KUALA LUMPUR: Kenanga Research maintained its Outperform call on Petronas Gas Bhd
as it expects the upcoming Third Party Access (TPA) framework to have a neutral impact to the group as it does not impact the public, directly given that it deals only with businesses.
“Hence, we reiterate that the suppressed share price offers a good buying opportunity.
“Risk to our call is a severe reduction of rates under the TPA,” it said on Thursday.
The share price of PetGas continued to come under pressure since 2017 as the TPA framework was delayed to next year, which raised concerns that it could severely impact its earnings on lower rate while processing income would be lower as customers may opt to import their own gas supply.
“In our opinion, being a Petronas company, the new Pakatan Harapan government may protect PetGas’ interest to ensure earnings certainty.
“Moreover, based on experiences of ICPT and GCPT mechanisms, Tenaga Nasional and Gas Malaysia suffered no negative impact with fuel and gas costs passed through to end-users eventually.
“As such, the TPA could turn out neutral for PetGas,” it said in a note.
Following a better-than-expected set of Q2’18 results, the research house raised its FY18 and FY19 estimates by 4% to reflect stronger-than-expected Pengerang RGT earnings.
However, it maintained its target price of RM22.80 as the upside from Pengerang RGT is mitigated by lower net cash on higher capex assumption as well as lower target price for Gas Malaysia.
Limited time offer:
Just RM5 per month.
