Highlights
KLSE: PETRONM (3042)       PETRON MALAYSIA REFINING & MARKETING BHD MAIN : Energy
Last Price Today's Change   Day's Range   Trading Volume
5.05   +0.03 (0.60%)  5.01 - 5.15  27,800
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Vulture123 https://www.klsescreener.com/v2/news/view/599538
Good news for Malaysia Equity market next Monday :-)
08/11/2019 5:20 PM
Choivo Capital Statutory reserve requirement, not interest. Scare me like crazy when i first saw the number
08/11/2019 9:56 PM
Choivo Capital Phillip,

400m in a good year, 300 in a normal one, and 150-250 in a bad one. With 200m a year being basically fixed deposit earnings (retail earnings).

I too like a company with clear earnings and revenues coming in the future, and a well managed and resourceful one.

Maybe you were just talking about the refinery then, and not including the retail division.

Yes, you are correct, fuel retail industry is relatively saturated, but not so much so that Petronm cannot grow the business at high-ish single digits the last few years.

Are you by extension saying that the refinery business is not saturated? Or the Chicken Egg industry is not saturated, or the surimi business is not saturated?

===

Now i have margin at 4.5% (do note its barely used), lets say i use it. In exchange for the 4.5%, i am getting a company yielding me 13%, of which about 30% is paid out, with the remaining 70% reinvested at 10-20% returns. Sounds good to me.

===

On GKENT, i dont deny the management is fairly decent, but at that price, you are getting a water meter business at 16 times earnings (lets assume they are good at water meters). Not much of a deal to be honest, though when compared to QL, it may very well be a bargain.

Kidding aside, The key part here is how good is the construction division.

How good are they at their rail works etc. Is that company more than just a golfing buddy of najib? How do they compare against GAMUDA etc?

How badly will they get chopped on the MRT contracts?

Well, i don't see them getting any overseas rail projects, so we can at best think they are a jaguh kampung, except with GAMUDA around, i don't see them being even that.

Whether they will get chopped on the rail projects, i have no idea.

Does not mean its a bad buy, i was thinking about it for abit, but its by no means better than the petronm you so keenly deride.
08/11/2019 10:08 PM
Choivo Capital Phillip, before you comment more on Petronm, go and buy the PFI accounts from 2014 to 2018. Lets talk then.
08/11/2019 10:12 PM
Philip Greta I have already given my explanation on petronm and rce capital.i have attended the agm, read the industry trade journals and the financial reports. I highly doubt you will see much sustainable growth here. As you seem to be the expert on rce capital and petronm which was your biggest largest shareholding I believe you may have some confirmation bias on your rce and petronm.

It is fine to be confident on a stock that you own. But it is useless to just tell someone to look further into something without explanation and talk later.

I will just continue to monitor your performance with your rcecapital, hengyuan and petronm to see the quality of your investment strength.

I will stop commenting here again until the next QR results.
09/11/2019 8:04 AM
popo92 From qualitative analysis , of coz petron failed to meet almost all aspects. But when you look at quantitative side, I still think there are much risk for now to be honest. It is almost a gamble of whether there’s a better year ahead 400m, a normal year 300m-200m or a bad year 100m-negative. Unless you bet it right with 400m, there’s some chance to hit and run with some low p/e investors buying from you. Other than that, highly chances the market will still pay petron a low p/e for unsustainable growth. In my opinion, the safest time to punt petron is to buy when they are having a bad year, best is losing money (probably of unexpected crack spread from its refinery, there’s chance) and provided share prices are depressing. Manipulating fear and greed on this petron share price is the best chance you are looking at, but no petron is not in depressing mode now.
09/11/2019 12:52 PM
sheldon The way I look at it - so long as the co generates a profit and Petron reinvests a portion, it's value should increase.
11/11/2019 6:20 AM
Choivo Capital Popo, I don't trade. This is a long term investment for me.
13/11/2019 10:44 AM
popo92 Choivo, although i still don't feel now petron is in the right timing and cycle i do agree that your long term investment on petron (price around 5) can serve you well. Wish you lucks on reaping your fruits on petron one day.
13/11/2019 8:04 PM
Felicity If we compare between PDB and Petron, even though PDB can be expensive, Petron is way underpriced. Currently the market is giving a negative value to the refinery as the low crack spread pulled down the value of Petron. Should not be the case.
The revenue for Petron is about 40% of PDB while the valuation is about 15x smaller.
Never like the government funds supporting these companies like PDB but still Petron is underpriced.
14/11/2019 5:15 PM
benlim https://www.bloomberg.com/news/articles/2019-11-13/struggling-asian-refiners-to-get-a-diesel-demand-boost-in-2020
14/11/2019 8:05 PM
john0909 petron corp only posted P1bil net income only... therefore dont expect any outstanding result for q3 2019...
15/11/2019 9:28 AM
Outliar @felicity

