PETRONAS DAGANGAN SHARE PRICE SURGES ON STRONG 3Q NET PROFIT

KUALA LUMPUR, Nov 26 (Bernama) -- Petronas Dagangan Bhd's shares climbed nearly five per cent following a strong surge in net profit announced yesterday.

At 9.50 am, the counter gained 86 sen to RM18.28 with 170,300 units traded.

Petronas Dagangan almost doubled its net profit in the third quarter (3Q FY2024) to RM335.13 million against RM184.72 million in the same period of 2023, thanks to strong margins negated by elevated operating expenditure in line with increased activities.

The margins were supported by a favourable price trend for commercial and a decrease in overall costs due to a lower purchase premium. 

“The group also registered higher volume mainly from retail Mogas and the aviation sector, resulting from rising demand and passenger movements both domestically and internationally, which had positively impacted the group’s profitability,” according to its Bursa Malaysia filing. 

Revenue, however, decreased to RM9.73 billion compared with RM9.92 billion previously on the back of higher revenue by its retail segment by RM1.61 billion. 

It also declared an interim dividend of 24 sen per share, payable on Dec 24, 2024 bringing its nine-month dividend per share (DPS) to 62 sen, which translates to a payout of 71.3 per cent.

“We deem this as in line with expectations as Petronas Dagangan typically declares a higher DPS in the fourth quarter with a payout ratio of more than 100 per cent,” CIMB Securities said in a note.

CIMB Securities said it maintains the FY2024-FY2026 earnings forecast, discounted cash flow-based target price of RM20.10 and a hold call on Petronas Dagangan.

“Despite the positive surprise of the strong 3Q 2024 core net profit, we remain cautious about the earnings outlook owing to the uncertainty associated with the potential rationalisation of the RON95 subsidy in mid-2025.

“The government is still determining the income threshold for high-income earners who may be excluded from certain subsidies in 2025, potentially limiting the exclusion to the top 10 per cent (T10) instead of the top 15 per cent (T15) of earners, with the T15 category's definition still under review,” it said.

This poses a downside risk for the company as the implementation of targeted RON95 subsidies could suppress volume growth in the retail segment, it noted.

-- BERNAMA