Petronas Dagangan eyes expansion in Indonesia, Myanmar

June 15, 2012

KUALA LUMPUR, June 15 — Petronas Dagangan Bhd, the retail arm of Malaysia’s state oil firm Petronas  aims to expand into Indonesia and Myanmar as it widens its presence in Southeast Asia, its managing director told Reuters in an interview.

The largest liquefied petroleum gas (LPG) provider in Malaysia announced this month it will buy six downstream companies belonging to Petronas in the Philippines, Vietnam, Thailand and Malaysia in a deal worth RM197.3 million.

“We need to build new engines for growth,” Amir Hamzah Azizan told Reuters in an interview at his 76th-floor office in Kuala Lumpur’s Petronas Twin Towers, adding that the Malaysian market could become saturated over the next four years.

The company is interested in potential acquisition targets in Myanmar and Indonesia because of their large populations and strong economic growth potential, Amir said, without giving a timeframe for the expansion.

Amir Hamzah: Seeking to diversify sources of revenue. — File picHe said the company aimed to increase its contribution from overseas revenue to 8 per cent from 2 per cent over the next four years. It had RM766.4 million in cash as of March 31, 63 per cent higher than a year earlier.

It generated revenue of RM6.85 billion in the first quarter, 7.4 per cent higher year-on-year on the back of higher selling price and volume.

No.1 in Malaysia

Petronas Dagangan is the market leader in LPG and sales of petroleum products in Malaysia, commanding more than half of the country’s sales. But it comes second to Royal Dutch Shell Plc in the retail and lubricant markets.

The company plans to raise its retail presence in Malaysia by adding another 74 stations to its existing 970 and by expanding its lubricant business to carmakers and high-street dealers, said Amir.

“Touch wood, we can pass the 1,000 stations mark this year, and become the market leader in all segments over the next four years,” he added.

Petronas Dagangan is the second best-performing stock on Malaysia’s benchmark stock index in the year to date with a gain of 20.79 per cent, second only to power-to-cement conglomerate YTL Corporation Bhd.

Analysts tracked by Thomson Reuters I/B/E/S expected the company to report a net profit of RM1.1 billion net profit on top of RM30 billion revenue for 2012.

One out of four analysts held a “Strong Buy” call on the stock, one called the stock a “Hold” and two “Underperform”. — Reuters