Petronas Dagangan vs Petron Malaysia

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(22-11-2023, 07:49 AM)i4value Wrote: There are 2 Bursa companies in the service station sector – Petronas Dagangan and Petron Malaysia. The former is about double the size of the latter in terms of revenue. You may think that this may give Petronas Dagangan some advantage

But you can see from the chart below that Petron Malaysia is no pushover and is able to compete. So which would you chose to invest from a fundamental perspective?

[Image: Chart-5-min.png]

Hi i4value,

Petron Malaysia (PM) is ~50% geared while Petronas Dagangan (PDB) is <5%. So after accounting for the gearing in the denominator in the ROE calculation, PM should be much worst off than PDB. PDB also has negative working capital (~1billion or 20% of equity) and so it is much more capital efficient than PM. Somehow, PDB is enjoying some good payment terms from its parent while collecting cash straightaway from those who pump ron95.

PM also has refinery operations in the group and so a lot inventories involved in its refine/store/distribute of its commercial oil products. PDB is holding negligible inventories with a turnover of ~1.5days.

2 Msian gov-related entities hold 75% of the shares in PDB (64%-Petronas, 11%-EPF). This probably explains why it is paying 100% of its profits in last few years - most of this money is been paid upwards, and towards paying down obligations of the Gov spending and the improbable high EPF interest. The high payout ratio also suggest there is little need for CAPEX spending for PDB, unlike PM which has refinery/oil terminals to spend CAPEX on. PDB does own/operate some pipeline/terminals as well but it is on associate/JV level and not reflected on its consolidated cashflows.

So it is quite clear from fundamental perspective that PDB is a better investment candidate than PM.
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Petronas Dagangan vs Petron Malaysia - by i4value - 22-11-2023, 07:49 AM
RE: Petronas Dagangan vs Petron Malaysia - by weijian - 22-01-2024, 06:18 PM

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