KUALA LUMPUR (Nov 20): Public Investment Bank Research has initiated coverage on Petron Malaysia Refining and Marketing Berhad (Petron) with an “Outperform” rating and target price of RM14.46 and said Petron made its foray into Malaysia in 1933, marking over 80 years of business continuity in this nation.

In a note today, the research house said Petron’s roots can be traced back to ExxonMobil when the company set up Standard Vacuum Oil Company.

It said that today, it is the third largest petrol retail operator.

“We begin coverage on Petron with an Outperform call and target price of RM14.46.

“We arrive at our target price using a discounted cash flow (DCF) method applying a weighted average cost of capital (WACC) of 7.71%.

“At our target price, Petron’s price-earnings ratio (PER) equivalent is 7.5x, lower than the regional average of 11.4x, but justified given its smaller market capitalization.

“Although above its long-term average, Petron’s forward PER is supported by the changing prospects of oil prices,” it said.