PETALING JAYA: Gas Malaysia Bhd
’s flattish earnings could persist this year as the group continues to diversify its infrastructure to include green energy, says MBSB Research.
The research house has cut its earnings forecast for financial year 2026 (FY26) by 17% and for FY27 by 21%, after accouninting for lower average selling prices (ASPs) and volatile gas market.
Gas Malaysia recently released the results for the first quarter of FY26 (1Q26).
Revenue dropped 14% year-on-year (y-o-y) to RM1.4bil, while core earnings fell by 7% y-o-y to RM93mil.
The weaker revenue was due to lower natural gas ASP, partially mitigated by a higher volume of natural gas sold.
Meanwhile, core earnings declined because of a lower average natural gas contribution margin, higher administrative expenses, and increased finance costs.
Looking ahead, MBSB Research anticipates that Gas Malaysia will continue to be affected by procurement costs and industrial demand amid continued volatility in global gas prices.
“However, a slight optimism remains for domestic factories and households, over robust spending despite risks of raw material price hikes and supply shortages amid the US-Iran war.
“Amid the uncertainties in the market and the expected slower profit breakout, we opine that Gas Malaysia will continue to observe cost discipline in tandem with the incentive-based regulation framework,” it added.
The research house maintained a “neutral” call on Gas Malaysia, although it raised the target price from RM4.48 to RM5.54 per share.
Despite the higher target price, MBSB Research said the lack of immediate earnings catalysts, the contraction in gas margins, and instability within the supply chain limit further upside potential in the near term.
In a separate note, CGS International (CGSI) Research also raised its target price for the stock to RM5.50 per share.
“We maintain ‘hold’ as the stock’s 24% year-to-date rally suggests that the regasification terminal (RGT) project in Yan, Kedah, and higher oil price upside are largely priced in, while 4% to 5% yields remain supportive,” the research house said.
CGSI Research noted that Gas Malaysia received a letter-to-proceed (LTP) from the Energy Commission on March 18 for a proposed floating storage regasification unit (FSRU)-based RGT in Yan with a capacity of up to six million tonnes per annum.
The LTP remains conditional pending fulfillment of several requirements before a formal award is granted.
Key project details such as capital expenditure, equity structure, and regasification tariffs have yet to be disclosed.
That said, CGSI Research estimates the RGT in Yan could contribute about RM135mil in annual net profit from 2031 onwards.
This is based on the following broad assumptions: a 50% stake on a joint-venture basis, US$500mil in capital expenditure for fixed supporting infrastructure, a leased FSRU at US$175,000 per day, and a regasification tariff of RM3.65 per gigajoule per day.
On Gas Malaysia’s 1Q26 results, CGSI Research said core profit after tax accounted for 24% of its FY26 forecast, which it deemed ahead of expectations.
“We expect earnings momentum to strengthen from 4Q26 onwards on the lagged benefits of higher oil prices.
“We raise our FY26 to FY27 profit-after-tax forecasts by 2% and 17%, respectively, driven by higher gas price assumptions under a sustained higher-for-longer oil price environment.”
