.1 billion in line with EBITDA, partially offset by lower contribution from JV and associates. Next, moving on to balance sheets and cash flow. First, we look at the balance sheet on slide four. Quarter-on-quarter, our total asset increased from MYR 46.5 billion to MYR 47 billion, mainly due to higher PPE, primarily in relation to capital investment, as well as higher cash and cash equivalent contributed by higher CFO. Let's now turn to cash flow at slide number five. Cash generated from operating activities stood at MYR 2.1 billion, mainly due to higher profit generated during the period. Net cash used in financing activities for the period was higher by MYR 1.1 billion at MYR 1.8 billion, mainly due to dividend payment to the shareholders in March. At the end of the period, our cash balance remained strong at MYR 16.5 billion. That is all for the financial performance for the first quarter 2022. I'm handing over the floor to Mr.Kabir f or the manufacturing highlight. Thank you, Mr. Azli. Good evening, everyone. Kabir here. Briefly on the plant performance for quarter one, 2022. We recorded lower plant utilization rate in view of heavy turnaround and shutdown activities during the quarter, namely at Olefins & Derivatives segment. All in, our group plant utilization rate for quarter was 87% with production volume of 2.4 million tons. Moving on to the operational performance by segment. Olefins and Derivatives. Quarter one plant utilization for O&D segment dropped to 75% due to turnaround activities conducted at the PC Olefins, PC Derivatives and PC Aromatics. We also undertook plant maintenance pit stop for PC Glycols in Kertih and PC MTBE plant in Gebeng, which are short shutdown for the maintenance purposes. Except for PC Aromatics, which was completed in April 2022, all turnaround and pit stop activity within the segment were completed in quarter one. During the quarter, our downstream unit, especially PC LDPE, had performed reliably throughout the turnaround window, supporting the overall production volume for the Olefins and Derivatives segment. Fertilizers and Methanol. For the F&M segment, we achieved higher plant utilization rate in Q1 2022 at 93% as compared to 82% achieved in the previous quarter. This was due to lower turnaround days this year as compared to the last year, which in turn resulted in higher production of urea and methanol. However, as we are speaking now, our largest manufacturing unit, PC Fertiliser Sabah and Plant 2 of PC Methanol in Labuan, are currently undergoing turnaround. With this, the utilization for F&M segment for quarter two 2022 is expected to drop below 80%. We expect the turnaround will be completed within quarter two itself. Once completed, with our heavy turnaround for this year, we will look forward to optimize the plant for the rest of the year. Our goal, to keep plant safe and to achieve full-year group PU of above 90%. That is the brief write-up for the operational review for this quarter. Over to Mr. Shakeel for the market outlook. Thank you, Encik Kabir. Good evening. Shakeel here. Let's proceed with market highlights. In quarter one, 2022, prices were mostly higher compared to previous quarter amid strong crude and naphtha markets and tight supply mainly impacted by the Russia-Ukraine war. Demand was generally stable for F&M products, while O&D products prices were stable to soft, impacted by higher feedstock costs and a cautious market with the emergence of the new COVID variant, Omicron. Three-month outlook. Ethylene price is forecasted to be stable on the back of balanced supply, mainly due to a series of cracker turnarounds in quarter two, while demand may be affected due to zero COVID-19 policy and lockdowns in China. Regional spot supply is expected to be balanced with the end of Japan cracker turnarounds in early May and ongoing downstream output cuts by several producers amid weak margins. Cracker margins seem to be improving, but the short-term operating rate recovery in the region is still uncertain due to volatility of crude oil prices. Moving on to polymers. LDPE price is forecasted to be soft amid weak demand due to Labor Day and Eid celebration and bearish sentiment from volatile crude prices. Demand in Q2 expected to be weak in most SEA countries. Weak market sentiment remains in China as the country struggles to curb the spread of pandemic by imposing stricter logistical restrictions. Next, for MEG. Ethylene glycol price is forecasted to be stable on the back of balanced supply and weak demand due to China's lockdown. Heavy maintenance in Q2, coupled with ongoing production cuts in Asia, may disrupt energy supply. However, new Chinese plants' start-up may mitigate potential shortage. As for paraxylene, prices forecasted to be stable amidst limited supply due to plant turnaround, despite slow demand during COVID-19 lockdown in China and downstream plant turnarounds. Downstream PTA producers in China continue to face mounting cost pressure, especially with the recent depreciation of Chinese yuan against U.S. dollar. As a result, PTA producers may increase turnaround frequency in view of squeezed margins. Now, let's proceed