What do you think the fair value of Petron is?
15/11/2019 12:49 PM
Felicity I think it is more than RM10 stock. Market cap should be at least RM3 b
15/11/2019 5:43 PM
untong I am hoping when PETRONM can stop spending on capex or at least some rest
20sen div for 5.2 DY is 3.85%,@20% payout only
last 10 years their highest payout is only 38%, i am hoping the days they can get their div payout to 50%, then the DY could reach 7%~so at current price it is a good entry haha

few good things i noticed;
recent quarter (ended June 2019) they had paid off all their borrowings (with help cash received from government subsidies), not sure when they stop spending cash for acquisition of PPE (Jan-June about 257mil spent)
Crack spread is climbing up since Jan 2019~~
16/11/2019 2:41 PM
sheldon Agreed untong - it should pay much more dividends in proportion with its earnings. Earnings are all huffing & puffing, which can be manufactured by any decent accountant.

Being able to convert it to cash dividends is the real deal!
19/11/2019 7:35 AM
untong crack spread increase 10% today, PETRONM price drop 2% today hmm
price getting attractive

https://www.tradingview.com/symbols/NYMEX-D1N1%21/
20/11/2019 4:16 PM
Choivo Capital Why pay it out as dividend if they can reinvest it at a high rate of return? Having said that, i do acknowledge that the reinvestment of most companies is actually shit.

Having said that, petronm capex is not for fun or waste. They actually need to incur that amount to upgrade and meet compliance.
20/11/2019 7:23 PM
Loh Kok Wai W 如果老马下台这只股就完蛋。
20/11/2019 8:09 PM
untong I view it as "forced to" reinvest just to comply. Unless they will see higher margin after the refinery upgrade. Unless most of it are spent on more retail stations opening.

Hving said that i take back my words on little revenue growth on PETRONM. Currently their retail station market share is 21-22%, i see there is some room of growth, maybe will get to 30% market share, in 5 years time hopefully,this is the most important figure i monitor every year.
21/11/2019 1:52 PM
Choivo Capital Well, if there is one thing i'm bad at, its definitely quarter predictions haha.

Would be nice to see plant utilization rate this q versus the last.
21/11/2019 5:17 PM
Outliar Hmm, the 200m a year fixed deposit earnings retail + refinery might not materialize after all. Cash flow still seems pretty good though?
21/11/2019 5:26 PM
Choivo Capital I'm fairly certain the retail division did well. The question is how heavy was the stock holding loss.

Retail is about 400m gross profit, before allocating other operating cost, so it may not be 200 flat.

See lah, no idea, not enough information.
21/11/2019 6:54 PM
john0909 what is the positive and negative based on this quarter report?
21/11/2019 8:27 PM
sheldon A Loss : 0
B 0 - 50m - 2 (Sheldon, john 0909)
C 51 - 100m : 2.5 (hock007, damiantreez, Chiovo Capital)
D - > 100m 0.5 (Chiovo Capital)

Looks like John 0909 & I are spot on
21/11/2019 10:17 PM
hock007 the quarter report seem not bad, with 3 weeks of maintenance it still manage to come out net profit result. remember last year quarter end result making 25m loss
21/11/2019 10:21 PM
supersaiyan3 I bought Petronm because I heard Petron's dispatch unit can use 3 people compare to Petronas' 60 people. You can't go wrong with low cost in this business environment.

Also, their new station percentage is the highest.

Buy more and hold. Its a long term game.

I think QL will be good though, last year they kena disease also, I heard 3 houses gone (compare to LH's 7 houses * 0.5). You can see the panic sale from the bosses last year. Now on should be good. Moreover, CPO rises little.
21/11/2019 10:53 PM
supersaiyan3 Phillip,

1. Why are investors only willing to pay 6.24 PE for petronm? This is a very interesting question indeed. the next few questions are followups that will be very pertinent.

I think the main reason is dragged down by HengYuan, the Chinese will drain HY and not Petronm. Then its the crack spread.

1a. What is the possibility of Petronm increasing their profit margins above 5%? If they could do it, how would they do it and would it be feasible? (this includes things like increasing efficiency, buying organically integrated businesses and investing in new products or systems that competitors are unable to have access to)

In fact Petronm is very efficient, cost structure is much lower then Shell and PETRONAS. PETRONAS spent few hundred thousand and down 4 -6 months just to make the logo black, totally unnecessary.

1b. What is the possibility of users to choose petronm above other competitors like petronas, shell etc even if the prices were fixed nationwide.

Petronm has the most effective reward program. You can get 1.5% discount using SMILE.

1c. what is petronm gameplan to hit 4 billion a quarter? do they have enough resources (without cutting the 3% dividend), and is it likely that they will do so?

Well they expand the fastest in terms of new store opening.

1d. was 2017 an anomaly with the crack spread or is it something that can repeated sustainably?

