It maintained its hold recommendation on the stock with a lower target price of RM2.75 from RM2.85 previously.
"GMB continues to be a good yield play offering a 4.6% yield but lacks a near-term catalyst," it said.
For the fourth quarter of 2019 after adjusting for a series of one-offs, Gas malaysia's core net profit came in weaker at Rm36mil, which was 14% lower year-on-year.
This brought cumulative core net profit for 2019 to RM168mil, which was 2% lower from the previous year, missing Affin Hwang's full-year forecast by 7%.
According to Affin Hwang, the reason for the weaker performance as owing to lower-than-expected margin spread.
4Q19 revenue dropped 4% y-o-y to RM1.68bil due to adjustments made for the under-recovery of gas costs, which was supported by a higher natural gas tariff and a 3% increase in natural gas volume.
However, margins remained flat owing to the gas cost pass-through mechanism.
Headline profit was 13% higher y-o-y due to several one-off items recognised at the joint-venture level relating to deferred tax assets and LAD claim.
Excluding these from the headline JV figure, operating losses from the JV widened to RM5.3m due to larger hedging losses at its combined heat and power business (CHP).
What do you think of this article?