PetDag’s sales volume to improve going forward
KUCHING: Petronas Dagangan Bhd (PetDag) sales volume is expected to improve going forward as borders gradually reopen and more economic sectors resume their operations, analysts observed.
“As borders gradually reopen under the ‘National Recovery Plan’, together with the resurgence of interstate and international travels, coupled with resumption of economic activities, we believe PetDag should see higher overall sales volumes in the fourth quarter of the financial year 2022 (4QFY21) and even more so in FY21,” the research team at Kenanga Investment Bank Bhd (Kenanga Research) opined in a report following the release of its 3QFY21 results.
It noted that PetDag’s first nine months of FY21 (9MFY21) core net profit of RM385 million were below expectations mainly due to the slower sales volumes which were caused by the nationwide movement restriction orders throughout the year.
MIDF Amanah Investment Bank Bhd’s research team (MIDF Research) believe that PetDag could still be recuperating from the previous nationwide lockdown, which affected demand similarly as 2QFY21.
However, following the National Recovery Plan, the reopening of economic sectors and increased vaccination rates have posed a better recovery prospect, which would be further improved by lifting all travel restrictions in the near term.
It noted that the retail segment has successfully changed all of its Diesel to be Euro-5 compliant, coupled with the expansion of the availability of Segar@Mesra at selected petrol stations.
Its LPG bolstered its distribution channel by utilising the Gas Petronas mobile app to increase accessibility, and Lubricant expanded its ecommerce footprint of which it has recently launched a new channel for purchase and hire of Petronas AutoExpert services through the platform.
“The commercial sector is also showing signs of revival, with more economic sectors reopening and international borders gradually reopening,” MIDF Research said.
Moving forward, the research team said Malaysia has recently reached a milestone of more than 90% completely vaccinated persons, and had since lifted interstate travel restrictions – subsequently showing the progress towards a positive economic recovery.
“PetDag expected that Budget 2022 will have a favourable impact on PetDag’s product demand. The high Brent crude price, coupled with a global economic growth is expected to sustain until the coming year. PetDag remained vigilant for any opportunities to accelerate its marketing and leverage on partnerships and digital technology, which would support PetDag’s future strategies,” it added.
All in, MIDF Research maintained its ‘neutral’ view on the stock as it opined that the previous border restrictions from Covid-19 pandemic resurgence could continue to affect PetDag’s sales volume – albeit at a minimal – countered by the high Brent crude oil and recovering global economy.