MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained its BUY call on Petronas Dagangan Bhd (PetDag), with an unchanged share target price of RM24.63, offering a potential upside of 41.4%. The recommendation follows the company's solid nine-month financial year of 2024 (9M24) results, which were in line with expectations.

PetDag's revenue grew by 5% year-on-year (YoY) to RM28.9 billion, while its earnings increased by 10% YoY, reaching RM837.6 million. This growth was driven by a 4% increase in sales volume and a 1% rise in average selling prices, although higher operating expenses (opex) dampened the overall performance.

Retail and commercial segments benefitted from favourable trends in the Malaysia Oil Price Scheme (MOPS), with retail revenue rising by 11.7% YoY to RM15.3 billion, and operational profit increasing by 7.1% YoY.

In the commercial segment, despite a slight decline in revenue due to lower sales volume, earnings surged by 28.9% YoY, largely driven by favourable MOPS prices and increased demand for Jet A1 and Diesel. The convenience segment, however, saw a 28.5% YoY decline in operational profit despite higher demand for Kedai Mesra and Café Mesra merchandise, primarily due to higher opex.

MIDF Research anticipates that domestic demand for petroleum products will remain robust, especially with Brent crude oil prices averaging US$80 per barrel, providing additional leverage for PetDag's sales volume.

Despite potential external risks such as global economic uncertainties and geopolitical tensions, MIDF Research said PetDag is expected to benefit from the supportive operating environment, particularly as the end-of-year holiday season drives higher fuel consumption.

MIDF Research has kept its earnings forecast unchanged for PetDag, highlighting PetDag's consistent dividend payouts, stable profit margins and strong brand leverage as key reasons for their continued positive outlook.