Despite being bought over by Petron, the then renamed ESSO entity is currently trading below purchase price. The then ESSO was traded as high as double current price of RM2.90 due to speculation of better buy-out price. Despite such news, ultimately the buyout offer price was only RM3.50. Even so, trading at RM2.90 presents a deep discount that one should simply not overlook.
There are a few factors:
1. Low P/E compared to Petronas Dagangan.
-Trades at P/E of 5, while Pet Dag trades at P/E of 26
2. Similar business compared to Petronas Dagangan
-Petron Malaysia has similar business activities as compared to Petronas Dagangan, even operating over 500 gas stations all over Malaysia. They also own a refinery in Port Dickson, and are planning to ramp up refinery capacity.
-Produces and markets various petroleum related products for car engines etc
3. Major deals being done
-Existing deal with Malaysia Airlines to supply gas for their Airbus A380
-Could potentially be a supplier for the coming Malindo Airlines
4. Good earnings, with swings just similar to Shell Malaysia.
- Despite having good earnings, it has been quite a volatile earner, but no reason why it should underperform Shell's share prices. Shell Malaysi trades at RM 8.35, despite suffering losses.
- Q3 2012, Petron Malaysia produced over RM110 million in profits
- Cumulatively, RM124 mil vs RM165 mil in profits (2012 vs 2011)
- Supposedly for Q4 it repeats at least a RM100 mil in profits, that should make its profits top RM200+ mil
- Predicted EPS should hit RM0.74 if that comes true.
- EPS Petron Malaysia vs EPS Petronas Dagangan should be very competitive should that prediction come true.
5. Price per Share trading at below Net Assets Per Share
-RM2.86 (as at 9th Jan 2013) vs RM3.50
6. Pays consistent dividends
- Between RM0.12 and RM0.14 per year
So, Why shouldn't you not buy it?
No comments:
Post a Comment