A Perak Petrol Station is For Sale. Is this a Good Investment?

Dec 20th, 2006 by AhYap

I always read the classifieds in Sin-chew everyday to see if there are any bargains or opportunities (not under job but under for sale!). Classifieds in Perak’s newspaper is pity when comparing to The Star KL classified. There are only 4 pages while comparing to 40 pages in KL! It is like comparing mosquito to cow.

I also like The Star online but recently some ‘smart’ guys of The Star ‘upgrade‘ their system to a worst online search and listing! This is what I call non-online guys doing online stuff. They can’t make sense of what they are doing.

Enough of classified bullshit, now come back to the Petrol Station. I saw an ad saying that there is a petrol station for sale in Perak inclusive of land, building and rights of business. Interesting because I have never saw such an ad before.

So I pick up the phone to and we talked for over 30 minutes. Here is what I get and let’s see if you will be interested in running this petrol station?

- It is a Mobil located at Teluk Intan. I pump Mobil myself because I have smile card and they accept credit card directly from pump, so I like it.

- Selling price RM930,000 (almost 1 Million). You can do business immediately. You may want to consider renovate with another RM100,000. Assume no renovation.

- Profit is around RM20,000 per month total to RM240,000 per year.

- Able to sell 150,000 litre of petrol every month.

Here comes the math I do myself.

What is the return per year?
Return will be

total profit
total capital

= RM240,000 / RM930,000 = 25%

Wow! If you are familiar with investment returns, you will be very excited with this number BUT if you are financially-blind (like my girl friend), than it is just very hard for you to get it. Compare to these, savings account return is below 1%, fixed deposit return is 4%, real estate around 8%-12%, mutual fund from -50% to 8% (wahahaha), Rule #1 investor 15%, Warren Buffet 23%, ah-long (loan shark) 50% … Does the 25% look good?

25% also means that you can get back your capital in 4 years.

What is the estimated Revenue and Profit Margin?

How do you calculate the revenue of the petrol station? (Revenue = Total sales before cost) Easy, we know the market price of Petrol which is $1.92. Round it to RM2.00, revenue would be RM300,000/month (150,000 litre x RM2). That’s RM10,000/day.

If revenue is RM300,000/month and profit per month is RM20,000, that means the cost of the business is RM280,000/month. Profit Margin is around 7%. Because your business is selling petrol and the cost of your petrol and the selling price is FIXED by the gouverment, the margin will be somewhere around that.

What are the advantanges of running a petrol station?

1. You don’t need to spend even 10 cents on advertising. Mobil, Shell or Petronas will do that for you.

2. You don’t need to negotiate price with your customer. No one will come to your petrol station and tell you, “Wei Uncle, Less 10 cents per litre can ar?”

3. Consider a very stable and consistent business for the long run. All cars need petrol and there will be more and more cars in the future. Anyone trying to invent an alternative to petrol will be *assassinated* by the rich oil companies. Wahahahahaha. Don’t play play!

What are the disadvantages of running a petrol station?

1. Profit margin is very low because it is a commodity product (7% from calculation is quite high and I believe it should be around 5%). You petrol station will be collecting most money in CASH and end of each business day, you will have RM10,000 cash and 95% of it is the COST of your business. Put in another word, that’s NOT YOUR MONEY! You need to use that money to pay your petrol company, your employees, etc. Losing others people money is more PAIN than losing your own money! You need to make sure the RM10,000 is safe everyday because 95% is not yours. If your manager run away 10 days of your money, that is RM100,000 which is 5 months of your profit! Your hair will get white in one day while he can take his holiday for 2 years. There will also be robbers waiting for you outside the petrol station everyday.

2. Petrol is a commodity product and because of this if the customer doesn’t like you or your father-in-law or your dog or your Benz, they don’t need to come to your shop. There are many other petrol stations. Your staff at anytime can poke a hole in your pocket by saying Diu-Nia-Ma (Fuck Your Mother) to your customer and they will never come back.

