PETALING JAYA: Petronas Dagangan Bhd
(PetDag) risks seeing lower retail sales of petrol once the government announces its subsidy rationalisation measures on fuel at the end of September, analysts say.
In a report, CGS International (CGSI) Research said PetDag faced the possibility of a negative impact on sales volumes as foreigners will be prevented from buying subsidised RON95 petrol because of identity checks, while Malaysians may try to limit the volume of their RON95 purchases to their monthly quotas only.
“Our current earnings forecasts for PetDag assume that volume growth will be nil for this year (FY25) to FY27.
“Given the dark clouds on the horizon, we think the risk-reward ratio for investors is unfavourable,” the research house said, adding that this was based on the fact that PetDag’s share price had risen by almost 20% over the past three months.
The research house also expects jet fuel demand growth to return to organic rates unless the Visit Malaysia Year 2026 tourism campaign has a big effect on demand on the commercial sector.
At an analyst briefing after the release PetDag’s second-quarter (2Q25) results, BIMB Research noted that the fuel retailer highlighted a positive outlook for the second half of this year (2H25), guiding for higher retail segment sales volumes.
The commercial segment is also projected to maintain robust volumes driven by stronger domestic consumption, seasonal travel trends and a continued rebound in tourism activity.
The company also expects the sales of jet fuel to remain strong due to new airline contracts secured as more carriers enter the Malaysian aviation market.
For 2Q25, PetDag’s core net profit of RM270mil was 8% lower quarter-on-quarter (q-o-q) and 7% lower year-on-year (y-o-y) due to unfavourable trading margins as well as impairment made on land development costs on the retail side.
The drop came despite a 5% rise in sales volume q-o-q in 2Q25, with retail volumes up 4% q-o-q and commercial volumes up 7% q-o-q.
The research house maintained its “reduce” call on PetDag with a target price of RM16.74 a share.
Meanwhile, BIMB Research has a “hold” call on the counter with a target price of RM22.30 per share.
The research house said PetDag currently trades at an FY26 price-to-earnings multiple of 20.9 times, which is broadly in line with its 10-year average of 20 times, which it deemed fair.
