The investment bank said this was also evident from historical data when petrol and diesel prices were floated in 2019 with no material impact on PDB’s retail sales volumes.

Kenanga also noted that PDB does not expect a substantial earnings contribution from electric vehicle (EV) charging in the financial year ending Dec 31, 2024, given the early stage of the EV market.

“Conversion of alternating current (AC) chargers to direct current (DC) chargers is underway to decrease the average charging time for EV users.

“With 20 available AC charger stations, PDB’s partner, Gentari, will increase capacity in the coming years,” said Kenanga in a statement.

It added that PDB will earn income via fees paid by Gentari or profit-sharing arrangements, with no direct operation of the charging stations.

“PDB is also growing its Café Mesra outlets at a more measured pace amid a soft market,” it said.

Kenanga Research pointed out that its standalone Café Mesra in malls, office buildings, and train stations was doing better given higher foot traffic versus those located at the petrol stations.

However, it said Café Mesra’s contribution to PDB’s convenience division revenue “remains insignificant” currently.

“We like PDB due to its highly cash-generative business that translates to high capacity to pay dividends, its strong balance sheet with a sizeable war chest of RM2.8 billion, and its growing convenience division’s revenue on stronger demand for Café Mesra.

“However, we are concerned over the long-term prospects of PDB’s retail business on the back of EV adoption,” it said, adding that it maintains a “market perform” call on the nation’s largest downstream petroleum product retailer.

The research house said that among the risks to its call include volatility in its product prices which translates to margin volatility, lower fuel demand due to a domestic economic slowdown, and low fuel demand stemming from a slowdown in air travel.