PETALING JAYA: Analysts concur that Petronas Gas Bhd’s (PGas) net profit of RM551.3mil for the first half ended Sept 30 was well within expectations, with some saying the stock remains attractive for long-term investments.
Research outfit OSK Research said PGas had steady financial cash flow and reasonable dividends as well as good prospects in east Malaysia.
It said in a research note: “We believe more investors will sit up and take notice when PGas’ Kimanis-Bintulu pipeline project commences operations.
“Meanwhile, growth in its utilities division made up for lower profits in the throughput services division.”
The brokerage said the new accounting procedure under FRS (Financial Reporting Standards) 116 continued to have a positive impact on financial records, as the reclassification of plant maintenance cost over a longer period resulted in lower expenses.
When contacted, OSK Research analyst Chris Eng told StarBiz FRS 116 required companies to spread their spending over a longer period of time and this had resulted in a better and more consistent reading for PGas’ 2007 figures.
OSK Research revised its financial year-end (March 31, 2007) forecast for PGas revenue up by 0.8%, but reduced its net profit forecast by 1% to RM2.9bil, because it felt PGas could improve on efficiency in controlling the amount of gas used by its gas processing plants.
OSK Research also maintained its dividend yield forecast of 15 sen interim and 25 sen tax-exempt final yield for PGas.
Meanwhile, K&N Kenanga also expressed confidence in PGas’ ability to pay higher dividends despite the company's interim dividend of only 15 sen, as it had no major capital commitments.
“Petronas Gas is unlikely to stop expanding in the near future.
“Plans are underway to expand the natural gas distribution system network to 2,005km under the Ninth Malaysia Plan and to connect newly developed east Malaysian gas fields to shore,” it said in a report. - By KEITH HIEW