with fertilizer and methanol segment, starting with urea. Urea price is forecasted to soften despite limited supply due to ongoing Russian sanctions. In China, export continues to be restricted as domestic demand will increase for the summer season. Nonetheless, most SEA and Middle East plants are running at normal operating rate. Demand in South Asia is muted as many markets closed for Eid celebrations and the delayed issuance of Indian tender. Moreover, most buyers are focused on fulfilling term commitment. In Australia, buyers are on the sidelines after recent price falls in the global market. Moving on to ammonia. Ammonia price is forecasted to be stable on scarce spot availability on top of limited Russian supply due to Ukraine tension, despite all plants running at normal production rate. Slow market demand in SEA owing to the Eid holiday, as well as slow downstream demand in South Korea, with both acrylonitrile and caprolactam plants running at lower OR due to weak margins. Lastly, on methanol, prices will be on the correction mode following the lockdowns in China affecting demand. Supply will be tight, especially in South Asia, due to few plant shutdowns until June. SEA demand is expected to be stable due to gradual easing of movement control in the region. That's all I have on [our current]. Back to Mr. Yusri for the growth updates. Thank you. Thanks, Shakeel. Before we end our presentation, allow me to share some brief updates on our growth commitment and achievements. I'm pleased to say that Pengerang Integrated Complex, the refinery have restarted earlier this month. I believe that this is the news that we have been looking forward to hear. So far, the startup and commissioning activities are progressing quite well. We will continue to monitor the progress and activities towards a successful integrated startup for the whole complex. We expect the petrochemical plants to start up in phases following the stabilization of the refinery unit and the steam cracker unit. Also, ladies and gentlemen, as many of you are aware by now, we recently announced our conditional security purchase agreement with Financière Forêt, a private equity firm, to acquire 100% equity of Perstorp's holding of Sweden. This acquisition is a major milestone for us in establishing our specialty chemicals platform to meet our objective of diversifying into specialty chemicals and solutions in order to capture new growth opportunities for us. As a quick recap, Perstorp was established in Sweden over 140 years ago and is a niche global specialty chemicals manufacturer specializing in intermediates and specialty chemicals for resins and coatings, engineering fluids, and animal nutrition. Perstorp operates currently seven manufacturing sites across the globe alongside three R&D centers. There are two sites in Sweden, Stenungsund and Perstorp. One site in U.S. in Toledo, one site in Netherlands, Waalwijk, one site in Italy, Castellanza, one site in Germany, Bruckhausen, and one site in China at Zibo. There are also two tolling facilities in Netherlands for DuPont and one in Italy for some of our Perstorp specialty products. It has presence in 26 countries worldwide, with sales predominantly coming from Europe, about half of that, followed by APAC and the Americas, respectively. Perstorp currently serves slightly more than 2,600 customers globally through its 130 products offering from the 30 products group that it produces. It anchored itself on its proprietary oxo and polyol chemistry. Because of that, this acquisition will also provide us the critical talent knowhow. The critical talent, the know-how, and the technology platform, as well as proven customer channels to address the pressing needs of the market for more sustainable solutions. In 2017, Perstorp has intensified its commitment towards sustainability and has launched its Finite Material Neutral ambition, with the end goal of switching to alternative resources that are abundant or renewable, or even to close the loop in order to recycle those that are finite in line with our net zero carbon emissions aspiration. Ladies and gentlemen, we are very, very excited over the idea of being able to expand our specialty chemicals range with a company that is not only established and knowledgeable, but also progressive, with a strong drive for sustainability. We look forward to be able to replicate and expand on what Perstorp has built in Europe here in this region, where the demand for specialty products are high and on the rise. We are now in the process of applying for regulatory clearances and these clearances and shareholders approval through EGM are expected to be obtained within four months of the signing of SPA. Next slide. Okay. When we talk about sustainability, let's look a bit of our sustainability metrics that we have published. We have mentioned previously on how serious we are with regards to sustainability. We have embedded sustainability at the core of all the things that we do and have begun to include ESG-related calculations, such as carbon pricing, when assessing our new projects. This is to ensure that we move forward with projects that