It will repeat 2-3 years later. Then I will sell RM10 again.
21/11/2019 11:02 PM
supersaiyan3 The short fall of petronm are:

The pump is the slowest.
It has the lowest number of workers.
The image is old and cheap.
Very low / none advertisement.
....
21/11/2019 11:12 PM
Choivo Capital The pump is the slowest.
- I don't know bout you guys, but i follow the old wives tale of pumping at the slowest speed to ensure i get as much fuel as possible.

It has the lowest number of workers.
-Only when i pump at petron, do the workers offer to wipe my windscreen, and its close to every time.

The image is old and cheap.
- This one is a matter of opinion i suppose. I think it looks very vibrant. Shell, BHP and Caltex looks very old. Petronas also to an extent.

Very low / none advertisement.
- Petrol stations don't need much ads or any tbh, its sheer existence is an ad, id rather their advertising money going towards opening more stations. But i think they do market their synthetics etc quite well, for a petrol station company at least.
22/11/2019 9:01 AM
Panorama1 Cash flow is good as Q3 affected by various factors as highlighted in the QR3. Q4 2019 expected to be much better that Q4 2018. Trust Your Intuition as Value Buy at current price level of 5 before it head towards 6 level.
22/11/2019 9:38 AM
sheldon I make sure & I tell my kids as well that every time we need fuel go to Petron. (When I held Digi shares, I switched my entire family from Maxis to Digi).

I think the unexplored potential of Petron stations is the basic groceries. May be the management feels that it's too much of an effort for some loose change but Petdag considers it as a significant source of income. Besides the straight forward income, the grocery and petrol pump complement each other.
22/11/2019 9:58 AM
untong Bought some @ 5.01, avg cost @ 5.9, to make it above FD rate div yield
3.3% at 20sen/share @ 20% payout (60mil payout)

Dividend should be more than achievable given 300m+ net cash level and 9months operating cash flow of 265 mil before working capital changes, despite spending 300m+ for PPE 9months period.

Haha no point predicting quarters profit as there are too many moving parts. I just looking at sales volume, cash level and PPE spending. For annual i will look at retail market shares.

Next year the PPE spending should be lesser i guess. See this
https://www.theedgemarkets.com/article/petron-awards-us132m-diesel-refining-plant-job-south-korean-petrochemical-firm

Somehow PETRONM is similar to AIRASIA; 20% net operaing profit dividend payout, heavy capex, cyclical.
22/11/2019 3:09 PM
Panorama1 Believe me ... Trust My Intuition. Those who buy in now at current 5 level will reap the good rewards in due course :-)
22/11/2019 5:08 PM
EatCoconutCanWin got imparment loss for this quarter?
22/11/2019 5:09 PM
Panorama1 I am a contrarian investor. I will Buy When There's Blood In The Streets :-) Crisis = Opportunities
24/11/2019 10:30 PM
TheContrarian I am the real contrarian, hahaha.
24/11/2019 11:58 PM
KassimBaba7 Ill be buying back soon - but need to park cash elsewhere - good luck with the market for the time being. Hope I don't miss the boat.. we got 3months to the next quarter.
25/11/2019 7:50 PM
Shinnzaii Aiyo...gov decide to go up one or two sen for RON95...let see it will U turn or not...congratulation retail...hehe
27/11/2019 4:30 PM
Panorama1 Refining margin looking good. Buy whilst sentiment is poor and price is Low.
03/12/2019 9:59 AM
Equityengineer Shook up at closing
04/12/2019 9:42 PM
Panorama1 Happily accumulating :-) Last Call ... Watch It Move.
05/12/2019 8:11 AM
sheldon I'm looking forward to a good dividend announcement for the 4th qtr results or else I'm gonna take a flamethrower to the AGM.
10/12/2019 6:36 AM
john0909 @sheldon, expecting a 20cents payout most likely i feel, provided q4 result not gone unexpected one...
10/12/2019 10:00 PM
sheldon RM329m cash balance on 30 Sep.

9 months profit at RM148m.

9 months cash generated from operations RM976m.

Liabilities down RM326m (don't look at lease liabilities as they're just change in accounting treatment)

With such glowing numbers, they could easily reward shareholders with 30 sen which cost RM81m
11/12/2019 9:48 AM
Outliar What I do like about Petron is that its ROIC has been consistently high. Even taking into account its latest quarter, assuming Petron does not earn money at all (no loss either) in the 4th Quarter, taking the same amount of capital currently, it is earning over 20% ROIC. And has been consistently doing so for the previous years despite the odd loss in one quarter here and there.
11/12/2019 2:04 PM
sheldon Profits & returns are all huffing & puffing as to how great the business is. It's like someone claiming he's the heavyweight champion. The real deal is when he gets into the ring to prove all his claims.

Likewise any decent accountant can manufacture profits. The real deal is when it's converted to cash & distributed in the form of dividends.
12/12/2019 9:59 AM
Equityengineer When will the dividend announced
12/12/2019 11:52 PM
Outliar No dividend was declared for Q3
13/12/2019 9:41 AM
sheldon Long wait bro ...

Dividend announcement = April

Ex and Payment dates = Jun
16/12/2019 5:56 AM


 

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