PETALING JAYA: Petroliam Nasional Bhd (PETRONAS) is already adhering to high standards of governance and financial reporting, and a listing on Bursa Malaysia will not improve those conditions.
Furthermore, a listing will also not unlock any additional money in its accounts and could well be a setback for Malaysia, as the national oil company (NOC) could lose its status on the international level.
President and group chief executive officer Datuk Tengku Muhammad Taufik Tengku Aziz said any listing of the giant petrochemcial company will also not improve the financial reporting or governance of the NOC, given it was in compliance with international reporting financial standards, already being audited by a Big 4 accounting firm and scrutinised by rating agencies.
He said the NOC had benefited from higher commodity prices, reliable production and favourable foreign-exchange rates, and those improvements will not come as a result of a listing.
“People believe we have RM20bil to RM30bil in hidden profits. I don’t know where that comes from,” he said, adding that PETRONAS had responded to questions by ministries openly and transparently.
The idea of floating PETRONAS on the stock exchange was made by parliamentarian Wong Chen. That suggestion has been met by divided opinion. Analysts have questioned whether a listing would bring long-term and sustainable reduction to national debt.
Then, there is the question over the huge influence PETRONAS would have on Bursa Malaysia. It is estimated that a PETRONAS listing could be priced at nine times to 10 times earnings, giving it a market capitalisation of RM900bil to RM1 trillion provided it has a dividend payout policy of 50%, giving the stock an attractive dividend yield of 5% to 5.55%.
A market value of RM1 trillion is almost 60% of all the Bursa-listed securities market valuation of RM1.7 trillion.
Then, there is the pressure minority shareholders could force on PETRONAS’ management and board over the adherence to global sustainability or environmental, social and governance standards that are faster than what PETRONAS has planned for.
Tengku Muhammad Taufik said one drawback from any listing is the potential loss of PETRONAS’ status as an NOC. He said that label awards a certain level of trust when dealing with countries.
“Any implication of a listing has to be thought through thoroughly,” he said, indicating the repercussions to an industry that employs 150,000 people. Ultimately, he said a decision on whether PETRONAS should be listed will be the prerogative of the shareholder.