are sustainable and processes that leave lower, if not very minimal, carbon footprint that bring value to both the company and our stakeholders. While continuing to address improvement in the ESG space, we are continuously monitoring our day-to-day operations and the impact on our sustainability pillars. Let's go through some of our sustainability indicators for the quarter. Starting with economy, you know, like, which focuses on our business operation. We've mentioned that, you know, our operation and commercial front, you know, we spoke about lower utilization due to our plant turnaround and maintenance activities. Subsequently, that drives our current sales volume. With, you know, the lower production volume, our environmental pillar, where we measure and monitor our impact to the environment, was impacted slightly. Again, both corresponding and preceding quarter, our energy intensity was a little higher at 17.07 gigajoule per ton of production, as we recorded lower production volume, as we mentioned earlier. Similarly, at 1.73 million tons of CO2 equivalent emitted, our quarter one 2022 GHG emissions was also slightly higher than both the preceding and corresponding quarter, respectively. Now, GHG intensity also increased in quarter one 2022 compared to the comparative quarter, again due to the lower production volume. Recycling rate was lower compared to the preceding and corresponding quarter due to higher non-recyclable waste produced during the turnaround. This is mostly due to the turnaround activities that we have in our quarter one. Our third pillar that looks at our social impact, where our focus is on community development and well-being through education and governance. Our outreach programs for 2022 are being finalized in quarter one, having engaged various ministries, government agencies, NGOs, trade associations, and partners to discuss the coordination of the upcoming program. As we speak, as Malaysia move into endemic period, you know, and now we are going to start and begin our various CSR and outreach activities in earnest starting quarter two of this year. On the governance, ladies and gentlemen, we continuously look to enhance our current practices. Social risk assessment for 2022 is to close the gaps identified in previous assessment. Currently, 25% of the identified gaps have been closed, and we're working hard on the rest. All that I have shared are part of our net zero carbon emissions roadmap and are key in our commitment towards creating positive economy, environmental, and social impacts, and lowering our carbon footprint. At this point, we are on track towards our immediate aim to reduce 20% of our baseline emission by 2030. There will be more to share on this in the near future, so bear with us. We will continue to share our progress with you. Next. Ladies and gentlemen, before I end, a brief review of what we expect for the rest of 2022 with regards to our key focus areas. On growth delivery, I've spoken earlier on the restart of Pengerang Integrated Complex and the acquisition of Perstorp Holding. Next, we are looking at business environment. We are still looking at continuing economic expansion, albeit at maybe a slower rate attributed to the conflict between Russia and Ukraine, as well as we believe rising inflation. Uncertainty remains as the key risk for crude oil prices owing to supply limitation as Russia's exports are curtailed, production disruptions in various producing countries, namely Kazakhstan, Libya, and the Middle East. Though it will be cushioned by some of OPEC's gradual output increase. With all the uncertainties looming and increased volatility, it is imperative that we manage our operations well to minimize the risks which are within our control and optimize our manufacturing asset and maximize value to our sales, you know, leveraging on the opportunities that we see as the market presented itself. In fact, to date, I'm proud to say that we have not experienced any loss of sales due, for example, to the lockdown in China. Though we have cargoes meant for China that were affected by the logistic restrictions in Shanghai, we have managed to divert the volume to other unaffected ports in South China and also our other ASEAN markets. On the operation front, to date, we have mentioned, Kabir has mentioned that we've completed our plant turnaround for our Olefins and Derivatives segment with no major HSE. We are currently undergoing turnaround for our F&M segment with both methanol Plant Two and our fertilizer plant in Sabah, and we hope that we're continuing our record of completing the turnaround with clean HSE record. We will continue our focus and our efforts on our three HSE culture to ensure health and safety of our employees, contractors, and the uninterrupted operation continue. We remain vigilant on the threat of COVID-19 and continue to observe strict SOP at all our premises and during all activities that we plan. With regards to our net zero carbon aspiration, the team continues to monitor ways to cut back our impact to environment, and to monitor any new and emerging technologies and options that can be implemented at our facilities that will bring the best value for us on our sustainability commitment. That, ladies and gentlemen, bring me to the end of our presentation. I think let's open the floor for question and answer. Thank you, Encik Yusri. Operator, we shall hand over to you to open the line for questions. Thank you. