KUALA LUMPUR (Feb 22): After being hit by a lower sales volume during the fourth quarter as a result of the conditional movement control order (CMCO), analysts expect the reimposition of the MCO since January to further impact Petronas Dagangan Bhd’s (PetDag) first quarter ending March 31, 2021 (1QFY21).
Weak sales volume and average selling prices (ASPs) during 4QFY20 caused its net profit to drop 29.5% to RM89.21 million versus RM126.59 million previously, missing analyst expectations, they said in reports today.
“Its FY20 earnings declined tremendously amid the Covid-19 pandemic and travel restrictions, resulting in poorer sales volume and product prices. While 4QFY20 was badly affected by the implementation of the CMCO, we expect the upcoming 1QFY21 to be worse hit by the reimposition of the MCO in January 2021,” Kenanga Research wrote in a report today.
The research house maintained its “underperform” call on the stock with a higher target price (TP) of RM17.60 (from RM16) as it rolled forward its valuation base year to FY22, pegged at an unchanged valuation of 26 times price-earnings ratio (PER) roughly in line with the stock’s historical average, it said.
MIDF Research, meanwhile, maintained its “neutral” call on the stock as it also expects the current MCO to impact PetDag’s profitability in 1QFY21 given that its sales volume is expected to drop during the period.
It also revised its TP upwards to RM20.31 (from RM18.29) as it rolled forward its valuation base period to FY22.
“That said, the recent uptrend movement in oil prices might be able to partially cushion the impact of the drop in sales volume. Furthermore, we continue to view PetDag positively given its ongoing efforts in mitigating the impact of volatility in selling prices and lower sales volume via increasing pump productivity, aggressive marketing and product promotions, and creating brand stickiness via the Setel mobile application,” said MIDF.
At the time of writing today, the stock was trading six sen or 0.31% higher at RM19.26.