KUALA LUMPUR (Aug 26): Petronas Dagangan's 1H earnings were below expectations on lower margins and increased operating expenses, indicating more challenges ahead for the Malaysian gasoline stations operator, AllianceDBS Research says.

Maintaining a hold rating, the researcher cuts its target price on Petronas Dagangan to RM23.75 from RM25. 

Besides a tough operating environment, uncertainties surrounding the imposition of the target fuel subsidy and air departure levy by the government in 2H could affect demand for its products.