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to withdraw your request, please press the pound or hash key. Please stand by while we compile the question and answer roster. Once again, it's star one for questions. Our first question comes from the line of Alex Goh from AmBank. Please ask your question. Thank you. Let me start with two questions first. It's regarding you mentioned the diversion of China deliveries to other China ports and ASEAN markets. May I know what is the current exposure in your first quarter in terms of your production? How much does China account for your sales? And when you diverted to other ports in China or ASEAN, did you incur a lower revenue, or was there higher cost involved? I think to answer your question, typically about 14%-15% of our volume goes to China. That was average for last year, 2021. This year, due to the lockdown, we have lost close to 5% of our volume to China, which has been diverted to the other markets in Southeast Asia. That's for the first one? Yeah. To further support Shakeel's response with regards to impact, although some of the cargoes were diverted to other unaffected markets within ASEAN and Southeast Asia, we don't have any impact to our netback from that particular cargoes that was diverted. No particular impact on China lockdown arising from the diverted cargoes. I hope that answers your question, Alex. Does that mean your revenue would have been the same instead of going to those parts in China for like Shanghai, you went over to other parts of Southeast Asia, you would still have generated the same revenue? Is that right? Correct, Alex. Okay. Would that mean going forward, you would want to have a more diversified exposure to those other markets, or how would your strategy be going forward in terms of your marketing? I think we have various marketing channels and our various customer base. These are mainly based on the supply and demand and then the customer's contract. We will monitor the situation closely, as we want to deliver those cargoes. In the event that the particular cargoes are being affected by lockdown and we were able to find alternative routes or alternative markets for us to divert such cargoes. Okay. That's wonderful. Can I just ask now regarding your plan, maintenance and CapEx, could you give us a bit of indication for the rest of the year, the next three quarters? What are the turnaround activities that you would be planning and the potential impact to the plant utilization? I understand you've mentioned overall you're looking at 90%, but we just want to have a feel of in each quarter, how would the plant utilization, the trend be? Okay. This year our plan for turnaround only quarter one and quarter two. Quarter one already completed. Now we have two big plants in progress and almost will be completed. For quarter three, quarter four, we don't have any activity. No turnaround and also no pit stop for the plant, all the plants. For quarter three and quarter four, we expected we can be recover is above 90%. I think that to answer your question, we try to keep all the plants safe and also reliable, try to target more than 92%. In the second quarter, can you run through again which two big plants that you will be doing this turnaround on? For the second quarter is PC Methanol Plant 2, the biggest plant, and also PC Fertiliser Sabah. Okay. This means that your O&D will rebound back in the second quarter. Would that be right? Yes, true. Second quarter, third quarter and fourth quarter. Alex, if you see our segment in quarter one, O&D is in the 80s% while F&M in the 90s%. Quarter two, we expect that to flip. Sorry. We expect that to flip. F&M will be in the 80s%, O&D will be in the 90s%. Yes. Okay. Quarter three and quarter four onwards, both will be. In the 90s. In the 1990s. Okay. That's wonderful. Yeah, I just want to find out, in terms of your CapEx, the maintenance as well as for new growth, what will it be for the full year this year and next year? As our normal guidance to the analysts, it will be around MYR 1 billion-MYR 1.5 billion. That's inclusive of CapEx for maintenance and CapEx for turnarounds, CapEx for other particular capital investment projects. I think that that's basically the guidance that we provide. If you were to strip out the, growth projects, how much would your normal maintenance CapEx be? It would be around MYR 700 million-MYR 800 million, Alex. I mean, just for maintenance like. Yeah. Do you see any inflationary pressures coming in because of, you know, the current lockdown i ssue? I think in terms of inflationary pressure, that's already embedded in our scenario analysis, and we do not rule out such rising inflationary pressure like what Yusri has mentioned earlier. We do have some contingency plan because we do have good relationship with these contractors and we've mainly