Sslee blog

Petron Malaysia: My email to Kenanga IB analyst and Petron Malaysia IR

Publish date: Mon, 31 Oct 2022, 08:34 AM
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This is my blog
Dear Mr. Steven Chan,
I refer to your research article initial coverage: Petron Malaysia Refining - A Crack Spread Refinery Play.
Dated: 27 October 2022
I started to invest in Petron Malaysia at the beginning of this year as I believe post covid-19 with no more travel restriction Petron Malaysia petrol stations will do very well in bringing in a consistent earning to Petron Malaysia.
In fact I make the below comment in i3 Petron Malaysia forum:
Petron Malaysia:
Q2 Revenue: RM 5,596 million, PAT RM 183 million EPS RM 0.68
Q1 Revenue: RM 3,800 million, PAT RM 106 million and EPS RM 0.394

Q2 Revenue: RM 9,501 million, PAT RM 237 million and EPS RM 0.239
Q1 Revenue: RM 7,618 million, PAT RM 118 million and EPS RM 0.119
Petron Malaysia earning from Biodiesel + refinery + retail and commercial sales petroleum products
Petdag’s earning from retail and commercial sales petroleum products
Anything wrong, I promote Petron Malaysia at RM 7.00? Petron Malaysia makes 2.8 times higher EPS than Petdag but sells at 2.8 times lower than Petdag.
I am shocked and can’t believe my eye Kenangan IB analyst had just discounted Petron Malaysia petrol stations earning contribution totally and assumed Petron Malaysia as “A Crack Spread Refinery Play”
I refer Petron Malaysia annual report: page: 21-22
A profitable network of service stations:
We accelerated our volume recovery through demand-generating programmes. Amongst them was the expansion of our retail and commercial networks at strategic locations to ensure that we are able to meet higher demand in time for the easing of travel restrictions.
Together with our sister companies, we expanded our retail network with 18 new service stations to bring our total number to about 740 service stations nationwide.
May I ask, before you totally discounted Petron Malaysia services stations earning contribution have you seek clarification with Petron Malaysia management on:
1.     Out of 740 service stations nationwide how many were controlled by Petron Malaysia and its sister company?
2.     What is the volume recovery quarter to quarter for Petron Malaysia services stations?
3.     Petron Malaysia service stations contributed how many % of earnings to Q1 and Q2 2022 PAT?
4.     Your assumption on investing CF of RM (200) million for the year 2022 and 2023, have you clarified with management that the CAPEX is for refinery or petrol services stations expansion?
"A refinery play. PETRONM is part of the larger Petron Corporation (headquartered in the Philippines), which entered Malaysia back in 2012 after acquiring ExxonMobil’s downstream business. Petron Malaysia Refining & Marketing Bhd (PETRONM) primarily operates the Petron Port Dickson Refinery, which has a rated capacity of 88k barrels per day. The facility produces a wide range of petroleum products including gasoline, diesel, LPG, and aviation fuel. While PETRONM also markets and operates some petrol stations in Malaysia, the network of petrol kiosks is shared with a non-listed sister company, Petron Fuel International Sdn Bhd.
Regional crack spreads currently down trending. The Singapore Mogas 92 (Platts) Brent crack spread futures have fallen off a cliff from its peak in May-June 2022"
You are right in saying the Mogas 92 (Platts) Brent crack spread futures have fallen off a cliff from its peak to negative now. But since the Petron Port Dickson Refinery produces a wide range of petroleum products including gasoline, diesel, LPG, and aviation fuel:
May I ask?
1.     Have you checked what is the crack spread for diesel and aviation fuel?
2.     The reasons behind diesel and aviation fuel crack spread remain at elevated levels when Mogas 92 (Platts) Brent crack spread futures have fallen off a cliff?
For your reference:
Gasoil/diesel crack spread chart (historical highest level range)
Kerosene/ jet fuel crack spread (at historical highest range level)
Gasoline/petrol RON 92 crack spread spread chart (normalize level range)
3.     Have you checked with Petron Malaysia management what is the Port Dickson refinery yield in gasoline, diesel, LPG, aviation fuel etc?
I am writing in this letter with the hope that IB analysts should seek truth from facts and seek facts and figures from the Petron Malaysia management so as to give a more informative, unbiased and fair assessment/valuation.
A fairer Petron Malaysia valuation is by sum of parts valuation on Petron Malaysia refinery margin and Petron Malaysia petrol stations earning:
Thank you
Best Regards
Lee Soon Sheng
General Counsel / Company Secretary / Manager-Human Resources/Compliance Office
Shahidah Aris
Senior Legal Advisor/Assistant Company Secretary
I refer to 63th AGM minutes:
We would like to emphasize that the company is an integrated company. Both the refinery and marketing are contributing to the gross margin, and we are not reporting the split between the two. Our business is the retail business but, in terms of the supply chain, we are sourcing either from the refinery production or imports of the finished products. So, all parts of the supply chain are contributing to the margin. But we are not able to disclose the split between the two.
If an IB analyst can mistake Petron Malaysia as “A Crack Spread Refinery Play” when Petron Malaysia management is saying “Our business is the retail business”.   As a minority shareholder of Petron Malaysia, I can only say Petron Malaysia management had failed to explain to the investing public with facts and data why the management classified Petron Malaysia business as a retail business?
Analysts Reports/ Rumours:
"The downstream oil and gas business is one that is often impacted by vagaries of the international oil prices and foreign exchange fluctuations of which a company in the business has little control over. As such, Petron Malaysia does not, as a general rule, provide any guidance to analysts in developing an analysis /report on the Company. The Company further does not provide any earnings estimates or forecasts.

