PetDag’s 4QFY17 to exceed expectations

KUALA LUMPUR: Analysts called on Petronas Dagangan Bhd’s (PetDag) fourth quarter of the financial year 2017 (4QFY17) to likely exceed expectations by a variance of about five per cent and possibly touching RM1 billion.

In a report, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) believed that PetDag, which will be announcing its 4QFY17 results next week, could see its normalised earnings

(excluding gains on disposals) exceeding expectations by a variance of about five per cent, possibly touching the RM1 billion mark.

“Our expectation is largely premised on higher average RON95 MOGAS price of RM2.26 per liter in 4QFY17 compared with RM2.10 per liter in 3QFY17 (up 7.6 per cent quarter-on-quarter), Brent crude oil price appreciation of approximately 20 per cent within the quarter which gives rise to ‘lag gain’ opportunities, and overall upbeat economic momentum (4QFY17 GDP growth of 5.9 per cent),” it opined.

In addition to the expected commendable earnings, MIDF Research also believed that there could potentially be a special dividend or higher final dividend declared. The three cumulative dividends declared for FY17 amounts to 48sen per share.

“We believe that there could be approximately an additional 35 to 40sen declared, bringing the total

dividend declared to approximately 83 to 88sen per share (payout more than 80 per cent),” it said, noting that this could be a result of a large gain on disposal recorded in 3QFY17.

Of note, PetDag recorded a gain on disposal of RM430.8 million from the disposals of 100 per cent equity interest in Petronas Energy Philippines Inc (PEPI) and 40 per cent equity interest in Duta Inc.

The actual cash proceeds of the disposal was RM552.4 million.

All in, MIDF Research pegged a ‘buy’ call on the stock.