Petronas Dagangan’s opex expected to sustain in line with initiatives

KUALA LUMPUR: Petronas Dagangan Bhd’s (Petronas Dagangan) operating expenditure (opex) is expected by the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) to sustain in-line with the company’s Commercial Excellence initiatives.

According to MIDF Reseasrch, for the first quarter of financial year 2017 (1QFY17), Petronas Dagangan’s opex increased by 12 per cent year on year (y-o-y) to RM306.1 million largely due to increases in purchases of professional services as well as repair and maintenance.

“We are expecting opex to maintain at such levels in-line with the company’s Commercial Excellence initiatives,” it said.

On dividends, the research arm highlighted that Petronas Dagangan had declared the group’s first interim dividend for FY17 of 14 sen per share, representing a payout ratio of 54.9 per cent.

Overall, no changes were made to MIDF Research’s earnings estimates.

MIDF Research also maintained its ‘buy’ recommendation on Petronas Dagangan with a revised target price of RM28.00 per share.

The research arm’s target price was premised on price earnings ratio 2018 (PER18) of 28-fold pegged to earnings per share 2018 (EPS18) of 100.1 sen.

“The target PER is based on Petronas Dagangan’s average fourquarter rolling PER over the past five years,” it said.