PETALING JAYA: Petronas Dagangan Bhd
(PetDag) is expected to maintain a high dividend payout ratio of 90% to 100% for the financial year 2025 (FY25), with room for a special dividend.
In a note, BIMB Securities Research said the special dividend can be supported by PetDag’s potentially excess cash position.
PetDag’s net cash balance as at end-September 2025 surged by 85% to RM3.7bil from RM2bil in FY24, partly driven by the rationalisation of government diesel subsidies.
To put it into perspective, the last special dividend of 14 sen was declared in the fourth quarter of 2022, when net cash stood at RM2.7bil.
BIMB Securities Research pointed out that PetDag’s dividend payout ratio had risen to 95% in FY24, following a lower ratio of 82.1% previously.
“Assuming a 95% payout ratio, we project a dividend per share (DPS) of 106.6 sen (FY25), 95.7 sen (FY26) and 95.9 sen (FY27).
“Based on our existing core earnings per share forecasts, this implies dividend yields of 5.3% (FY25), 4.7% (FY26) and 4.7% (FY27).
“To date, PetDag has declared a cumulative DPS of 66 sen in the first nine months of FY25,” it added.
Meanwhile, BIMB Securities Research cautioned PetDag’s profit margin outperformance may not be sustainable.
This is amid ongoing jet fuel price volatility and an uncertain oil price environment, which could constrain PetDag’s ability to maintain elevated commercial margins.
The research house said better-than-expected commercial margins would help PetDag deliver a stronger bottomline in the fourth quarter of FY25 (4Q25).
PetDag is due to release its results for 4Q25 on Feb 24. BIMB Securities Research expects the results to meet expectations, in line with FY25 forecasts.
“This performance is expected to be driven by better-than-expected commercial margins, benefiting from favourable Mean of Platts Singapore (MOPS) price trends.
“Based on our estimates, PetDag is likely to report a net profit of RM286mil, indicating a 2% quarter-on-quarter (q-o-q) increase or 14.8% year-on-year (y-o-y).
“This would bring cumulative FY25 net profit to RM1.13mil, marking a y-o-y increase of 1.9%.”
It also expects the commercial segment’s operating margin to improve to 4.3%, representing a 0.4 percentage point (ppt) q-o-q and 1.3 ppt y-o-y expansion, primarily driven by lower input costs following the decline in MOPS prices. The softer pricing environment has translated into reduced product procurement costs, supporting margin expansion.
For context, Jet Fuel Singapore FOB Cargoes prices declined by 1.8% q-o-q in 4Q25, in tandem with a decline in the Brent oil price of 7.5% q-o-q, providing a favourable cost backdrop.
In addition, margins are expected to be further supported by strong sales volumes of higher-margin products, particularly Jet A1 and diesel, underpinned by sustained aviation demand and infrastructure-driven commercial activity.
Pending 4Q25 results, BIMB Securities Research said its FY25-FY27 earnings remain unchanged.
“We upgrade our rating to ‘hold’ (from a ‘sell’) with an unchanged target price of RM19.50. We believe downside is well contained at current valuation levels, as uncertainties surrounding subsidy rationalisation have largely abated. The share price is further supported by a 3.5% yield,” it said.
