Petronas Dagangan to record lower volume for retail segment
KUCHING: Petronas Dagangan Bhd ( Petronas Dagangan) has been projected by analysts to record lower volume for retail segment going forward, while others also note that there could be some downward pressure upon earnings in the upcoming quarter.
The research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research), which downgraded Petronas Dagangan to ‘ neutral’, revised its recommendation in view of expected lower volume for retail segment once the targeted subsidy initiative is online.
MIDF Research also took into consideration the re- floating of RON95 petrol price being implemented by the government tentatively in the second quarter of financial year 2019 (2QFY19).
“Additionally, as Petronas Dagangan is currently in the midst of conducting aggressive refurbishment on some of its stations, we opine that it will lead to lower sales volume,” the research arm said. “Furthermore, we are also wary on the declining trend of Jet A1 fuel due to the aircraft optimisation initiatives taken by airlines which we opine could further exacerbate the impact on earnings.”
Meanwhile, Affin Hwang Investment Bank Bhd (Affin Hwang Capital) maintained ‘hold’ on the stock.
“There could be some downward pressure upon earnings in the upcoming quarter due to lower Means of Platts Singapore (MOPS) prices, resulting in some inventory losses,” it said.
“Upside and downside risk to our call include swing in retail and commercial sales volume.
“Downside risk could also arise from any unforeseen higher thanexpected spending for the current stations infrastructure upgrading.”