KUALA LUMPUR: AmInvestment is maintaining its Hold rating on Petronas Gas (PGas) with an unchanged fair value of RM24.40 a share, based on our sum-of-parts valuation.
“This implies an FY16F price-to-earnings of 26 times,” it said on Thursday.
PGas and Sabah Energy Corp have mutually decided to terminate the proposed regasification terminal (RGT) at Lahad Datu, Sabah following prolonged uncertainties concerning the project.
In September 2013, PGas had offered Sabah Energy to acquire up to a 20% equity stake in the project, which was expected to be smaller than the 530mil mmscfd Melaka RGT.
StarBiz reported that the facility, which would have a send-out capacity of 0.76mil tonnes per annum versus the Melaka RGT’s 3.8mil tonnes, which AmInvestment earlier scheduled for completion in 2015.
However, the Lahad Datu insurgency in February 2013 led to an indefinite suspension of the project.
“Hence, security concerns and the current low crude oil prices environment are likely to be main reasons for the project abortion.
“Our fair value and forecasts are unchanged as we had not incorporated any contributions from the proposed Lahad Datu regasification terminal, given that management had not given any guidance of when the project would have commenced,” it said.
AmInvestment said the group’s next phase of growth will be contributed by the group’s second LNG regasification plant in Pengerang, recently announced and targeted to be operational by the fourth quarter of FY17.
“As the Pengerang RGTP’s capacity is similar to the existing Malacca regasification facility’s 530mil mmscfd, we expect the Pengerang RGTP to contribute approximately RM300mil per annum to the group’s EBIT upon commencement of operations.
“PGas will also be involved in the development of an air separation unit in a JV with Linde, which is expected to be used for the production of oxygen and nitrogen.
“A final investment decision is expected to be reached by 3QFY15 and it is targeted to be completed by 4QFY18. The stock currently trades at an FY15F PE of 24 times below its two-year peak of 25 times, while dividend yield remains decent at 2%-3%,” said the research house.
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