KUALA LUMPUR (Aug 24): Petronas Dagangan Bhd’s share price gained as much as 2.13% in Bursa Malaysia morning trade today after the company declared yesterday a dividend of 10 sen a share and reported that its second-quarter net profit rose significantly to RM82.14 million from RM3.51 million a year earlier.
At 10.27am today, Petronas Dagangan’s share price had pared gains at RM19.04 after rising as much as 40 sen or 2.13% to RM19.20.
Yesterday, Petronas Dagangan said in a Bursa filing that its revenue rose to RM5.14 billion for the second quarter ended June 30, 2021 (2QFY21) from RM2.93 billion a year earlier.
For the first half ended June 30, 2021 (1HFY21), Petronas Dagangan said its cumulative net profit stood at RM273.25 million, compared to a net loss of RM25.91 million a year earlier, while revenue climbed to RM10.25 billion from RM9.49 billion.
The group also declared a dividend of 10 sen a share for 2QFY21, bringing its cumulative 1HFY21 dividends to 24 sen a share.
Today, Hong Leong Investment Bank Bhd (HLIB) analyst Low Jin Wu said Petronas Dagangan’s 1HFY21 core profit after tax and minority interests or core net profit at RM266 million was below HLIB's and consensus expectations at 43% and 40% of full-year forecasts respectively due to a rise in Covid-19 cases which impeded travel.
A company’s core net profit excludes extraordinary items in its financial statements.
"We opine that it will probably get worse before it gets better for Petronas Dagangan as we expect its sales volume to drop significantly in 3QFY21 as a result of Phase 1 lockdown measures, which are still in place, especially with regard to travel (no interstate or inter-district movement).
"However, we believe that the ramp-up in vaccination rates nationwide should be able to bring us back to some form of normalcy in 4QFY21. We expect 3QFY21 to be its weakest quarter due to the lockdown measures imposed.
"We cut [our Petronas Dagangan] earnings [forecasts] by 35.2%/23%/22.8% for FY21-FY23 to factor in a slower-than-expected recovery from the Covid-19 pandemic and concerns over the Delta variant,” Low said.
The re-enforcement of Phase 1 of the total lockdown across Malaysia since June 1, 2021 is now known as Phase 1 of the National Recovery Plan or Pelan Pemulihan Negara.
HLIB is maintaining its “hold” call on Petronas Dagangan shares, with an unchanged target price (TP) of RM18.55, according to Low.
"While a recovery outlook is on the cards, expected sequential results weakness could impede its near-term share price performance. Hence, we believe that the stock is fairly valued at this juncture,” the analyst said.
Meanwhile, MIDF Amanah Investment Bank Bhd’s research team in a note today maintained its “neutral” call on Petronas Dagangan shares with an unchanged TP of RM20.31.
“[Petronas Dagangan’s] 2QFY21 earnings rose 23-fold to RM82 million y-o-y (year-on-year), but dropped 57% q-o-q (quarter-on-quarter).
"For 1HFY21, Petronas Dagangan’s earnings swelled over 100% y-o-y to RM273.3 million from a net loss of RM25.9 million for 1HFY20. Nonetheless, it was slightly lower than our 1HFY21 estimate at 81.5% and the general consensus at 83.2%,” MIDF said.