However, if there are any such reports that are developed independent of the Company, and if the Company is of the view that there are contents that may need clarification, the Company will take proactive measures to respond with clarifications."
I hold Petron Malaysia management to the above guidelines with the hope that the management will proactively engage with Kenanga IB analyst and investing public to clarify the management position that Petron Malaysia business is more of retail business rather than “A Crack Spread Refinery Play” as per presumption/perception by IB analyst and investing public.
Thank you
Have a good day
Best Regards
Lee Soon Sheng


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7 people like this. Showing 20 of 20 comments


If you look at those Cattle Shows Beauty Contests, you can interview candidates and talk about personality, abilities, compassion etc etc and then determine the Winner/s


To sensationalize the whole issue in order to make money or to draw in readers/viewers, you can just measure the vagina and declare the winner/.s.

so you are not at all happy with his vagina measurements? He should have used a vernier caliper rather than just his fingers?

2022-10-31 19:31

Mat Cendana

An informative post with the facts and sound arguments. Thank you for your effort. I have some Petron shares since I believe it offers the best value, when compared to Petronas Dagangan. After reading this post, I'll be adding more should the price come down for whatever reason (happens often enough when it loses 20 sen or so in a day). May not look like it now but I feel Petron has a much better chance of returning 100% or close to capital returns than PetDagang.

2022-11-01 19:05


Dear sslee, you write to them, but do they ever reply to you?

2022-11-02 13:08


Good Article SSlee . Hope they reply your email and admit their glaring mistake- where they have totally ignored Petron's lucrative retail business.

2022-11-02 14:05


Getting a reply is not the reason for writing in the first place.
Like Mandela, sslee might be required to habitate Kajang [neighbour to Prisoner Ku] for 20 years [when Soap Bright prosecutes him for Criminal Defamation] before a Real Change takes place.

2022-11-02 14:27


Mr Lee, Fantastic coverage by you!! To IB analyst and Petron...
Perhaps a cc of your coverage and a call to the head of the IB analyst department will be great..
Contact Edge !

2022-11-02 14:34


Dear tehka,
Previously Petron Malaysia IR did reply to my further questions on AGM minutes as follow:

Dear Mr Lee,

Our apologies for not reverting to you earlier in relation to your email request. Management had considered and deliberated at length your request but we concluded that we are unable to accede to your request to table the questions (you had posed), to the Board. It is our position that the questions that had been submitted in writing by you prior to the AGM, had been addressed (along with similar questions on the day from other shareholders) to the extent possible.

Please note that at the Annual General Meeting (AGM), it was made clear to all shareholders present that there are certain questions that we cannot answer or entertain – questions ranging from forecasts/projections, business of other companies to providing sensitive information that is necessary to keep confidential for the Company’s benefit. You will also note that in the summary of the AGM proceedings that we posted on the website, we had re-iterated the same.

As a shareholder, you will appreciate that as a listed company Petron Malaysia Refining & Marketing Bhd is in a unique position in the downstream oil & gas industry in Malaysia with it being an integrated oil refinery and retail business whereas our competitors are ether unlisted (and thus not bound to make any disclosures) or where listed, are either a refining business or a retail business. In such a competitive market, managing our proprietary information, our strategy for expansion etc are sensitive information that if made known publicly, could be (and in some cases have been) detrimental to the Company. That then translates to the detriment of shareholders.

At the AGM, whilst there were some questions asked in advance (and then far more at the meeting itself), we kept to the policy of not addressing certain areas. Indeed at the AGM, we even provided shareholders an additional day to email in questions they could not ask at the AGM due to time constraints and yet we just received about three (3) emails – two of which we mere comments/suggestions for future meetings. Shareholders at the meeting (being informed of the limits) did accept our explanation and asked many other probing questions from operations to financials to corporate matters etc that we addressed. Considering the healthy and engaging rapport we had with the shareholders, (and their obvious support in terms of votes later cast by them), we believe shareholders present were satisfied with our responses to questions they posed.

Unfortunately, you were unable to attend the AGM in person and we hope to see you next year. Thank you.

