Latest news with #PetronasDaganganBhd
The Star
6 days ago
- Business
- The Star
Modest retail volume growth from RON95 price cut
PETALING JAYA: Petronas Dagangan Bhd (PetDag) is not expected to see a material shift in its earnings trajectory despite the recently announced changes in RON95 petrol pricing. While the lower subsidised pump price may offer minor volume support, CIMB Research believes the impact on the fuel retailer's bottom line will be neutral in the near to medium term. The brokerage maintained a 'hold' call on PetDag, with a discounted cash flow (DCF)-derived target price of RM20.90. In its report, CIMB Research stated: 'We maintain our earnings forecasts, as the pump price adjustment for RON95 appears to be primarily aimed at easing cost-of-living pressures, rather than driving a meaningful uplift in fuel demand for retailers like PetDag.' Prime Minister Datuk Seri Anwar Ibrahim, in a televised address on 23 July, confirmed the government's targeted subsidy rollout for RON95 petrol, set to begin by end-September. Under the new structure, eligible Malaysians will pay RM1.99 per litre, down 2.9% from RM2.05, while foreign nationals will pay the full market price of RM2.50 per litre. According CIMB Research, the RON95 pump price cut came as a surprise given the government's fiscal tightening stance. 'The reduction in RON95 retail pump prices for Malaysians to RM1.99 per litre is an unexpected development in our view, as it signals a more generous effective subsidy per litre than previously anticipated, especially against a backdrop of subdued global oil prices and the government's continued efforts to tighten fiscal spending.' Despite the cut, CIMB Research expects retail volume growth to be modest. 'The reduced pump price is anticipated to be mildly positive for PetDag as it may support incremental demand, although we expect the impact on retail volumes to remain limited. This view is supported by the relatively inelastic nature of fuel demand in Malaysia,' it noted. The research house further noted that any demand gains may be offset by changes to subsidy eligibility. 'Any incremental volume gains are likely to be partially offset by the exclusion of non-citizens from subsidised pricing; foreign nationals will face unsubsidised market rates of around RM2.50 per litre, based on current prices,' it explained. On subsidy mechanisms, CIMB Research added, 'PetDag operates under Malaysia's automatic pricing mechanism, which ensures retail fuel margins remain protected, with the government reimbursing the difference between market and subsidised prices.' However, it cautioned that the primary downside risk lies in potential delays in subsidy reimbursement by the government stretching PetDag's working capital and cash flows. While PetDag posted strong commercial margins in the first quarter of 2025 (1Q25), the research firm flagged potential headwinds ahead. 'Although PetDag's 1Q25 performance was strong, supported by robust margins in the commercial segment, we believe this trend is unlikely to be sustained owing to slower economic activity and persistently soft market conditions, which may weigh on commercial fuel profitability.'
Malaysian Reserve
7 days ago
- Business
- Malaysian Reserve
Petronas Dagangan retains Hold, with discounted-cash flow based target price of RM20.90
WE maintain our earnings forecasts, Hold call, and discounted-cash flow-derived target price of RM20.90 for Petronas Dagangan Bhd, as the pump price adjustment for RON95 appears to be primarily aimed at easing cost-of-living pressures, rather than driving a meaningful uplift in fuel demand for retailers like Petronas Dagangan. Consequently, we anticipate the earnings impact to be largely neutral. Our base case assumes FY25–27F retail volumes to decline by 0.5 1.0% year-on-year primarily owing to a drop in diesel sales volume due to the full-year implementation of diesel subsidy rationalisation since Jun 10, 2024. Although Petronas Dagangan's 1Q25 performance was strong, supported by robust margins in the commercial segment, we believe this trend is unlikely to be sustained owing to slower economic activity and persistently soft market conditions, which may weigh on commercial fuel profitability. – CIMB Securities Sdn Bhd (July 24, 2025) (Calls by analysts tracked by Bloomberg: 4 Buy, 5 Hold, 2 Sell; Consensus target price: RM20.69)
New Straits Times
7 days ago
- Business
- New Straits Times
RON95 price cut mildly positive for Petronas Dagangan
KUALA LUMPUR: The lowered RON95 price to RM1.99 per litre is expected to have a mildly positive impact on Petronas Dagangan Bhd, potentially boosting demand amid relatively inelastic fuel consumption in Malaysia. CIMB Securities said its analysis of retail volume trends over the past 10 years shows that a 10–12 per cent drop in average pump prices typically leads to only a slight increase in total retail volumes of less than one per cent. "Furthermore, any incremental volume gains are likely to be partially offset by the exclusion of non-citizens from subsidised pricing, foreign nationals will face unsubsidised market rates of around RM2.50 per litre, based on current prices," it said. The research house said the reduction in RON95 pump prices came as a surprise, indicating a higher-than-expected subsidy per litre despite weak global oil prices and the government's ongoing fiscal tightening efforts. "Importantly, Petronas Dagangan operates under Malaysia's Automatic Pricing Mechanism, which ensures retail fuel margins remain protected, with the government reimbursing the difference between market and subsidised prices. "As a result, earnings impact on Petdag is expected to be neutral, with margins safeguarded under the existing subsidy mechanism," it added. CIMB Securities projects a 0.5 to 1.0 per cent annual decline in retail volumes from financial year 2025 to 2027, mainly due to reduced diesel sales following the full-year implementation of diesel subsidy rationalisation starting June 10, 2024. While Petronas Dagangan posted strong results in the first quarter of 2025 driven by healthy margins in the commercial segment, CIMB Securities said this momentum may not continue, citing weaker economic activity and ongoing market softness that could pressure commercial fuel profitability. The firm added that a key risk is the possibility of delays in government subsidy reimbursements, could strain Petronas Dagangan's working capital and cash flow. CIMB Securities maintained its "Hold" rating on the company, with a target price of RM20.90, noting that the RON95 price adjustment seems more focused on alleviating cost-of-living pressures than significantly boosting fuel demand for retailers.
