i have gasmalaysia too singh :) still holding on

KUALA LUMPUR: CIMB Equities Research is keeping Gas Malaysia as an Outperform and is maintaining the target price at RM3.07.

It said on Thursday that rising gas demand and the start of the Petronas Melaka regas terminal are the catalysts.

“Our DDM-based target price is unchanged, still based on a 5.5% cap rate and a 2% TGR,” it said.

CIMB Research said Gas Malaysia's nine-month revenue rose by 7.1% on-year to RM1.6bil due to a 2.2% increase in gas sold and higher average selling prices (from June 1, 2012).

“The Q3 revenue was boosted by a capital contribution of RM8.6mil, which we treat as non-core. This is payment by clients for rural pipelines. Due to a revision in the regulated spreads, EBITDA fell by 26% to RM183mil as EBITDA margins were compressed by 5.2 percentage points. As a result, core net profit fell by 29% to RM109mil.

“We believe that Gas Malaysia will be the least affected from the delay of Petronas' Melaka regas terminal (by January 2013). Gas Malaysia pays more for gas (at RM16/mmbtu) than Petronas Chemicals (RM14/mmbtu for C1 feedstock) or the power sector (RM13.70/mmbtu),” it said.

CIMB Research said any supply curtailment will impact the power sector first, Petronas Chemicals second, and then only Gas Malaysia. Also, during the 2011 gas shortage Gas Malaysia's output rose by 7%, suggesting that the company was prioritised by the regulator ahead of the power sector,” it said.

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