Best regards,
General Counsel / Company Secretary / Manager-Human Resources/
Compliance Officer

Petron Oil & Gas International Sdn Bhd (970208-X)
Petron Malaysia Refining & Marketing Bhd (3927-V)
Petron Fuel International Sdn Bhd (4527-V)
Petron Oil (M) Sdn Bhd (8823-D)

2022-11-02 17:51


End result is same as Jaks. => No answer.

The difference is that Petron is very polite about it.

=> The Jaks enkresshi was positively hostile, very natural for the Krogan Empire ... ...
The phrase. "we keep telling you." was that what they said? really make me laugh out loud.
Will still make me laugh whenever I read it again.


2022-11-02 18:40


Exact Klingon Hengresshi From Jaks.

[ We have explained this to you many times.
The truth is that despite our explanations you have chosen to misinterpret and manipulate the facts entirely on your own accord, fancy and personal agenda.
you should have ought to know as an investor yourself.
Your statement that you were led to belief anything at all is wrong.
We have repeatedly answered that ]

if you need comic relief in this dark covid world now, please drop by sslee blogs to read company replies.


2022-11-02 18:55


Jaks is history. I pity my good friend Aseng still holding so much faith/hope with JAKS

2022-11-02 19:01


Petron Corp just posted a way below expectation Q3 results. The group (Included PetronM) only posted net income of 500 millions peso for Q3!

2022-11-09 09:52


I just check Petron Corp website: No Q3 result yet.
So may I know where you get the information:
The group (Included PetronM) only posted net income of 500 millions peso for Q3!

Our Financial Reports
Quarterly Reports on SEC Form 17-Q
2nd Quarterly Report
1st Quarterly Report

2022-11-09 10:52


Posted 8.2 billions for first 9 months (First half 7.7 billions)

2022-11-09 10:58


Industry leader Petron Corporation maintained its strong financial performance in the first nine months of the year, reporting a consolidated net income of P8.2 billion, up 64% from last year’s P4.99 billion.

Combined sales volume from Petron’s Philippines and Malaysian operations as well as the Group’s Singapore trading subsidiary grew 37% to 80.4 million barrels from 58.8 million barrels in the same period of 2021, reflecting higher fuel demand. In the Philippines, total sales volume jumped by nearly 30%.

The average price per barrel of Dubai crude dipped by $11 per barrel to US$96.88 in the third quarter due to recession fears. Despite the correction in the third quarter, prices of finished fuel products remained elevated compared to last year. With the volume increase, Petron reported consolidated revenues of P631.1 billion in the first nine months, more than double that of last year’s P291.6 billion.

The demand recovery in most economies supported the continued strength of regional refining cracks resulting in the overall improvement in margins. Petron’s operating income stood strong at P16.5 billion, 23% more than 2021’s P13.4 billion. These improvements, however, were tempered by the increase in financing cost due to the unprecedented strengthening of US dollars against the peso and the successive hikes in interest rates.

“Despite uncertainties from geopolitical conflicts affecting the industry, we are pleased to note that our recovery is still on track. We are working hard so we can end the year strong and remain committed to providing consumers and industries with quality fuel products they need,” said Petron President and CEO Ramon S. Ang.

Petron is the Philippines’ largest oil company, operating the only remaining refinery that is capable of providing nearly 40% of the country’s petroleum requirements. Petron operates a 180,000-barrel-per-day refinery in Bataan, 30 terminals, and over 2,000 service stations nationwide.

Petron has recently obtained the go-signal from its shareholders to allow the company to construct and operate a coco-methyl ester plant and to secure relevant permits.

Petron also acquired a PME (palm methyl ester) plant in Malaysia to serve as an internal source for its biodiesel products. Earlier this year, the plant has undergone capacity expansion to support the higher demand for biodiesel in the country.

2022-11-09 14:09


Petron’s operating income stood strong at P16.5 billion, 23% more than 2021’s P13.4 billion

Interesting: Petron Corp has borrowing of more than USD 1 billion. A 10% depreciation against USD will result in more than 2 billion peso addition to the borrowing in Peso currency.

2022-11-09 14:12


Need to wait for Q3 detail result to work backward from Net income attributable to Non-controlling interest to get the NP for Petron Malaysia.

2022-11-09 14:17


Dear SLee,
Your write ups on value of Petron is highly commendable. Any feedback from the IB and also wondering why Petron is not backing you and us to wanting to clear matters to benefit all of us.. Especially the fact that Petron has its own petrol stations plus also it's franchise stores.
I am wondering why NO response from the IB and efforts by Petron to address this important issue.

2022-11-14 22:00


Dear TakePofits,
So far Petron Malaysia and Kenanga IB has not yet response to my email.
This morning send another email to them

Petron Malaysia projected net income from Petron Corp Q3 financial result announced on 14th Nov 2022.

2022-11-15 15:16


Great job SsLee..Hope Petron and the IB's get a real wake up call to give their answers to your letter to them.

2022-11-16 15:41

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