* Commodity is a product that a customer can buy from anyone because they are almost the same, such as petrol, rice, sugar, chickens, beef, pork … If you price it higher than someone or if the customer doesn’t like you, he can buy from someone else.

Conclusion

This is an incredible deal based on the return and stability of your investment if everything describe by the seller is legitimate (malay saying: no prawn behind the rock). However, you will need to be careful of your cash. You need a manager that you can trust or you manage it by yourself (go stay in Teluk Intan and watch the Clock House everyday, forget about watching movie at TGV or GSC). If you don’t, make sure you buy Wella from Watson so you can dye your hair when your manager run $100,000 away from you. Get your Great Eastern medical card ready if your heart is weak. Say Diu-Nia-Ma 100,000 times a day to your manager for the next 5 months.

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Posted in Intelligent Investing | 59 Comments

59 Responses to “A Perak Petrol Station is For Sale. Is this a Good Investment?”

on 30 Dec 2006 at 6:24 am1Teoh

Pls calculate how sell 150000 liter can earn $24,000 per month ???
on 31 Dec 2006 at 2:54 pm2ahyap

It is RM20k per month and RM240k per year.

The number RM20k and 150,000 litre is given by the seller.

The number is correct since we know the selling price of the petrol in Malaysia (RM1.92/litre). It’s fixed by Adbullah.

Profit around 5% is logical.
on 12 Feb 2007 at 5:51 am3Minyan

If your petrol station business is good, you can expect a Petronas coming nearby in a better location. If this is a “Shell”, a plus. If it’s a “Petronas”, only Bumiputera can take over.

If you can find a capable and trust-worthy staff to run the business for you, can consider. If you’ve to run the petrol kiosk yourself, 25% is not enough, might as well just buy “PETDAG”
on 24 Mar 2007 at 3:04 pm4Ah boy

You can try to go to the Petrol station,sit there for 1 month and calculate how many cars come in.As i know,many Perak people have moved out to Selangor because of jobs.I think you can bargain the price to obtain a higher safety margin.
on 07 May 2007 at 1:18 pm5ekkamai

Crazy laa.
1. Mr Teoh – your question really valid
2. Mr Minyan – Lets buy PETDAG, easier maa
3. if 20k/mth, why sell???
on 08 May 2007 at 6:07 pm6ahyap

ekkamai:

Wow, did you bought PETDAG? It just got me 20% return in 1 month.
on 08 May 2007 at 8:15 pm7ekkamai

Sure bought, got more more x than you. Got info maa. Sudah lepas ka?
on 09 May 2007 at 10:07 am8ahyap

Glad that you are on the boat. Got too many info, don’t know which to trust.
on 06 Dec 2007 at 5:28 pm9boyboycute

It’s pretty hard to find a good blog on property investment in M’sia.But i finally found one.Please visit http://ask-gee.blogspot.com
on 08 Apr 2008 at 5:24 pm10samdol

150,000 liter X RM 19.2 = RM 288,000.00 ( fix price )
You can get only 7.5 cent per liter if not forget ( commission by SHELL @ PETRONAS @ ESSO )
so 150,000 liter x 7.5 cent = RM 11,250.00 only.
After that you imagine that you must pay for :-
1. Staff.
2. Electricity, water, telephone, internet & etc.
3. Others overhead………
4. A big car and house….. he he he

so conclusion is………….
on 20 Apr 2008 at 5:06 pm11babyrambutan

Dear all,

Considering of applying for a Petrol Station Dealership.
ExxonMobil is offering a business opportunity for such a dealership. One must come up with RM50,000 for working capital and another RM150,000 as well … so total RM200K.

Would appreciate any feedback from you gentlemen ( and ladies) out there especially those who own such a business or is familiar with one.

