Ampol’s third-quarter profit update highlighted strong performances from its Lytton refinery and convenience retail stations, but recorded losses in its fuel and infrastructure division, RBC notes.
In a note to investors, RBC Capital Markets analyst Gordon Ramsay said Ampol's non-Lytton fuel and infrastructure division posted an EBIT loss of $21.3m in the third quarter of 2022 – largely due to high product freight costs that reduced margins for imported jet fuel.
However, Mr Ramsay said Ampol continues to realise higher than historical average Lytton refining margins over the second half of 2022, partly offset by freight costs and quality premiums.
"Increased Chinese product exports remain a key risk for the outlook for Australian refiner margins," he said.
"While Ampol has stated the impact of the increase in Chinese export quotas is yet to materialise, we look at this coming through as a potential negative for the outlook for Australian refiner margins, offset by low global product inventories, particularly diesel, and the impact of the Russia and Ukraine conflict."
Mr Ramsay says Ampol needs to "stem its trading losses on jet fuel sales" and notes the retail market "appears to be acting rationally, but has also been volatile".
RBC holds a negative sentiment for Ampol and a target price of $40.00.
Ampol shares are 10.7 per cent lower at $27.92 at 12.20pm AEDT.