The Sun
29-05-2025
- Business
- The Sun
Govt aims for all ports to transition to use B20 biodiesel
SEPANG: The government is targeting all ports nationwide currently using B10 palm-based biodiesel in their operations to transition to B20 biodiesel, said Plantations and Commodities Minister Datuk Seri Johari Abdul Ghani. Johari said the initiative would support the country's efforts to meet its goal of reducing greenhouse gas (GHG) emission intensity based on Gross Domestic Product (GDP) by 45 per cent by 2030 and to achieve net-zero carbon emissions by 2050. 'In the future, I want to see every port, like Penang Port, Port Klang, Tanjung Pelepas Port, Johor Port and Kuantan Port, start using B20 biodiesel in their operations. 'We are currently collecting statistics, and based on that data, we will be able to determine the operational costs involved,' he told reporters after launching the B20 Use Pilot Project for Ground Service Vehicles and Machinery at the Kuala Lumpur International Airport (KLIA) here today. He said the government had already begun pilot projects for the use of B20 biodiesel in Langkawi, Labuan and Sarawak in 2020 and now at KLIA for ground service vehicles and machinery to create a big impact and be a catalyst for national change in the use of green energy. Johari said the initiative not only supports Malaysia's transition toward sustainable energy but alsod the initiative not only supports Malaysia's transition toward sustainable energy but also strengthens the country's position as the world's second largest producer of palm oil, which is committed to responsible and proactive practices. 'This is one of the government's key initiatives because we've made a commitment to the world that we intend to achieve net-zero carbon emissions by 2050,' he said. According to Johari, the project is being implemented through a strategic collaboration between the Malaysian Palm Oil Board (MPOB), Petronas Dagangan Bhd, Malaysia Airports Holdings Bhd (MAHB) and Syarikat Teras Kembang Sdn Bhd. He said Petronas Dagangan Bhd serves as the B20 biodiesel supplier, MAHB as the airport operator, while Syarikat Teras Kembang Sdn Bhd manages the petrol stations supplying B20 to operators of ground service vehicles and machinery at KLIA. 'This launch is a historic milestone as it marks the first time B20 biodiesel has been introduced for the ground service sector or the industrial sector at airports in Malaysia,' he said. B20 is a blend of 20 per cent palm methyl ester (PME) and 80 per cent petroleum diesel. Its use is seen as contributing to sustainability and reducing the use of fossil-based fuels, as well as reducing the use of GHGs that cause global warming.
The Star
29-05-2025
- Business
- The Star
Govt aims for all ports to transition to using B20 biodiesel
SEPANG: The government is targeting all ports nationwide currently using B10 palm-based biodiesel in their operations to transition to B20 biodiesel, says Plantations and Commodities Minister Datuk Seri Johari Abdul Ghani. "In the future, I want to see every port, like Penang Port, Port Klang, Tanjung Pelepas Port, Johor Port and Kuantan Port, start using B20 biodiesel in their operations. "We are currently collecting statistics, and based on that data, we will be able to determine the operational costs involved," he told reporters after launching the B20 Use Pilot Project for Ground Service Vehicles and Machinery at the Kuala Lumpur International Airport (KLIA) here on Thursday (May 29). He stated that the government had initiated pilot projects for the use of B20 biodiesel in Langkawi, Labuan, and Sarawak in 2020 and was now implementing it at KLIA for ground service vehicles and machinery. Johari said the initiative supports Malaysia's transition toward sustainable energy and strengthens the country's position as the world's second-largest producer of palm oil. "This is one of the government's key initiatives because we've made a commitment to the world that we intend to achieve net-zero carbon emissions by 2050," he said. According to Johari, the project was being implemented through a collaboration between the Malaysian Palm Oil Board (MPOB), Petronas Dagangan Bhd, Malaysia Airports Holdings Bhd (MAHB) and Syarikat Teras Kembang Sdn Bhd. He said Petronas Dagangan Bhd serves as the B20 biodiesel supplier, MAHB as the airport operator, while Syarikat Teras Kembang Sdn Bhd manages the petrol stations supplying B20 to operators of ground service vehicles and machinery at KLIA. "This launch marks the first time B20 biodiesel has been introduced for the ground service sector or the industrial sector at airports in Malaysia," he said. B20 is a blend of 20% palm methyl ester (PME) and 80% petroleum diesel. – Bernama