Cheers!
on 09 Jun 2008 at 5:36 pm12hahaha

is it still offer to be bought?coz it already 2 years,justwant to know
on 06 Jan 2009 at 2:02 pm13anon

Thanks for the good info. I know this is late, but even with the 2008 increase in petrol commissions for petrol station operators, the only way to make 20k profit / month is if

a) you sell a HELL of a lot of goods in the retail store AND
b) you pay the staff peanuts

Current commission is 12.19 sen (used to be 9 sen) for each liter sold. At 150000 liters, revenue = 18285 (previously 13500 at old commission rates).

Subtract operating costs and taxes, and it’s easy to see why they want to sell the station.
on 28 Jan 2009 at 10:21 pm14jason

hi,
I am interested in acquiring a service station. But at the moment, the petrol prices are fluctuating. Is it really profitable?
I have heard that some petrol pump owners are just surviving.
Pls advice.
on 13 Feb 2009 at 4:10 pm15jalil

hi,
i got offer from BHP to re-open 1 of the closed BHP petrol kiosk at taman tun aminah skudai johor..

is it a good idea to do a share business on petrol kiosk that can sell 4000 liter of petrol perday..

please advise
on 03 Mar 2009 at 2:54 pm16mohammed

nobody knows how the business works besides anon. the R900k price is worst than ridiculous. in malaysia petrol stations are one year returns.
on 01 Apr 2009 at 10:40 am17petrol

Hi all,

I heard it is difficult for non-bumi to aquire the license from government to open a petrol station. Let’s say if i can invest, build up everything and then governemnt dont approve the license… it is kinda hard and frust.

Any advise/ comment?
on 20 Apr 2009 at 10:56 am18Steve

Hi Petrol,

Those remaining non-bumi stations has been around for a long time, never heard of new non-bumi owned stations ever since. In this case, the advertiser offering to sell its station may be solely on private deal i.e. the oil company and goverment may not be informed of a change in dealership as any change in the ownership of dealer’s company may need their re-approval and re-applying of PDA license. Hence, a separate S&P agreement may be signed between the dealer and buyer to safeguard the buyer’s interest (not so safe afterall, but more on trust)

As for new application, it is always welcomed by oil companies but more than often rejected on grounds of ” not fluent in BM” etc. If you do get pass the oil company, the next obstacles is the PDA license (Petroluem Development Act), which requires 30% (bumi shares in the company in theory (in practise, it may be 100% bumi), which is another stumbling block. Pikir-pikirkan lah…………
on 22 Apr 2009 at 7:28 am19gaur

i have a petrol pump and i am having fantastic life, i am very happy every day my profit is 10,000 rs.
on 28 Apr 2009 at 11:26 am20Mickey

Hi there. I have a piece of land located at Taman Soong Choon (near Simpang Pulai) which is suitable for the petrol station operation.
Can I lease the land to the petrol station? How do I go about it?
Any advise/comment?
on 31 Jul 2009 at 3:22 am21Jamil

Never mind abt the station business…I need (very urgent ma) to buy two (2) units of 2nd hand/used skid mounted fuel tanks, and a fuel dispenser/pump…serious buyer..no joke..

anybody knows anybody who want to sell the above items?
on 05 Sep 2009 at 1:45 pm22siva a/l subramaniam

I like to invest petrol kiosk pls reply thank you
on 11 Sep 2009 at 10:22 pm23YY

hi, how can i apply for exxonmobil Petrol station dealership ?
019-3510001 give me a call..
plsadvise..
thanx
on 15 Sep 2009 at 4:09 pm24shaan fernando

i am interested in buying a petrol station close to Kuala Lumpur
with a good turn over to buy upto one million RM.
please contact me on 0094722467423

and also cyril@sar.lk
on 16 Sep 2009 at 1:13 pm25shaan fernando

i am from srilanka and my friend and me have accepted malayasia as our second home and we would like to invest in a petrol station wtih a high turn over and willing to invest around upto one million RM.
the station should be around Kuala Lumpur.
please terat this as urgent and send information with documents to prove the turn over.

