• Overview. Petronas Dagangan (PetDag) 4Q22 core PATAMI rose by 19% YoY to RM178mn mainly driven by higher sales volume amidst pent-up demand. However, it declined by 38% QoQ as sales volume was flattish whereas inventory gains were minimal as oil price movement stabilised.

• Key highlights. Total sales volume was flattish at 4bn litres in 4Q22 which is similar to pre-COVID level. For full year FY22, total volume sold stood at 15.2bn litres which is 28% higher than FY21 volume of 11.9bn litres.

• Against estimates: Inline. FY22 core profit grew by 38% YoY to RM745mn which is in line with sales volume growth. This is largely within both our and consensus’ estimate at 100% and 99% respectively.

• Dividend. A 4 th interim DPS of 26sen was declared which is similar to 4Q21 DPS. In addition, a special DPS of 14 sen was also declared, bringing YTD DPS to 76 sen (FY21: 70sen) which implies a payout ratio of 101% (FY21: 128%).

• Outlook. As sales volume has normalised to pre-pandemic level, the company has shifted its focus towards growing its non-fuel segment via the expansion of Café Mesra outlets.

• Our call. We maintain a HOLD call on PetDag with an unchanged DCFderived TP of RM21.70. This implies 25x FY23F P/E. Given the peak demand scenario in the refined petroleum product, we foresee a challenging task for the company to continue growing its sales and earnings substantially. Meanwhile, growth from non-fuel segment remains to be seen.

Source: BIMB Securities Research - 22 Feb 2023