Financial Management

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  • Topic: Financial ratio, Financial ratios, Asset turnover
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(For your information, in this whole report, Petronas Dagangan Bhd, we will short it as PDB and Petronas Gas Bhd as PGB) Question (a)
Background and Future Prospects of the selected Company
i) History
PDB is incorporated in 1982 and listed on the Main Board of Bursa of Bursa Malaysia in 1994. Notably, PDB is also known as the principal domestic marketing arm of Petroliam Nasioanal Berhad (PETRONAS) and Malaysia’s leading retailer and marketer of downstream oil and gas products. Today, PDB is continuously strives to provide superior products, and further solidify this position.

PGB is initiated its business since the year 1983 as a wholly owned subsidiary of PETRONAS. Remarkably, the reason of incorporate the company is due to the PETRONAS’s program regarding development of facilities to enable the processing and transmission of gas supplied by the gas fields offshore Terengganu to the whole of entire peninsula. As the business growth comprehensive, during year 1998, PGB has expanded and diversified the business into manufacturing, supplying and marketing of industrial utility products to customers in Kertih Integrated Petrochemical Complex and Gebeng Industrial Area through its Centralised Utility Facilities Division (CUF). ii) Market Structure

Petronas dagangan berhad involved in the distribution and sale of fimished petroleum products and operation of service stations for the domestic market.tha comapany’s market share stands at about 43.5% sustaining its market leadership in the country.petronas gas berhad involved in the provision of gas processing and transmission services to petronas and its customers as a throughput company The petronas dagangan berhad registered higher profit before tax of RM1046 million compared to RM810.3 million last year, while earnings per share rose to 75.8 sen. The business performance include retail business, market share around 32%, beside this, the commercial business has continued to maintain its market share at 64% in the sales of industrial products. The liquefied petroleum gas (LPG) business has expanded its market share at 52%. The petronas gas berhad profit after tax increased from RM928.0 million last year to RM940.7 million. The company’s gas processing plants operation by the plant operation division in kertih and paka also embarked on plant rejuvenation and revamp ensure that the plans integrity can be sustained for another 20 years of operation. The company achieved a major milestone by venturing into the independent power producing business through its subsidiary, Kimanis power Sdn Bhd.

iii) Growth Potential
Petronas Dagangan Berhad and Petronas Gas Berhad both are fossil and fuel companies. Both companies are making big money in this field , however the reserve of oil and gas is running low, the prosperity can’t last forever if they rely on oil and gas wholly. Petronas Dagangan Berhad and Petronas can look for alternative source of energy to substitute oil and gas. Microalgae fuel (can also call biodiesel) will be one of the ideal alternatives to this, however further study will be needed to make this really cost effective and profitable. Competitiveness

Petronas Dagangan Berhad and Petronas Gas Berhad are subsidiary company of Petronas Berhad, so they are run their business by separately. In financial statement, profit before tax of Petronas Dagangan Berhad from 2006 to 2010 are RM724.6 mil (2006), RM903.2 mil (2007), RM908.4 million (2008), RM810.3 (2009), RM1046 (2010). Furthermore, the figure shows the profit before tax of Petronas Gas Berhad are RM1024.9 mil (2006), RM1233.1 mil (2007), RM1366 million (2008), RM1241.1 (2009), RM1238.3 (2010) within 5 years. Compare to the Petronas Dagangan Berhad, Petronas Gas Berhad perform better than Petronas Dagangan Berhad.

iv) Risk
Firstly, the recent domino effect that happened in Arabic nations has influenced the production, leads to instability of the market. The second risk is economic risk...
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