PETALING JAYA: Petronas Dagangan Bhd
(PetDag) is seen to be supported by resilient domestic fuel demand in the near term, underpinned by affordable RON95, resilient gross domestic product growth and improving tourism activity.
TA Research said retail sales volumes remained broadly stable despite recent subsidy changes while jet fuel demand had started to recover, although management expects it to take several quarters to return to previous peak levels.
It said commercial segment margins could normalise in the second half of 2026 after an exceptionally strong second quarter, when a sharp decline in Mean of Platts Singapore (MOPS) prices generated favourable price-lag gains.
“Given that profitability remains sensitive to product-price movements, the exceptional second quarter of financial year 2026 margin uplift may not be repeated if prices trend higher,” TA Research said.
Nevertheless, the research house said PetDag’s integrated Petroliam Nasional Bhd (PETRONAS) supply chain and diversified earnings base should continue to provide resilience.
For the first half of the financial year 2026 (FY26), PetDag’s core net profit of RM677.6mil came in above its expectations, accounting for 61% of TA Research’s full-year forecast and 60% of consensus estimates.
Second-quarter revenue rose 77% year-on-year (y-o-y), supported by a 1% increase in total sales volume and a 75% jump in average selling prices, while profit before tax increased 42%.
Retail segment revenue grew 85% y-o-y on a 7% increase in sales volume and a 73% rise in average selling prices, although operating profit fell 77% due to higher product costs and operating expenditure.
Commercial segment revenue increased 70% y-o-y, while operating profit more than doubled to RM454.3mil, driven mainly by higher gross profit contribution from Jet A1 and favourable MOPS price movements.
TA Research raised its FY26 to FY28 earnings forecasts by 1.4%, 2.6% and 3.7%, respectively, lifted its target price to RM20.80 a share from RM20.30, and downgraded the stock to a “hold” from “buy” following its recent share price strength.
Separately, CIMB Research said the company’s second-quarter earnings exceeded expectations due mainly to stronger- than-expected commercial segment earnings.
The research house said core net profit rose 47.4% y-o-y and 46.6% quarter- on-quarter to RM402.2mil, lifting first-half core earnings to RM676.5mil.
Group revenue climbed 77.5% y-o-y to RM16.1bil, driven mainly by a 75% increase in average selling prices across products due to the West Asia conflict.
CIMB Research said retail demand remained resilient, particularly for diesel, with sales volume increasing 7% y-o-y despite a reduction in the Budi95 quota and a work-from-home policy for civil servants.
However, retail earnings before interest, taxes, depreciation and amortisation (Ebitda) fell sharply due to an unfavourable MOPS trend.
This was offset by the commercial segment, where Ebitda surged 155.2% y-o-y to RM446mil as declining jet fuel prices created a temporary margin benefit.
“We do not expect the strong commercial segment margin recorded in the second quarter to be sustained,” CIMB Research said. It added that jet fuel prices had gradually increased in the third quarter, potentially reversing the timing benefit and leading to weaker commercial margins.
CIMB Research raised the FY26 earnings forecast by 5.1% and target price to RM20.50 a share from RM19.40, while maintaining a “hold” recommendation due to limited re-rating catalysts.
It said the stock remains supported by forecast dividend yields of 5.3% to 5.7% for FY26 to FY28.