engaged them in our other turnarounds and maintenance activities. This is where we leverage on our strong relationship with them in term of managing costs moving forward. As what we have experienced in the you know pandemic two years ago. All right. Maybe my one final question I have, and I leave the floor, is regarding your PIC. Yes, you are starting in on eighth of May. What should we be looking in terms of the plant utilization, you know, as we move towards the rest of this year and next year? The plan is to stabilize the operation, Alex. We are looking at maybe in the mid-60s%, initially. If we are stable at that level, and then we'll slowly gradually raise it up. But in the initial couple of months period, post-startup, that's the level that we're looking at. I see. Okay. Generally, but by next year, you should be looking at closer towards 80%-90%. Would that be right? Yes, definitely. Our target is by next year, the plant is stable, and that would be running at its normal operating rate of close to 90%. Okay. That's great. Thank you so much. That's all for me. Thank you. Our next question comes from Ho Meng Kong from UOB. Please ask your question. Hi. Greeting guys. Thanks for the result. I just have three questions. My first question is more of a reminder. You probably have covered this in your earlier briefing on Perstorp. But just hope for your reminder again, between, say, the Perstorp portfolio versus your existing portfolio, which one will have the higher exposure towards the volatility of feedstock costs and say once you have consolidated both portfolios in under the group, what is your plan to narrow the gap or fix the weakness in from the weaker portfolio? That's my first question. My second question is, I think. Sorry. Please go ahead. Yeah. Thank you. Ho Meng Kong, can you repeat that particular question because your line was not very clear on our side. Sorry. Okay. My first question is basically to just to be reminded again on the in terms of feedstock cost volatility between the Perstorp portfolio as well as your existing portfolio which has a higher exposure. Once you merge the portfolios, what is your plan to fix the weakness or narrow the gap? Yeah. Maybe I answer that question first. Yeah. I think, as what you will acknowledge from your reading the Perstorp's reports, which they publish every quarter, their portfolio is more to intermediate and specialty chemical. Being in specialty chemical, they are able to pass on any increase in cost of especially if it's stock down to their customers while preserving their margins, which is around 15%-20% for the past how many years, right? You will notice that from the report. Once they are consolidated in our pool, that is basically the kind of operating philosophy that we will embed in a way that, you know, is there any certain feedstock that we can leverage with the PCG's portfolio, we will do so. That's basically the quick win that we can get from this particular acquisition. Understood. All right. That very clear. Okay, my second question is, I think recently there is some article that states, you know, to decarbonize the global petrochemical industry, that would roughly cost about $800 billion. Of course this is a moving target and, you know, it's across the years. But just wondering whether have you done your studies and what would be your share of that, of the cost, over the years? Yeah. Okay. You will notice, like, Ho Meng Kong, that last year we approved and make known, especially in our sustainability report on our net zero carbon emissions roadmap toward 2050. With the immediate reduction of 30% of carbon emissions by 2030. That is the short-term, medium-term, and long-term goal towards net zero by 2050. Along that three phases, we have initiated. We have a list of initiatives and targets that we are embarking. We are still early in this journey, but I think compared to our peers and other players in this region, we are quite well ahead. As what GC have mentioned, we will educate and we will disclose the result of this initiative, as we move forward, once we brief the analyst and public on a quarterly basis. The cost associated. With regard to the costs associated with it, Ho Meng Kong, currently it's a bit too premature to really put this on public domain yet. We will of course make known in terms of the necessary CapEx or OpEx for sustainability and initiative as we move forward towards this initiative. Okay. Understood that it's premature, so it is probably also not realistic to just apply the mark there on the industry multiplied by the $800 billion also, I guess so. Just wait for your guidance now, right? No. Yeah. Oh, got it. My last question is just to I know you don't. It's not your project per se, but you do have a partnership arrangement with the [Pengerang me thanol] plant. Just wondering whether do you happen to know the percentage of completion of that plant as of the latest date that you have there? Actually, we are not a party to that particular project, and we don't know the progress of that particular project. To be specific there. Yeah. Okay. I thought you have some sort of a marketing