Thursday 13 January 2011

Petronas Dagangan - A stock par excellence

Zas, a regular visitor to my blog posted in my chat-box.

13 Jan 11, 11:15 PM
zas: petdag buy as a gift to grandchildren
13 Jan 11, 11:14 PM
zas: LPI n Petdag is super longterm stock.Imagine in 10 years if petdag revalue its petrolkios land or possible develop into poperty development!!

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Yes, Petdag is a very high quality company. This was what I wrote on this company in one of the many posts on Petdag. 

3.6.2009:
"I like this company. It is a company that I can relate to. Petronas service stations are sprouting all over the place. It has a virtual monopoly supplying energy to certain niche sectors. Its revenue has been good and profitable. It generates a lot of free cash flow. It has been reinvesting into its business regularly, and the return on the equity is a 16.89% which is one of the my investing criteria. Its ROTC is 16.89%, as this company has no borrowings. Its earnings yield is at least 2x that of the risk free FD interest rate. Its dividend has been increasing over the years and I do not anticipate any decrease in future dividend despite the poor economic environment. In fact, it is predicted that the future earnings should continue to show an uptrend, and growth is encouraging with new Petronas stations opening up in new locations funded by self generated profit. The company is debt free.


At 7.90, its PE of 11.86 is at the lower end of its historical 5 year and 10 year PEs. There is safety of capital with a reasonable potential for moderate return (low risk with moderate return) for those with a longer term investing horizon. Just loudly sharing my view, you will need to make your own investing decision based on your personal assessment."

Petdag continues to deliver good profits and dividends.  What was written in 2009 remains applicable, though the PE has expanded since then, in other words, those wishing to buy this stock will have to pay more for each ringgit of its earnings.

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