Petrol Station Success Story - Upgrades vs Divestment in Malaysia

A family-owned petrol station in Ipoh, Malaysia had been operating for over 12 years under a local fuel brand. While fuel volumes remained stable, the site was aging, and competition from newer stations nearby had intensified. The owner was weighing a major investment to upgrade the forecourt and expand the convenience store for RM$1.9m or to divest the site entirely and reinvest elsewhere.‍ They engaged CapX Solutions to assess both options from a financial and strategic perspective. The Challenge‍ • The site needed a significant capital injection to remain competitive • The forecourt was outdated, and the convenience store had limited range and footfall • The owner had received informal interest from another operator to buy the site • There was uncertainty around future fuel margins, regulatory changes, and return on investment • The owner lacked a structured financial model to make an objective decision What CapX Solutions Did‍ 1. Built a Two-Track DCF Model: Invest vs Divest We created a 10-year discounted cash flow model comparing: • Full-site upgrade (forecourt modernisation + retail store expansion) • Status quo with eventual site divestment • Immediate sale based on recent indicative offers We included: • CAPEX costs, projected revenue uplift, and cost savings from newer equipment • Fuel and retail margin assumptions • Sensitivity analysis around fuel volumes and retail basket growth • Estimated site sale value, transaction costs, and reinvestment assumptions ‍2. Delivered Strategic IRR-Based Decision Support CapX provided a clear, board-style summary comparing the IRR of upgrading the site vs proceeds from an immediate or delayed divestment. We also incorporated non-financial considerations such as operational complexity, future competition, and owner’s lifestyle goals. The result was a decision-making framework that combined data with strategic clarity. ‍3. Modelled Long-Term Value Creation We helped the owner visualise what long-term value would look like in each case. The model showed that if performance assumptions held, the investment could yield higher long-term value than the current sale offer—but also carried execution risk. This allowed the owner to weigh risk appetite vs financial upside. The Result‍ ✅ The owner decided to invest in upgrading the site, supported by a clear IRR advantage and the potential to reposition the site for higher future value or exit. ✅ Construction planning began, with a 6-month phased execution strategy to avoid full site closure. ✅ CapX was re-engaged to model a potential future divestment timeline, once the site was stabilised and revenue uplift was proven. Services Provided • 📊 DCF Modeling: Upgrade vs Divestment • 🔍 IRR & Scenario Analysis • 🧠 Strategic Exit & Investment Planning • 📄 Executive Summary for Decision Support