Switching my holdings to Petronm
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Extract of Analyst Report from RHB

Petron Malaysia

Fuel Happy

We initiate coverage on Petron with a BUY recommendation. Our TP of MYR16.20 (60% upside) is based on a 12.5x FY18 P/E. The company owns over 580 service stations nationwide, distributing gasoline, diesel and LPG products. Petron also owns an 88,000bpd refinery in Port Dickson, Malaysia with a Nelson Complexity Index of 3. We believe the refinery would provide the company with a competitive advantage, thereby enabling it to take advantage of refined product spreads.

Third largest retail station operator in Malaysia. Petron Malaysia (Petron), a major fuel retail distributor in Malaysia, has the third largest market share in the country behind Shell and Petronas Dagangan (PETD MK, NR). It owns over 580 service stations nationwide, distributing gasoline, diesel and LPG products.

Besides retail marketing, the company also owns an 88,000bpd refinery located in Port Dickson, Malaysia with a Nelson Complexity Index of 3. The refinery is capable of producing gasoline, diesel, liquefied petroleum gas (LPG), kerosene and low sulphur waxy residue (LWSR). The refinery has an average utilisation rate of c.50% due to the unfavourable economics of LSWR which, in turn is due to its low complexity rate. The company is 73.4%-owned by Petron Corp, the largest oil refining and marketing company in the Philippines.

The refinery could provide alpha. Its retail fuel segment plays a volume game, ie the more retail stations imply a higher volume. As such, we expect its retail volume to grow by c.4% each year, driven by the opening of new stations. Our base case scenario assumes Petron would open 15 new stations every year. Its commercial fuel segment earnings are driven by spreads for naphtha, kerosene and LSWR. We expect spreads for naphtha and kerosene to range between USD2-7/bbl for the long term. As such, we believe the commercial fuel would provide the company with a higher earnings growth potential, compared to that of its peers.

Healthy balance sheet. As of 1H17, it is a net cash company; we expect Petron to end FY17F in a net cash position. Total borrowings are at MYR66.4m, while its cash position is at MYR156m. This is comparable to the situation at the end-FY16, when it was in a net debt position of MYR136m. Net cash from operations and free cash flow has been on an increasing trend, attributed to better cost management as well as the asset performance mechanism (APM), which transmits changes in oil prices to retail fuel prices.

BUY. We initiate coverage on Petron with a BUY recommendation, supported by a TP of MYR16.20. We arrive at our TP by pegging a 12.5x P/E to FY18F EPS of MYR1.30. As a comparison, Petronas Dagangan is trading at 24.6x P/E for FY18, at a 70% premium to Petron. We like Petron as we believe its retail fuel segment would provide a stable base of earnings due to the APM mechanism, while its commercial fuel segment would provide an earnings boost, an advantage the company holds over its peers due to its refinery.

Extract of Analyst Report from RHB

Petron Malaysia

Fuel HappyTM

We initiate coverage on Petron with a BUY recommendation. Our TP of MYR16.20 (60% upside) is based on a 12.5x FY18 P/E. The company owns over 580 service stations nationwide, distributing gasoline, diesel and LPG products. Petron also owns an 88,000bpd refinery in Port Dickson, Malaysia with a Nelson Complexity Index of 3. We believe the refinery would provide the company with a competitive advantage, thereby enabling it to take advantage of refined product spreads.

Third largest retail station operator in Malaysia. Petron Malaysia (Petron), a major fuel retail distributor in Malaysia, has the third largest market share in the country behind Shell and Petronas Dagangan (PETD MK, NR). It owns over 580 service stations nationwide, distributing gasoline, diesel and LPG products.

Besides retail marketing, the company also owns an 88,000bpd refinery located in Port Dickson, Malaysia with a Nelson Complexity Index of 3. The refinery is capable of producing gasoline, diesel, liquefied petroleum gas (LPG), kerosene and low sulphur waxy residue (LWSR). The refinery has an average utilisation rate of c.50% due to the unfavourable economics of LSWR which, in turn is due to its low complexity rate. The company is 73.4%-owned by Petron Corp, the largest oil refining and marketing company in the Philippines.

The refinery could provide alpha. Its retail fuel segment plays a volume game, ie the more retail stations imply a higher volume. As such, we expect its retail volume to grow by c.4% each year, driven by the opening of new stations. Our base case scenario assumes Petron would open 15 new stations every year. Its commercial fuel segment earnings are driven by spreads for naphtha, kerosene and LSWR. We expect spreads for naphtha and kerosene to range between USD2-7/bbl for the long term. As such, we believe the commercial fuel would provide the company with a higher earnings growth potential, compared to that of its peers.