thank you
shaan fernando
tel. 0094722467423
on 17 Sep 2009 at 3:32 am26Jamil

Aug 20 2009 at my place in Jenderam Hilir, Dengkil, we did a demo on emulsified bio-fuel (bio-diesel), with the presence of Puspakom technical staff. Emisson/smoke level come down by 70% with the use of our specifically blended/formulated bio-diesel.
on 18 Sep 2009 at 10:55 pm27vincent

i am interested to know more of what is the minimum start up capital for petrol station? do we need to build up the station with our own money or the oil company will build it for us? you guys mentioned of investment of up to a mill. dollar, ist so much to required?as from petronas website just put RM 150k for working capital and RM 50k for bank guarantee?
on 21 Sep 2009 at 1:15 pm28shaan fernando

dear all i have advertised asking people concern to contact me to sell a petrol station to me. i am very much interested to buy a petrol staion immediately with high turn over. i prefer the staion to be in a very good busy location and the petrol station must sell more litres of petrol in the station. if anyone has a petorl station to sell please contact me immediately. mr. cyril fernando
tel: 0094722467423
email: shaan.fern@gmail.com
email: cyril@sar.lk

please terat this as urgent and all the companies who are willing to give franchise pls take notice.
thank you.

shaan fernando
on 21 Sep 2009 at 1:24 pm29shaan fernando

babyrambuttan

please be good enough to advise me to purchase a good petrol station in a good locationand willing to invest around 1 mill RM with good turn over. please contact me shaan fernando

tel: 0094722467423

email shaan.fen@gmail.com
on 29 Sep 2009 at 11:59 am30Tom

Hi I would like to get advise, what should we request from a seller before we proceed to buy petrol station?
on 04 Jan 2010 at 3:05 pm31Danyal

I am currently running a petrol pump in Pakistan. Have just recently got interested in running a station in Malaysia. While alot of ppl are putting up calculations here they dont factor in alot of details. Here are my 2 cents.

I sell about 150000ltrs of petrol per month and about 80000ltrs of diesel, about 300ltrs of oil.
The margins as we call dealer marigins here are much less around 2.5%.
All the taxs are deducted at source.
Out of the 2.5% we have to pay delievery to the station of all the products.
I dont know the avg salary in Malaysia so I cannot add that here but roughly I pay about 100000rs which is 4347rm(we employee about 20 ppl, I am sure that is more over there).
The electricity is very costy here which amounts to about 40000rs(1800rm) per month. Then misc exp phone credit card percentage etc costs around 50000rs per months(2174rm) after that I still save on the avg about 200000rs(8695rm).
There are a couple of more things to factor in here. Fluctuating price as someone mentioned we have to make sure that we have tanks near full towards price increase and very little at time of decrease which translates into more profit on fluctuating price then a stable price. Then you have to factor in Evaporation loss and Diesel gain. If your management is good you will be able to keep the evaporation loss to around 3% or less and diesel gain will give you about 300ltrs extra at the end of the month which will cover for itself. You have to be carefull from dilevery drivers cause they tend to steal….
With all these factors and a bit more you have more margins (7.5%) in Malaysia and provided the cost on investment being low is very good. The question I have is that do you own the land on the above working or is it a dealership as if you own the land you get a rental from the company for it also.

If anyone can notify me of any petrol stations for sale do let me know.

The best way to check sale is get there receipts of receiving the product from the oil firm to the station for last 6 months then dividing that by the number of days to give you accurate sale figures cause official receipts cannot be denied.

If there is a pump for sale please contact me on dmz241@gmail.com and if you have more questions feel free to ask me would gladly help you.
on 06 Jan 2010 at 1:08 am32ron j

I’m currently running a petrol station with 600,00 liters volume a mth. My net profit monthly is 600,000 ltr x 3 cents = RM 18,000.
Add up RM 4,000 net from shop = RM 21,000 per month.
How come this guy said he made RM 20,000 per month from selling 150,000 ltr??
on 06 Jan 2010 at 1:00 pm33Danyal

Hey ron is it possible I can get your contact as I am looking to setup a similar business there.

