• Maintain HOLD (TP: RM19.10). Petronas Dagangan (PetDag) 9M24 core PATAMI of RM870mn (+17% YoY) made up 86% and 88% respectively. We deem this as within our estimate given that typically earnings are weaker in 4Q due to higher maintenance activities. In addition, strong earnings in 3Q24 which surged 20.8% QoQ and >100% YoY to RM348mn was aided by lower product cost from favourable MOPS price and this may not recur in 4Q24 as oil price stabilising around USD70-80/bbl. The company declared a 3 rd interim DPS of 24sen (3Q23: 20sen), bringing 9M24 dividend to 62sen which is higher than 9M23 DPS of 53sen. Maintain PetDag as a HOLD with unchanged DCF-derived TP of RM19.10.

• Key highlights. 3Q24 operating profit rose 70% YoY to RM444mn mainly driven by (i) lower product cost, and (ii) higher demand for Diesel and Jet A1 in the commercial segment. By segment, earnings growth is driven mainly by commercial segment which more than doubled to RM206mn (Table 2). 9M24 sales volume stood at 12.9bn litres (+5.2% YoY) which made up 83% of our FY24F estimate.

• Earnings forecast. No changes.

• Outlook. We remain cautious with Petdag’s earnings in view of a possible implementation of subsidy rationalisation for RON95 in FY25. As such, despite 9M24 sales volume came strongly ahead of our FY24 estimate of 15.5bn litres, we impute lower sales volume of 15bn litres in FY25.

Source: BIMB Securities Research - 26 Nov 2024