KUCHING: Petronas Dagangan Bhd’s (Petronas Dagangan) fourth quarter of 2016 (4Q16) results are expected by analysts to be the weakest seasonally as sales volume are likely to be impacted by a reduction in consumption from the school holidays last month.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), Petronas Dagangan’s 4Q (October to December) is seasonally the weakest quarter in terms of sales and earnings for the past eleven quarters due to the year-end school holidays – less travelling by car to school and to work.
“As such, the company’s sales volume is also usually weaker in 4Q,” it said.
In anticipation of a weaker volume sold in 4Q of financial year 2016 (4QFY16), MIDF Research anticipated Petronas Dagangan’s full year FY16 revenue to come in at approximately RM21.5 billion to RM22.5 billion while full year earnings to be approximately RM850 million.
The research arm noted that this would suggest that 4QFY16 earnings to be below RM200 million.
For full year FY16, MIDF Research expected Petronas Dagangan’s sales volume to register around 15.05 million litres – a very marginal decrease compared with FY15’s full year volume sold of 15.07 million litres.
MIDF Research maintained its earnings forecasts at this juncture as the research arm believed its forecasts were intact.
For FY17, the research arm was of the opinion that Petronas Dagangan’s expansion plans in terms of new station openings will be limited and that the focus will be on increasing the throughput of every station.
“In addition, continuous effort will be placed on further reducing and containing its operating costs in a bid to increase profit margins,” the research arm said.
All in, MIDF Research maintained its ‘neutral’ stance on Petronas Dagangan with an unchanged target price of RM24.80 per share.
The research arm’s valuation was premised on price earnings ratio 2017 (PER17) of 28-fold pegged to earnings per share 2017 (EPS17) of 88.6sen.
“The target PER is based on Petronas Dagangan’s average four-quarter rolling PER over the past five years,” it said.