MARC Ratings has affirmed its MARC-1IS/AAAIS ratings on PETRONAS Dagangan Berhad’s (PDB) RM10.0 billion Islamic Commercial Papers/ Islamic Medium-Term Notes (ICP/IMTN) Programmes. The outlook on the long-term rating is stable. There are currently no outstanding issuances under the programmes.
The rating affirmation reflects PDB’s established position as a leading retailer and marketer of petroleum products in Malaysia. The ratings are underpinned by PDB’s robust liquidity, conservative capital structure and strategic importance to Petroliam Nasional Berhad (PETRONAS, AAA/Stable) as its primary downstream retail and marketing arm.
PDB maintains a strong, competitive position in the domestic retail market through its nationwide network of more than 1,000 service stations, with plans to add approximately 10 stations annually. Leveraging its extensive retail network, PDB continues to expand its non-fuel business through higher sales of PETRONAS Shop merchandise, and contributions from C-Biz partners. Although the non-fuel segment accounted for less than 1% of revenue, it contributed about 7% of group profit in 1H2026, reflecting its higher margins. In the commercial segment, PDB also maintains a significant share of the jet fuel market, supported by its extensive supply infrastructure and longstanding relationships with major domestic airlines.
PDB benefits from secure fuel supply through its affiliation with the PETRONAS group and access to PETRONAS’ global trading and supply network through PETRONAS Trading Corporation Sdn Bhd (PETCO). PETCO’s diversified sourcing strategy reduces reliance on any single supply route and mitigates the risk of supply disruptions amid geopolitical uncertainties.
Supported by higher fuel prices and resilient demand, PDB’s revenue rose by 50.0% y-o-y to RM27.2 billion in 1H2026, driven mainly by a 44.0% increase in average selling prices. Sales volume grew by 4.0%, broadly in line with economic activity, while pre-tax profit increased by 17.5% to RM920.4 million. Operating margin, however, narrowed to 3.3% from 4.3% in 1H2025, reflecting sharp movements in Mean of Platts Singapore (MOPS) prices.
Operating cash flow remained healthy at RM1.5 billion in 1H2026, compared with RM2.5 billion in 1H2025, when cash flow benefitted from higher government subsidy receipts. Elevated oil prices could increase working capital requirements and result in timing mismatches between fuel purchase payments and subsidy recoveries. Nevertheless, PDB’s liquidity remains robust, with cash and cash equivalents of RM5.5 billion as at end-June 2026. Its capital structure remains highly conservative, with total borrowings of RM135.7 million and a gross debt-to-equity ratio of just 0.02x. MARC Ratings expects leverage to remain low over the near to medium term, supported by strong operating cash flow generation relative to modest annual capital expenditure of approximately RM400 million.