KUALA LUMPUR (Feb 11): PETRONAS Dagangan Bhd (KL:PETDAG) will likely see higher commercial margins when the fuel retailer reports its results for the final quarter of 2025, said BIMB Securities.

The commercial segment, which sells bulk products such as diesel to industries and jet fuel to airlines, benefitted from lower input costs, judging from the declining benchmark price trends, the research house said in a results preview note.

“Margins are expected to be further supported by strong sales volumes of higher-margin products, particularly Jet A1 and diesel, underpinned by sustained aviation demand and infrastructure-driven commercial activity,” BIMB Securities said.

All in all, PETRONAS Dagangan will probably report a net profit of RM286 million for the fourth quarter of 2025 (4QFY2025), bringing the total net profit for the year to around RM1.1 billion, according to its forecasts. The company is due to release its results on Feb 24.

Shares of PETRONAS Dagangan, which mainly sells petrol and diesel through a network of over 1,000 stations across Malaysia, have recovered some of their value from a sharp decline after reporting their third-quarter results in November.

Brent, the global benchmark for crude oil, declined nearly 8% in October-December from the preceding quarter amid a massive build-up in supply that trumped market demand. Investors were also jittery over Malaysia’s fuel subsidy rationalisation that was implemented near the end of Sept 2025.

“We caution that the margin outperformance may not be sustainable amid ongoing jet fuel price volatility and an uncertain oil price environment” which could constrain the company’s ability to maintain elevated commercial margins, BIMB Securities flagged.

Nevertheless, any further downside to its stock price is likely “well contained at current valuation levels, as uncertainties surrounding subsidy rationalisation have largely abated”, the research house said and upgraded the stock to a 'hold' from a 'sell' recommendation.