PETALING JAYA: Petronas Dagangan Bhd
’s (PetDag) commercial business will continue to benefit from demand for jet fuel and diesel in financial year 2026 (FY26) and offset any weakness in its retail business.
Analysts said the fuel retailer’s margins managed to hold in FY25 ended Dec 31, on lower operating costs and improved demand from its commercial business which offset the weaker performance of its retail segment.
MBSB Research noted PetDag’s commercial segment delivered a strong performance in FY25, supported by higher sales volumes despite a weaker pricing environment.
Commercial revenue increased marginally to RM17.5bil driven by a rise in sales volume, mainly from stronger demand for Jet A1 and commercial diesel, which more than offset a 10% decline in average selling prices.
As a result, FY25 commercial pre-tax profit rose to RM751.2mil (up 24% year-on-year), underpinned by higher gross profit in line with improved aviation fuel demand and lower operating expenditure, reinforcing the segment’s role as the key earnings driver for PetDag, the research house said in a report.
The research house maintained a “buy” call on PetDag with a target price (TP) of RM23.64 a share.
UOB Kay Hian (UOBKH) Research said PetDag could get a boost from its successful appeal against the Inland Revenue Board (IRB) to claim for capital allowance on petrol station canopies and halide lights as qualifying plant expenditure when constructing a new station or during maintenance.
“Although we await management’s guidance on any reversal of excess tax paid, we opine it may be a material amount,” it stated.
The court’s decision covered for PetDag’s consolidated appeals since IRB enforced the refusal decision in 2018/2019.
Meanwhile, UOBKH Research had maintained its “hold” recommendation on the stock with a target price of RM23.20 a share.
PetDag has issued a total dividend per share of RM1.13, representing 100% payout and significantly above its 50% policy payout rate on its improved cash flow position in the final quarter of FY25.
UOBKH Research attributed it to the fall in its subsidy receivable from RM1bil to under RM500mil in 4Q25.
The company made a net profit of RM1bil in FY25 or earning per share of RM1.106 on revenue of RM38.3bil.