arrangement. If my memory serves me correctly, yeah. Thank you. Yeah. That is currently in discussion and then what's the collaboration that we have. Currently, we have no concrete information about the progress of the plan and then where they are in terms of project status. Yeah. Okay. Noted on that part. Thank you so much. That's all I have for now. Okay. Thank you. Our next question comes from Desmond Loh from Citi. Please go ahead. Desmond, please unmute your line and ask the question. Thank you. Hi, management. Can you hear me? Hi, management. Yes. Can you hear me? Very vaguely. Sorry. You need to speak louder, Desmond. Okay. All right. Hi, can you hear me? Is it better now? Yeah. Yes. Right. I have a few question. The first one is, may I know why is the F&M EBITDA margin down from 49%-42%? Okay. Basically, one of the main reason is basically for additional maintenance work that incurred for fertilizer and methanol segment, especially at ABF, fertilizer in Bintulu, for quarter one, 2022. That's basically the main reason for lower EBITDA margin for F&M segment. Thank you. My second question is, I saw that there was a big increase in EBITDA from other segments. What exactly drove this, and will this amount persist in the future quarters? Thank you. Okay. That is basically contribution from our BRB. Currently, BRB fits in our other segment. I would say around 90% of what you see in the other segment is basically from BRB. BRB has contributed a lot, and then due to improved margin on silicone business, as well as the lubricant and additive chemicals, globally and mainly in the European continent. Got it. Thank you. I have last two questions. Given the refinery has started up test run, when do you expect the cracker and various downstream to start operation? Well, as I've mentioned, that it will be upon stabilization of refinery. Desmond, I think we expect now the cracker to start within the next couple of weeks and subsequent to the cracker start-up and stabilization, we expect by within June we will be starting our the what I call it? The petrochemical plants within the complex. Thank you. The last question. Given the first wave of M&A, right, will this, you know, affect PChem's current dividend payout ratio, which is about, you know, at 60%? Thank you. As we mentioned last week in our analyst briefing with regards to [inaudible]. This particular M&A activities will not affect our dividend policy, and that dividend policy of 50% of PAT will still remain. Thank you for your time. Thank you. Thank you. Thank you. Our next question comes from Pianin Panico from UBS. Please ask your question. Thanks for the presentation. I have two question, please. Let me ask one by one. If you look at the production volume for the F&M segment, look like both methanol is up from last quarter and urea is pretty flat. We look at the price of urea and methanol, they are both up. Could you explain why the EBITDA and EBITDA margin dropped this quarter? Hello, hello, Pianin. Can you hear me? Hi. Yes, Azli, thank you. Can you hear me? Yeah. Okay. Okay. Okay. All right. Yes. Yeah. I think I basically have answered that your question from Ho Meng Kong just now. It's basically a lower EBITDA margin for fertilizer methanol mainly due to number one the maintenance activities undertaken at the Bintulu Fertilizer that happens in quarter one, as well as we see a little more normalization of the urea prices in quarter one. That's basically the main reason for the reduction in EBITDA margin for F&M. Okay. Azli, let me ask one more related to this. For the maintenance cost at Sabah in Q2 and methanol, would it be more or less than Q1? It will be slightly more, Pianin, because it will be, it involves even larger units, especially the methanol. Not to forget the fertilizer plant in Sabah, which is the bigger one that we have compared to our other fertilizer plant. Thank you. Second question is on the PIC. Could you now give us, you know, some color on the profit or selling price structure of this project? Can you confirm that, you know, the cost overrun at the refinery, if any, would not be, you know, spill over to PChem? Thank you. Basically, what we will book in our balance sheet and income statement is our 50% portion of the revenue, EBITDA, and other financials, including balance sheet, in the PChem complex. As what I iterated earlier and before in the analyst briefing earlier, the whole refinery cracker and petrochemical are meant to work in a fully integrated basis. The idea is for each of the whole value chain is supposed to work on a systematic and then provide a return, integrated return to others. You know, we don't foresee any cost overrun or anything that affects the refinery being burdened to the petrochemical unit. Because number one, it's a two separate entity. One is the JV between PETRONAS and Saudi Aramco, which owns the refinery and cracker. The other is a JV with PCG and Saudi Aramco, which owns the petrochemical. In terms of profit, or margin of this project, should we look at the integrated margin from naphtha to polyethylene, or is it just ethylene to polyethylene? Just the downstream part. I think we can