Thanks
Danyal Manzar
dmz241@gmail.com
on 07 Jan 2010 at 12:07 pm34darling

Hi Ron, i am filling up application for a petrol station as well. Need your help for some info:
1. You were saying you net profit is 3cent/ltr, this is after deducting all OPEX including staff cost, electricity and etc? Because i heard the normal commission for dealer is 12.9sen/ltr.
2. 600,000ltr monthly sales is huge to me, is your area in Klang Valley? Is this the average sales for petrol station? I heard from other forum, it is around 300,000ltr.

Appreciate you help. Thanks.

you may email to me. sabrinna_s@yahoo.com
on 14 Jan 2010 at 5:05 pm35Petrolboy85

Hi there,
I guest the forum samdol makes a good point. Pakistan guy know what he exactly saying. Hey guys remember one thing u get into consideration…. For shell there is (DD) means Door Door “Some stupid name from oil company” Means that Own property petrol station? You build yourself….(CD) Co-door means Property is not your’s. Hold and behold yes you have to pay. Well how much they charge? Depends on your business lo…. if your business is good it may go up to say “Ok this guy seems like he is doing good, We raise our
rental fee” In the delivery docket right end there is the percentage stated business good up to 15% no good 9%”. If your petrol daily sales not more then 9000lts a day. My advise it keep your money and invest in other things because YOU CAN NEVER GET IT BACK. In other words you have to sit there long hours for 20 yrs? Is that enough? Or your fuel unable to be sold each tanker comes. Your fuel cannot discharge to the tank ” Happy new year” Fine Rm 1000 each time your fuel cannot go it. Reason for shell ” you waste their time and money”… too much to talk about that’s just a brief idea. Petronas New year close 1 day Fine Rm 10,000 and more….
on 17 Jan 2010 at 12:35 am36Tajul

Darling,

you are right
on 18 Jan 2010 at 3:28 pm37kokanchai

hello guys,
due to my relative have stronger social standing In the circle of Petronas,
alas we(family) got our first Franchising dealer petronas in KL as a
Franchies.

the catch is~
i heard at most you can earn up to rm10,000 or 20k per month

how much is the net profit amount or gross profit amount?
it can be reach too
any dealer here can share some information

This seems that operating the petrol station should be greater than the unit trust investment.

Welcome to have more input on this.
on 18 Jan 2010 at 4:43 pm38Petrolboy85

well you have a good idea how much is a petrol station earns….Let me ask you this question… How much you can get the licence for with the land and property build up for you?? Rm4 million?? When you gonna earn back? Doesnt mean the computer system is there you are safe? Huge loop whole…..One largest prob we face here that i have experience. In my state, The boss left everything to deal with. One day the driver delivery comes at night usually people are tired in their last trip. The boss don bother to discharge let the worker discharge. The fuel end up “super mix with diesel in a tank” so after a while i feels awkward why all the customer stop near by 50m away…..because of that incident the owner lost “abt 150-200k”….. Honestly tough business. i work shift 14 hrs a day as manager so i can tell you this ….
on 27 Jan 2010 at 10:31 am39BC

I’ve ONE Question:

If a piece of land is lease to Build Petrol Stations, is there any restrictions of its use in the future? Can we still demolished the Petrol Station and build commercial building? How about building hotel over it after that? We’ve bought a piece of land, and we intend to lease and allow the tenant to build petrol station. Please advice. Would appreciate.
on 20 Mar 2010 at 2:47 pm40nick

i’m interested in buying a petrol pump preferberaly petronas or shell
mail me at sk8er_boyz_15@yahoo.com
on 07 Sep 2010 at 8:15 pm41jim

