Oil Market Year-on-year prices of Dubai increased by 16.8% to average US$50.43 per barrel in the third quarter of 2017 from US$43.19 per barrel in the same period last year. OPEC’s production cut which started in January 2017 supported the increase in prices. Product cracks also went on an upward trend for naphtha, LPG, gasoline, kero-jet and diesel, owing to tightening of Asian and global balances.
Public Investment Bank Research has initiated coverage on Petron Malaysia Refining and Marketing Berhad (Petron) with an “Outperform” rating and target price of RM14.46 and said Petron made its foray into Malaysia in 1933, marking over 80 years of business continuity in this nation.
In a note today, the research house said Petron’s roots can be traced back to ExxonMobil when the company set up Standard Vacuum Oil Company.
It said that today, it is the third largest petrol retail operator.
“We begin coverage on Petron with an Outperform call and target price of RM14.46.
“We arrive at our target price using a discounted cash flow (DCF) method applying a weighted average cost of capital (WACC) of 7.71%.
“At our target price, Petron’s price-earnings ratio (PER) equivalent is 7.5x, lower than the regional average of 11.4x, but justified given its smaller market capitalization.
“Although above its long-term average, Petron’s forward PER is supported by the changing prospects of oil prices,” it said.
publics justification is lazy, even if market cap is smaller, does it justify PE being 50% lower than regional average? based on their RM14.46 tp and 7.5x PE, putting 10x PE will get a tp of RM19.30 and its PE still below average. then their market cap will be obviously higher and deserve lower discount?
Public is usually very stingy at valuation of stocks. For it to promote a buy with TP 14.46 consider very good le...meaning the actual traded price should be much higher
1) Petron Miles Card has growth to 5 millions and out of the numbers with an estimate of 2.8 millions active customers (The number was 4 millions as at this year AGM).
2) Public IB forecast 2017 EPS will be $1.60, Free Cash Flow of $379 mils & 25 cents dividend.
3) FY2018 performance will be lower due to mandatory shutdown in 4th quarter.
Overall, the forecast is fair but with a slight conservative approach. However this is a normal practice for Public IB.
Opportunity to collect much more particularly this comment : Public IB forecast 2017 EPS will be $1.60, Free Cash Flow of $379 mils & 25 cents dividend.
For most IB, it is all about looking for stable, consistent, much less volatile and less risker companies. Too volatile companies might shoo them away. I think for sure IB know about HRC.
Bro LaiHuatAhh, the remaining share floating outside may oledi drop to less than 15% due to active collection by several unknown parties in recent months.
Investors’ interest on Petron will also be moved by several factors including its attractive business model which shields the company from the adverse movement of oil prices and Ringgit fluctuations.
I see the textbook "driven by greed & fear" playing out.
About a year ago, I had a similar situation with Ajinomoto. It was bitter-sweet because I came out a little too early. Overall though it sweet - made my biggest kill !
Hey Bro& Sisters , according laihuatahh the remaining shares of Petronm in the public is around 15% so there should be bonus issue after this quarter results otherwise when this counter open up in MSCI Small Cap Indexes 30th of November the fund manager will scramble this counter is the best time the management will look into it !! Just my two cents opinion Buy buy buy before is too late
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Newmaster
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Posted by Newmaster > 2017-11-17 16:14 | Report Abuse
Oil Market
Year-on-year prices of Dubai increased by 16.8% to average US$50.43 per barrel in the third
quarter of 2017 from US$43.19 per barrel in the same period last year. OPEC’s production cut
which started in January 2017 supported the increase in prices. Product cracks also went on an
upward trend for naphtha, LPG, gasoline, kero-jet and diesel, owing to tightening of Asian and
global balances.