Petron seen delivering strong earnings

Petron Corp. is set to deliver a strong performance in the next two years, hinged on continued network expansion and improved margins, according to stock market online research firm 2TradeAsia.com.

In a research note, 2TradeAsia said Petron ended 2017 on a high note after sales volume broke the previous year’s record and service stations breached the 3,000 count.

The oil firm’s earnings grew 30 percent to P14.1 billion while topline revenues rose 26 percent to P435 billion.

This year, the brokerage firm is projecting Petron’s net income to reach P15.65 billion and sales to hit P487.59 billion.

Bottomline and topline numbers will continue to grow in 2019, hitting P17.56 billion and P546.99 billion, respectively, 2TradeAsia said in its report.

Growth will be supported by its plan to spend $250 million, or around P13 billion, in capital expenditure this year.

“This will be used for expansion of its retail outlets in the Philippines (+200 stations) and Malaysia (+75), from its 2017 base of 2,400 & 600 stations, respectively,” 2TradeAsia said.

However, it said the oil company would set its capex lower at $200 million in 2019 through 2021.

The brokerage firm said Petron would deliver improved margins this year with favorable inventory gauges in place.

“The company sees improved margins on diesel this year, including gasoline,” 2TradeAsia said. “Preliminary simulation shows slightly positive inventory gain as of 20 March at P185.6 million, following the increase in crude futures pricing for Jan.-Feb.”

This is despite planned maintenance shutdowns on its Philippine and Malaysian refineries.

Petron has scheduled its Bataan refinery to undergo maintenance shutdown in the second quarter, which would cover about 15 days.

Meanwhile, the oil firm’s Malaysian refinery is targeted to have its maintenance schedule in the fourth quarter which may take 13 to14 days.

2TradeAsia said Petron “does not see its sales volume trend to be affected with the implementation of the new excise taxes on petroleum.”

The Tax Reform for Acceleration and Inclusion (TRAIN) Law took effect at the start of the year. Under the law, gasoline will have a higher excise tax from P4.35 per liter to P7 per liter while new tax rates of P2.50 per liter will be imposed on diesel, of P3 per liter on kerosene and of P2.50 per liter on Auto liquefied petroleum gas (LPG).