have more color on that particular analysis, Pianin, once the complex starts on the second half of the year. Basically, you know, the economics of the petrochemical is based on the price of ethylene and propylene that the Pengerang petrochemical complex buys from the refinery. That is basically based on the, you know, over the fence prices, based on published prices. Okay. Last quick question, please. Go back to the maintenance cost. Could you give us, you know, the amount of maintenance cost in Q1? On this, basically, we do not, in general, Pianin, as you know, we do not disclose our maintenance cost quarter by quarter. In general, what I mentioned earlier, our typical maintenance cost for the whole year is basically around MYR 700 million-MYR 800 million. That would be the guidance for the year 2022. I hope that will be sufficient for your valuation purposes. Sure. Thank you so much for this. Bye. Thank you. Our next question comes from Anshu Singh from JP Morgan. Please ask your question. Hi. Good evening. Can you hear me? Yes, yes, we can. Hello. Thank you. I have a few questions. I'd like to start with... As you mentioned, others contribution was mostly driven by BRB. Could you provide more details regarding the margin, the exact contribution, for that business? Basically, internally they have performed well, compared to what we even expected, what we budgeted, internally. Currently they contribute around 5% of EBITDA of PCG Group. We expect BRB to contribute even more for this quarter and for the remaining of quarter three and quarter four. Okay. My next question is regarding the effective tax rate. We saw it climbed a bit quarter-on-quarter. I remember you saying that the impact from the prosperity tax would not be that high last quarter. I just want to confirm. Is it something else or is it due to the prosperity tax? No. Basically, the increase in effective tax rate is very marginal. It's. Our effective tax rate is currently stood at 6% for the quarter. That is basically based on the margins that we have incurred during the quarter. This is not anything to do with the prosperity tax, as you know, we have simulated earlier. Effectively, on a full year basis, we could see around 6%-6.5% going forward? Basically our guidance to the analyst is that if our effective tax rate for year-over-year and also applies for 2022 is between 6%-9%. That would be the guidance that we provide to analysts. Perfect. My next question is regarding the associate contribution. It's continuing to drop for the past two quarters. Could I have an idea about why this is happening? As you see, Anshu, the contribution from JV associates for this quarter is lower compared to quarter four as well as the corresponding quarter last year. It is basically due to two things. One is a lower contribution from our JV with BASF, BPC, BASF PETRONAS Chemicals. That is basically mainly due to some plant issues that they have experienced in quarter one, as well as the lower spread for OXO and acrylics. And then there was also a lower contribution from IPASB, the acetic acid business, also due to lower spread for acetic acid. That basically resulted in the lower JV and associated contribution to our bottom line. Okay. My last question is regarding the SG&A cost. Could you remind us why we saw a spike in the fourth quarter? Anshu, can you repeat that question again? The spike in SG&A expenses. SG&A, selling general and administrative. Oh, the spike in SG&A? Yeah. That's basically, you know, mainly due to the market environment. Basically, the SG&A is in line with the increase in product prices. That correlates with the SG&A. Okay. No, thank you so much. Thank you. Our next question comes from Raymond Yap from CGS-CIMB at CIMB. Please ask your question. Hi, good evening, everyone. I'll keep it short. Just now the guidance was for the effective tax rate 6%-9%. Could I just double check that 6%-9% is based on the denominator that excludes the associate profit? Technically it should exclude the associate profits because taxes are lumped into the associate line in a single line. You're right, Raymond. Because what we book from the JV is profit after tax. That is, ETL is excluding the contribution from the JVs. Okay. The 6%-9% guidance on that basis as well, right? Yes. Basically we have a wide range because, based on the market movement. At the time where the product prices and spread is higher, our effective tax rate is lower, as you would notice over the past five years. Yeah. Okay. Sure. Just a small question on depreciation. I noticed that the depreciation for O&D actually fell quarter-on-quarter. Is that sustainable? What's the reason for the decline? Basically, Raymond, some of our asset, mainly in the olefins & derivatives segment, has reached, you know, the end of the depreciation life. That is basically nothing to worry about because we have been incurring CapEx, sustaining CapEx, since, you know, 10, 15 years ago. That is basically the result of that lower depreciation. Okay. It sounds like it will be sustainable going forward. The last question is on the BRB. You mentioned that in the first quarter it was 5% of group