By Ying Xian Wong


Petronas Dagangan shares rose Tuesday, supported by optimism about its outlook after it posted better second-quarter earnings amid resilient domestic demand and international travel.

Shares in the Malaysian downstream petroleum product retailer were recently 3.1% higher at 22.28 ringgit.

Petronas Dagangan late Monday said its net profit rose 16% from a year earlier to MYR275.7 million ($59.2 million), driven by higher contributions from its commercial segment. However, its quarterly revenue fell 6.2% to MYR8.91 billion amid lower oil prices.

Affin Hwang Investment Bank on Tuesday upgraded its rating on the stock to buy from hold and raised the target price to MYR24.90 from MYR23.50. It also increased its 2023, 2024 and 2025 earnings-per-share forecasts for the company by 32%, 33% and 20%, respectively, citing several catalysts.

Petronas Dagangan stands to benefit from the resumption of air and road travel, said Affin Hwang analyst Steven Chan in a research note. The stock is also trading at the lower end of its valuation range, and its dividend yield of about 5%-6% is attractive, he said.

TA Securities said the company's sales volume and earnings could grow steadily over the coming quarters, fueled by a robust domestic economy and the absence of a one-off prosperity tax.

Its commercial division is expected to deliver higher sales volume as air-passenger traffic rises, though higher operating expenditure may curb net profit growth, TA analyst Ong Tze Hern said in a note.

TA Securities has a buy rating and a target price of MYR26.70 on Petronas Dagangan.


Write to Ying Xian Wong at yingxian.wong@wsj.com


(END) Dow Jones Newswires

08-29-23 0104ET