KUALA LUMPUR (NewsRise) - Malaysia's Petronas Dagangan plans to exit Vietnam by selling its two local units that bottle and distribute liquefied petroleum gas as part of the company's broader reorganization strategy.
The proposed disposals of PETRONAS (Vietnam) Co. Ltd and Thang Long LPG Company Ltd to Totalgaz Vietnam Limited are expected to be completed by the second quarter of 2016, Petronas Dagangan said in an exchange filing. The company didn't disclose financial details.
The disinvestment is part of its "portfolio rationalization," Petronas Dagangan said without elaborating.
Analysts say the sale would help Petronas Dagangan to consolidate its operations after recent expansions into neighbouring Southeast Asian economies, and to focus on domestic market, which accounts for most of its revenue.
"Contribution from Vietnam should be quite minimal," said MIDF Investment Bank analyst Aaron Tan. "When it comes to retail segment, the liquefied petroleum gas is low-margin business compared to lubricants or aviation fuel," he added.
Thang Long began as a joint venture between PetroVietnam Gas and Malaysia's national oil and gas explorer Petroliam Nasional, or Petronas in 1995. In 2010, Petronas bought the 29% stake that it didn't own in the joint venture. Petronas Dagangan bought Thang Long in 2012 as part of six downstream companies that it purchased from its parent in Malaysia, Thailand, the Philippines and Vietnam in deals totaling $62 million.
The company had hoped to raise annual revenue contribution from its international businesses to between 5% and 8% by 2018 from less than 1% as of 2013.
Even if Petronas Dagangan exits Vietnam, its parent will continue its businesses, including exploration and production activities, in the former French colony.
Shares of Petronas group companies have widely outperformed the benchmark index FTSE Bursa Malaysia KLCI so far this year. While Petronas Dagangan has surged nearly 43% so far this year, Petronas Chemicals has gained 22% dwarfing KLCI's 7.6% year-to-date decline.
The stock fell 1.7% to 24.16 ringgit on Monday trading on the Kuala Lumpur stock exchange while the KLCI was down 0.5%.
The proposed disposals of PETRONAS (Vietnam) Co. Ltd and Thang Long LPG Company Ltd to Totalgaz Vietnam Limited are expected to be completed by the second quarter of 2016, Petronas Dagangan said in an exchange filing. The company didn't disclose financial details.
The disinvestment is part of its "portfolio rationalization," Petronas Dagangan said without elaborating.
Analysts say the sale would help Petronas Dagangan to consolidate its operations after recent expansions into neighbouring Southeast Asian economies, and to focus on domestic market, which accounts for most of its revenue.
"Contribution from Vietnam should be quite minimal," said MIDF Investment Bank analyst Aaron Tan. "When it comes to retail segment, the liquefied petroleum gas is low-margin business compared to lubricants or aviation fuel," he added.
Thang Long began as a joint venture between PetroVietnam Gas and Malaysia's national oil and gas explorer Petroliam Nasional, or Petronas in 1995. In 2010, Petronas bought the 29% stake that it didn't own in the joint venture. Petronas Dagangan bought Thang Long in 2012 as part of six downstream companies that it purchased from its parent in Malaysia, Thailand, the Philippines and Vietnam in deals totaling $62 million.
The company had hoped to raise annual revenue contribution from its international businesses to between 5% and 8% by 2018 from less than 1% as of 2013.
Even if Petronas Dagangan exits Vietnam, its parent will continue its businesses, including exploration and production activities, in the former French colony.
Shares of Petronas group companies have widely outperformed the benchmark index FTSE Bursa Malaysia KLCI so far this year. While Petronas Dagangan has surged nearly 43% so far this year, Petronas Chemicals has gained 22% dwarfing KLCI's 7.6% year-to-date decline.
The stock fell 1.7% to 24.16 ringgit on Monday trading on the Kuala Lumpur stock exchange while the KLCI was down 0.5%.
Source: nikkei.com
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