Healthy balance sheet. As of 1H17, it is a net cash company; we expect Petron to end FY17F in a net cash position. Total borrowings are at MYR66.4m, while its cash position is at MYR156m. This is comparable to the situation at the end-FY16, when it was in a net debt position of MYR136m. Net cash from operations and free cash flow has been on an increasing trend, attributed to better cost management as well as the asset performance mechanism (APM), which transmits changes in oil prices to retail fuel prices.

BUY. We initiate coverage on Petron with a BUY recommendation, supported by a TP of MYR16.20. We arrive at our TP by pegging a 12.5x P/E to FY18F EPS of MYR1.30. As a comparison, Petronas Dagangan is trading at 24.6x P/E for FY18, at a 70% premium to Petron. We like Petron as we believe its retail fuel segment would provide a stable base of earnings due to the APM mechanism, while its commercial fuel segment would provide an earnings boost, an advantage the company holds over its peers due to its refinery.

Yes, I saw too

Something must be going on

Going to sapu some PetronM CD, coming liaw

Going to sapu some PetronM CD, coming liaw

Toldya, better run fast fast on HY and HY-CH yesterday, otherwise gonna be stuck too when the sell call suddenly comes after change of mind

CWs are for gambling, beware of vanishing buying interest from now on.

Mother really going to drop sharp lor

So should sell on news right ?

Ran HYCH d, waiting for correction ahead of weekend North Korea-US tensions

Better whack CH if there is going to be article by OTB...............hehe

Want it to come down sharply, still eagerly waiting

大妈 mesti tunggu diam diam dekat 9.60

Macam sudah mari.....................hehewakaka. Will sapu sikit sikit lor

wow, all 10.10 cleared just like that

Make sure the price go above 10.50 today

The low profile value investors keep accumulating, no wonder we all now may have to buy back above 11 lor, really will miss the big boat if they buy up till 13

Wow

No need to worry la, price also will not drop much one. Cos, many waiting to accumulate

Blue is still very good, geng hahaha

Aiyo, time wil tell up or down. If down, just buy more and keep long term

No choice, may buy at current level lor. Still a good stock ma

All active promoters went over to PetronM to chit chat liaw

Bro paperplane2016, thank you for sharing the info.

Many waiting to buy back or lower are no longer able to get it cheap.

Meaning they have to consider much higher price level from now onwards.

But noted there are some value investors buying interest too

Is your OBV estimate reliable ?

Agreed hng33 sifu

Still too early to buy, will only monitor for the time being

Will only sell if rebounds buy when falls

Heard later got BIG force selling !!

Now my turn to sweep sweep the floor if any wants to sell........no bullets ke ?I have a lot to shoot.........hehehe

Full year even much better for Petronm la...............yahoo

Ya, full year picture is very very bright liao........................wowo

Cantik Petronm lalalalalala

Good wor, lalalalalalalala

Last 8 min window to decide to buy or not to buy more as q2 coming after 5 pm ?

Huhu, time to buy more mother too...........like the share so much

You are right bro.

Fully prepared to buy more if price purposely smashed down, come on if you dare.

Reactivated Petron's turn to move higher from today, dun miss the boat again guys.

Getting ready to add more as the selling appears fake, chance to grab at lower price if go lower again

Petronm's turn will come soon too, especially cc and CD. Quietly collecting some first

The above are all very possible. Dun take it lightly as the management from Philippines comprises talented professionals with proven track record.

paperplane, view from here :

http://edge.pse.com.ph/companyDisclosures/form.do?cmpy_id=136#viewer

All value investors,

Clues from the notes of result :

1. Cash and cash equivalents increased by 11% from P= 17.33 billion to P= 19.23 billion. Funds generated from operations were more than enough to cover interest and income tax obligations, fund capital programs and pay dividends and distribution.

2. Income tax payable climbed to P= 992 million from P= 626 million with the improvement in PM' taxable earnings.

Pls pay close attention to No. 2 above.

Trying to get more this morning, but realised not so easy to collect more lots anymore unless bid higher.

Anyway, will still try to snap some later on. Happy investing !

So far, david's worst case scenario has hinted that is achievable and could be much much surprising. But more as long as below 9.10

Somemore those who sold around 7 or below 8 waiting to buy back, would bang their balls as the price not too easily fall unless KYY and OTB sell their

On my way to jump into both for better tommorow.