PetGas management said negotiations for the new gas processing agreement with parent PETRONAS have concluded, according to Maybank IB Research.
PETALING JAYA: Petronas Gas Bhd
’s (PetGas) future growth is set to be supported by its projects under construction.
The projects are the Kluang compressor station, liquefied natural gas storage expansion and Sipitang Power plant, all of which are on schedule.
Maybank Investment Bank Research (Maybank IB Research) said PetGas’ core net profit for the third quarter of 2023 (3Q23) was in line with its estimates and consensus.
PetGas saw a 3% year-on-year (y-o-y) increase in its core net profit to RM477mil, which took its core net profit for the nine-month period of the financial year ending Dec 31, 2023, to RM1.4bil.
“PetGas’ 3Q23 earnings trended lower quarter-on-quarter mainly on the back of higher depreciation and maintenance costs. An 18 sen interim dividend per share was declared, unchanged y-o-y,” the research house said in a report yesterday.
Maybank IB Research said higher depreciation at the processing and regasification divisions, and higher maintenance costs at the transportation division led to the group’s 3Q23 segmental earnings being sequentially lower across all divisions.
“The utilities division saw sequentially lower earnings before interest and taxes due to lower prices as the imbalance cost pass through surcharge for electricity tariffs was lower in the second half of 2023.
Separately, PetGas management said negotiations for the new gas processing agreement with parent Petroliam Nasional Bhd or PETRONAS (effective 2024 to 2028) have concluded,” the research house said.
Moreover, the group is currently conducting feasibility studies for mini-hydro, carbon capture and storage as well as solar generation projects.
The research house maintained its “hold” on PetGas with a target price (TP) of RM17 a share and noted that it marginally prefers Gas Malaysia Bhd among the gas utilities.
It has a “hold” call with a TP of RM3.20 a share on Gas Malaysia.
The research house noted that risks to its call for PetGas include regulatory developments such as the determination of regulated returns, which will have a direct impact on the group’s earnings.
Additionally, it said unscheduled outages could also result in earnings losses for PetGas.