If anyone of you wanted to sell petrol land or petrol kiosk around Johor Bahru area. Kindly contact me at chokcteo100@yahoo.com. Let me have the details of the land, location and price asking for.
on 18 Sep 2010 at 1:18 pm42universal

I would like to know how to set up a petrol kiosk (Petronas) in Johor Bahru. How much money needed and getting license and approval from the Government. Appreciate any advice from those already have experience in similar situation. Kindly contact me at hello8954@yahoo.com.
on 20 Sep 2010 at 2:44 pm43Michael Lee

Dear Ron J,

May I have your email adress. Mine is michael _lee@petronas.com.my. I am also very interested in operation a petrol station.
on 03 Dec 2010 at 4:38 pm44Bryann112

Recently petronas is offering dealership with RM170k as working capital and RM100 as collateral in the form of property or bank guarantee.

I guess its something like a franchise program. Is there anyone familiar with this program? Please advise.

Thank you
on 05 Feb 2011 at 2:26 pm45Most

I really like your blog post, many thanks to your advice
on 18 Feb 2011 at 3:45 pm46Finance guy

If the ROI would be 25% per annum and the payback period is only 4 years, what the heck that the owner wants to sell, if the station is making money?????
on 13 Apr 2011 at 11:46 pm47dave

i have just finish the sch and am interested in opening a petrol pump.how much capital do i need? plz advice me get me on face book David oirya.
on 24 Jun 2011 at 1:55 am48ali

Dear please tell me immediately if this petrol still available bcuz i am hardly interested.

regards

ali
on 01 Jul 2011 at 2:09 am49Deon

Hey ,Great article, very entertaining stuff. Thanks for posting this…wanna go check out your other posts now….I think it’s hard to make a blog stand out on the web, because it’s so huge, but yours is really cool. Thanks.
on 05 Jul 2011 at 3:22 pm50Axen

I am from Pakistan. I want to go to Malaysia and set there. I want to invest in petrol pump in Kuala Lumpur. Please guide me about total investment for petrol pump with mini retail shop.
Thanks.
on 06 Aug 2011 at 10:58 pm51shakir

i am intrest to buya filling station or get it for leas
i am new in town pl help me to
on 11 Aug 2011 at 3:29 am52alan_chen

who are looking for shell petrol station, can give me a call or email me. 016-7473829
on 28 Aug 2011 at 11:59 pm53Chris

Hi petrol pump for sale in nilai 3
Collection 12k per day
Please contact me if interested

chris_5796@yahoo.com
on 29 Aug 2011 at 3:11 am54alan_chen

http://www.mudah.my/Shell+Petrol+Station+Jalan+Tanjung+Labuh-11024860.htm

visit my website and get the service..016-7473829

your ultimate solution for a better petroleum business in malaysia !!
on 10 Oct 2011 at 3:18 pm55siva

I want to invest petrol pump insg chuh ulu selangor pls advice what compney can i select pls advise tq.
on 27 Oct 2011 at 1:20 pm56shah

Hi I would like to open a oil station, please advise me which one is better… Petronas or Shell ?????
on 10 Dec 2011 at 9:07 pm57Ashraf Janjua

I am a retired person and interested to set up a petrol/diesel station with all its necessary facilities. Can some good person advise me that which company services to be availed. It means shall I go for PETRONAS, EXXONMOBIL or SHELL. Any other details provided will be highly appreciated, plz. May contact on soldier_oncall@yahoo.com
on 03 Mar 2012 at 8:22 pm58sim

i m from oil n gas industry. 150k liters a month cant get u any profit. there are a lot of hidden cost company will charge u like advertising, license, system etc all monthly so dont invest in petrol station, return too low for 150k liters/ month. only those station that do 300k liters per month can get healthy profits. trust me most ppl dun know if they r not in the industry.
on 17 Mar 2012 at 12:55 pm59Rajan

I interested to set up a petrol station but capital and license very difficult to get from governments . Because I non- bumi.