Commercial division to drive PetDag volume growth
PETALING JAYA: Petronas Dagangan Bhd (PetDag), the listed operator of Petroliam Nasional Bhd (PETRONAS) stations nationwide, enters the year with the widely anticipated RON95 petrol subsidy rationalisation to be implemented in the second half of 2025.
Analysts were mixed on their views for its outlook following the release of the company's first quarter ended March 31, 2025 (1Q25) results last Friday, with CGS International Securities noting that the RON95 subsidy rationalisation move may impact retail volumes, already suffering from inflationary pressure.
It cited that there had been a 2% year-on-year and quarter-on-quarter decline in overall sales volume in 1Q25.
The research house maintained a 'reduce' call on the stock with an unchanged target price of RM16.74.
While it noted that 1Q25 earnings were broadly in line with its financial year ending Dec 31, 2025 (FY25) estimates, there could be more downward pressure in the second half of 2025.
Kenanga Research, which has maintained an 'outperform' call on the stock with an unchanged target price of RM21.20 per share, noted that retail volumes were expected to remain weak in FY25 due to overall cautious consumer sentiment, but this would be offset by the company's optimised cost structure.
'Its commercial division is expected to remain the driver for volume growth in the near term due to healthy demand,' the research house said.
TA Research said the top 15% of household income earners would not significantly reduce their consumption despite the RON95 subsidy rationalisation.
However, the research house did not discount the possibility that the government might widen the scope of the rationalisation to other income groups, especially in the context of driving the transition to cleaner transportation modes such as electric vehicles and public transportation.
TA Research has raised its target price for PetDag to RM19.10 apiece from RM18.20, but maintained a 'sell' call on the stock given the limited upside from current share price levels.
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