GASMSIA (5209) - Headwinds ahead Gas Malaysia, says AllianceDBS Research
KUALA LUMPUR (March 11): AllianceDBS Research has maintained its “Hold” rating on Gas Malaysia Bhd (GMB) at RM2.52 with a lower target price of RM2.20 (from RM3) and said the freezing of gas tariff until 2016 could hurt GMB given the sustainable growth in demand for gas, because the company would have to buy a larger portion of LNG at market price.
In a note Wednesday, the research house said the estimated higher blended gas cost will reduce FY15 gross margin to below 5%, compared to 9-11% over the past three years.
AllianceDBS Research said it was cutting its FY15F/16F earnings by 55%/30% after accounting for thinner margins in the absence of a tariff revision in the near term.
“Consensus earnings estimates - which are 77%/22% higher than our FY15F/16F earnings – are too optimistic, in our view.
“Also, the weaker earnings could result in less attractive dividend yield, although we expect GMB to be able to maintain its more than 75% dividend payout policy,” it said.
http://www.theedgemarkets.com
KUALA LUMPUR (March 11): AllianceDBS Research has maintained its “Hold” rating on Gas Malaysia Bhd (GMB) at RM2.52 with a lower target price of RM2.20 (from RM3) and said the freezing of gas tariff until 2016 could hurt GMB given the sustainable growth in demand for gas, because the company would have to buy a larger portion of LNG at market price.
In a note Wednesday, the research house said the estimated higher blended gas cost will reduce FY15 gross margin to below 5%, compared to 9-11% over the past three years.
AllianceDBS Research said it was cutting its FY15F/16F earnings by 55%/30% after accounting for thinner margins in the absence of a tariff revision in the near term.
“Consensus earnings estimates - which are 77%/22% higher than our FY15F/16F earnings – are too optimistic, in our view.
“Also, the weaker earnings could result in less attractive dividend yield, although we expect GMB to be able to maintain its more than 75% dividend payout policy,” it said.
http://www.theedgemarkets.com
