PetDag Should See Minimal Impact On Diesel Rationalisation

Following the Prime Minister’s speech on 21 May 2024 and in line with the thematic report by MIDF on Determining Winners and Losers of Targeted Subsidy, 4 April 2024), Petronas Dagangan Berhad informed that on the Retail segment, Diesel prices will only affect Peninsular demand, which stood at one third of the retail sales volume.

Meanwhile, Sabah & Sarawak is expected to remain the same with subsidy categories depending on vehicle type. For Commercial, Diesel the subsidy has minimal impact as the differential of commercial Diesel today and subsidised Diesel is not overtly significant, and the intention is to be more focused on transitioning. Consequently, we are expecting the
consumer sector to rationalise to the smooth transition, giving minimal impact to cost of goods. At this point, the expectation of companies applying for the targeted Diesel subsidy is relatively small, and PDB is on the lookout if the number of applicants would spike following the speech, while being mindful of the mechanics of the targeted subsidy. No impact on reported Shell’s talks with Saudi Aramco.

According to media reports, Shell had been in the talks with Saudi Aramco to sell off its pump stations in Malaysia with a deal worth up to USD1b. MIDF opines that there would be no negative impact in terms of competition for PDB’s pump stations, as the government still controls the retail pricing of fuel.

Nevertheless, PDB has the leverage on its digital solutions for its operations, for all customers, which the house believes gives the group an upper hand on its Retail and Convenience segments. Operating expenditure was higher due to the festive season. PDB disclosed that its operating expenditure (opex) for 1QCY24 was due to marketing expenses following festivities (Chinese New Year and Eid), as well as promotions to the Malaysia Open 2024 and its recent sustainability project of collecting used cooking oil (UOC). Therefore, the house said it expects opex from Retail and Convenience segments to be normalised in the next coming quarters.

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