PETALING JAYA: The market remains positive on Gas Malaysia Bhd
despite the company posting a slight dip in core profit for the second quarter ended June 30, (2Q25) due to a strong market position from being a key natural gas retailer in the domestic market.
Kenanga Research said Gas Malaysia could expect to see a sales recovery in the second half of this year following the dip in 2Q25 mainly due to a temporary gas curtailment following the pipeline fire in Putra Heights, Selangor.
“Normalised gas volumes in 2H25 should support its attractive dividend yield,” the research house added.
However, the research house cautioned that narrower margin spreads from contract renewals in January could weigh on the company’s profitability.
Kenanga Research has maintained its discounted cashflow-derived target price of RM3.93.
The research house said it favours Gas Malaysia for its strong earnings visibility underpinned by its ability to retain customers, typically via three-year contracts, and strong free cash flows, anchoring a dividend yield of more than 5%.
The research house maintained its “market perform” call as it believes the positives have been priced into the stock.
Meanwhile, MBSB Research said it expects Gas Malaysia to continue delivering a steady performance this year, supported by its strong position as well as long-term contracts.
“We also believe Gas Malaysia’s pursuit of growth opportunities through its GM32 Strategy – which includes diversifying into cleaner energy solutions – will continue to take precedence.
“On that note, we are also looking forward to the commencement of operations at the centralised biomethane injection station in Kluang, Johor, which is scheduled to be fully operational in 2H25,” it added.
However, the research house said it believes Gas Malaysia would likely be influenced by the slower economic growth leading to moderate demand for energy in the domestic market.
“We think initiatives by the government to support economic growth will encourage business and consumer spending, subsequently increasing demand for gas. This gives Gas Malaysia its operational sustainability in the near to mid-term,” MBSB Research added.
It maintained its “neutral” call for the stock on the back of limited upside, with an unchanged target price of RM4.48.
