Petronas Gas - A steady flow of gas (ADD - Maintained)
Target RM26.44 (Stock Rating: ADD)
At 75% of our and consensus full-year forecasts, Petronas Gas's (PetGas) 3Q14 core net profit of RM418.6m was in line with our expectations. Revenues grew by 9.8% yoy, underpinned by the new Gas Processing and Gas Transportation Agreements and higher utilities revenues. We retain our earnings forecasts and SOP-based target price of RM26.44. We remain optimistic on PetGas's earnings outlook, which we expect to be stable moving forward. We maintain our Add call on the stock, with the announcement of more regasification terminals being a potential re-rating catalyst. PetGas remains our top pick in the overall Malaysian utilities sector.
3Q14 results review
PetGas's 3Q14 revenues grew by 9.8% yoy to RM1.12bn from RM1.02bn previously. The drivers for revenue growth were across the board, as its gas processing and transportation revenues grew by 6.1% and 8.6% yoy, respectively, due to higher reservation charges and higher transportation capacity booked as per the new Gas Processing Agreement (GPA) and Gas Transportation Agreement (GTA). Its utilities division revenues also grew by 31.7%, driven by the electricity tariff hike earlier in the year and higher offtake by its customers. However, regasification revenues were lower during the quarter, due to a revision of the Regasification Service Agreement tariff after one year of commercial operations. PBT during the quarter grew by 10.2% due to the higher revenues and lower costs.
No impact from recent gas price hike
Last week, the Malaysian government revised the natural gas tariff for the non-power sector in Peninsular Malaysia, which took effect on 1 Nov. PetGas is, however, unaffected by the gas price hike as it is mainly involved in the processing and transportation of gas.
Limited downside
Given its stable earnings and cashflow outlook, we see little downside to PetGas's earnings and share price. Furthermore, we think that its longer-term earnings are likely to be supplemented by additional regasification terminals, which we think could act as a re-rating catalyst for the stock.
Source: CIMB Daybreak - 05 November 2014
CIMB Daybreak
At 75% of our and consensus full-year forecasts, Petronas Gas's (PetGas) 3Q14 core net profit of RM418.6m was in line with our expectations. Revenues grew by 9.8% yoy, underpinned by the new Gas Processing and Gas Transportation Agreements and higher utilities revenues. We retain our earnings forecasts and SOP-based target price of RM26.44. We remain optimistic on PetGas's earnings outlook, which we expect to be stable moving forward. We maintain our Add call on the stock, with the announcement of more regasification terminals being a potential re-rating catalyst. PetGas remains our top pick in the overall Malaysian utilities sector.
3Q14 results review
PetGas's 3Q14 revenues grew by 9.8% yoy to RM1.12bn from RM1.02bn previously. The drivers for revenue growth were across the board, as its gas processing and transportation revenues grew by 6.1% and 8.6% yoy, respectively, due to higher reservation charges and higher transportation capacity booked as per the new Gas Processing Agreement (GPA) and Gas Transportation Agreement (GTA). Its utilities division revenues also grew by 31.7%, driven by the electricity tariff hike earlier in the year and higher offtake by its customers. However, regasification revenues were lower during the quarter, due to a revision of the Regasification Service Agreement tariff after one year of commercial operations. PBT during the quarter grew by 10.2% due to the higher revenues and lower costs.
No impact from recent gas price hike
Last week, the Malaysian government revised the natural gas tariff for the non-power sector in Peninsular Malaysia, which took effect on 1 Nov. PetGas is, however, unaffected by the gas price hike as it is mainly involved in the processing and transportation of gas.
Limited downside
Given its stable earnings and cashflow outlook, we see little downside to PetGas's earnings and share price. Furthermore, we think that its longer-term earnings are likely to be supplemented by additional regasification terminals, which we think could act as a re-rating catalyst for the stock.
Source: CIMB Daybreak - 05 November 2014
CIMB Daybreak
