KUALA LUMPUR (May 19): Petronas Dagangan Bhd (PetDag) rose as much as 3.5% or 84 sen to RM24.92 this morning, on the back of firmer first quarter earnings and dividend declared.

PetDag shares ended the morning session up 68 sen, or 2.8%, to RM24.76. Yesterday, the retail arm of Petroliam Nasional Bhd reported a 15% increase in net profit for its first quarter ended Mar 31, 2017 to RM253.15 million or 25.5 sen a share from RM219.4 million or 22 sen a share in the same period last year.

Revenue in the period jumped 36.2% to RM6.69 billion from RM4.91 billion a year ago.

PetDag proposed an interim dividend of 14 sen a share, payable on June 16.

In a note to investors today, CIMB Research said PetDag's core net profit of RM253 million is 25% of the research firm's full-year forecast and in line with expectations and 10% above consensus.

CIMB had also noted that PetDag's 4% sales volume contracted 4% year-on-year, with retail volumes shrinking 6% and commercial volumes down 3%.

"However, this was compensated by more favourable inventory pricing at the retail arm, leading to better retail operating profits," the firm said.

CIMB maintained a 'hold' call on the stock, with a dividend discount model-based target price of RM24.14.