EBITDA. May I know what it was in the fourth quarter of last year? Was around, if I'm not mistaken, Raymond, it's around 4.5%. The contribution from BRB is quite small. Even if it increases, on BRB level is high, but over the, you know, let's say the MYR 8 billion of EBITDA that we had last year, it is still more slightly small in terms of percentage. Okay. The 4.5% you mentioned is for the whole of 2021, right? Correct. Yeah. Correct. Okay. Sure. Thanks. Bye. Thank you, Raymond. Thank you. Our next follow-up question comes from Alex Goh, from AmBank. Please go ahead. Yeah. I just wanted to follow up on a question on the associate and JV. You mentioned that, it's because our BASF petrochemicals that it was down or because of plant issues. I just want to find out, have these issues been resolved? Because I've noticed the numbers keeps coming down over the last few quarters. Has the issue been resolved? That's the first question. The second question is, given the fact that oil prices are up, petrochemical prices are up, why was OXO and acrylics prices down? Okay. Number one, Alex, the plant issues has been resolved. It was resolved expeditiously, if I say so, because both Yusri and I were at the JV two days ago, and we have been updated on this on a timely manner. With regards to the prices, I think that the prices are down because of supply and demand. They are also producers of OXO and acrylic acid within this region. That has basically supply dynamics impacted the margin for OXO and acrylic. I see. Going forward, since that you have settled your plant issues, should we be expecting your JV to rebound in the next few quarters? We expect so, Alex, but it all depends on the market dynamics, especially the prices and spread, mainly for OXO and acrylics. Okay. That's great. Okay, thanks. That's all for me. Thank you. Our next follow-up comes from Ho Meng Kong from UOB. Please go ahead. Hi. Just two quick follow-up questions to keep it short. I'm just wondering, you know, in terms of the demand related to China especially, say, you know, with the news on the easing lockdowns from China as well as, if I'm not mistaken, some of the petrochemical plants in China are supposed to undergo maintenance period in the middle of this year, probably until third quarter. Assuming if they do ease the lockdown, are you seeing increased bookings already for China, meaning a reversal of the trend that you saw in first quarter where you need to shift products to non-China markets, but is it a reversal? Do you see the reversal now back to China? Yeah. That's it. That's it. That's my first question for that, yeah. Okay. I think it was earlier on, our CFO, Encik Azli, has also answered. What we are seeing is basically, as and when we see the market changes, we will do our strategy of placing the volume. I think we have planned for China and also the other regions. As and when the market dynamic changes, we will change our plan accordingly. I see. Ho Meng Kong, we don't expect it will be beyond our normal average because I think our sales channels are basically within the same range year in and year out. I think that's basically I think the guidance we'll be giving in terms of allocations of product to the different markets. Understood. My second question is also related to demand, but more on, say, the effects on the end sectors that consumes your demand. Say for example, if the inflation comes in and that affects, say the demand of your products that supports, say the heavy sectors like, let's say for example, automotive sectors, food sectors and so forth. At the same time, you know, events like China's lockdown may be kind of like give some angle that probably products for healthcare sector, packaging and masks will still be strong. Do you see that? In terms of the demand of your products, are still resilient to these kind of sectors relative to those other sectors that could be more prone to inflation pressures. Yeah. I think, like, that's one of the benefits that we as PCG have from producing commodities. It can serve a lot of industries. It quite have a versatile and varied use of this particular commodity. In event that one industry suffers from demand disruption from rising inflation, there may be other opportunities that we can find from other particular industries that may be booming and then opening doors for us to grab that particular opportunities. That is basically one of the benefits that we can tap in the event that there are particular disruption in the markets. Being quite big in this region, we are able to capture market opportunities as, you know, as we see signpost of this on the slowdown of this demand. Okay. All right. Thank you so much. All right. Thank you. We have reached the end of the question and answer session. I'll now turn the call back to Ms. Zaidah Ali Shaari for closing remarks. Thank you, Agnes. We have now reached the end of today's briefing. Once again, thank you, ladies and gentlemen, for your kind participation. Please reach out to us should you have follow-up questions. We look forward to receiving the report once published. Good evening, and have a great weekend ahead.