Petronas Dagangan Bhd’s (PetDag) shares rose by 3.57 per cent in the morning trading session, driven by the company’s stronger performance across all of its business segments in the third quarter ended Sept 30, 2022 (Q3 2022).
At 12.11 pm, PetDag emerged as one of Bursa Malaysia’s top gainers, rising by 80 sen to RM23, with 152,800 shares changing hands.
In a filing with Bursa Malaysia yesterday, PetDag reported a higher net profit of RM275.97 million in Q3 2022 from RM119.31 million in Q3 2021, due to higher gross profit contribution from its commercial segment following favourable price movements and higher demand.
Revenue increased to RM10.13 billion from RM5.24 billion in Q3 2021 due to improved sales volume and higher average selling prices.
Basic earnings per share had also more than doubled to 27.80 sen from 12 sen previously.
As such, the retailer and marketer of downstream petroleum products has declared an interim dividend of 20 sen per ordinary share for Q3 2022, payable on Dec 27, 2022.
Kenanga Research said PetDag’s nine months of financial year 2022 (9MFY22) results exceeded its expectations, thanks to the company’s overall strong sales volumes, coupled with favourable product prices for its commercial segment.
“PetDag will benefit from the reopening of the economy but its demand growth could be dampened by the potential introduction of targeted fuel subsidies.
“We raise our full FY22 and FY23 net profit forecasts by 30-8 per cent and our target price (TP) by seven per cent to RM23.90 from RM22.25 previously, and maintain our ‘market perform’ call,” the stockbroking firm said in a research note today.
Meanwhile, CGS-CIMB noted that there is a strong likelihood of PetDag’s commercial profits moderating in Q4 2022 from the exceptional Q3 2022 level, albeit partially buffeted by higher jet fuel sales due to the year-end holiday travel boost.
Conversely, we expect to see higher retail profits in Q4 2022 versus the depressed profits in Q3 2022, since Means of Platts Singapore (MOPS) prices for mogas and diesel have so far fluctuated in a narrower band in October and November 2022.
“Overall, we pencil in a core net profit forecast of RM220 million for PetDag in Q4 2022, lower than Q3 2022’s RM283 million, but stronger than the average of RM135 million per quarter in the first half of 2022,” it said in a note today.
CGS-CIMB said in the next one to two years, the key de-rating catalyst is any plan by the Malaysian government to cut the fuel subsidy burden, which will likely cause pump prices to rise for many Malaysians.
As such, in anticipation of the subsidy cuts, it had reduced its forecast for PetDag’s retail volume growth to nil from four per cent for FY23, and to -5.0 per cent in FY24 from 2.0 per cent previously.
