PETALING JAYA: Gas Malaysia Bhd
’s proposed liquefied natural gas (LNG) regasification terminal (RGT) in Kedah could add about 80 sen per share in valuation upside, according to analysts, even though joint venture (JV) ownership terms remain undecided ahead of the final investment decision (FID).
Last week, Gas Malaysia signed a joint development agreement (JDA) with Japan’s Tokyo Gas Co Ltd and Netherlands‑based VTTI BV for the development phase of the RGT in Yan, Kedah.
The parties will collaborate on a 70:15:15 participation structure covering technical studies, commercial structuring, regulatory engagement, project management and preparation of a future JV framework.
The JDA’s development cost is estimated at RM72mil, of which Gas Malaysia will fund RM49.8mil.
CGS International (CGSI) Research views the partnership positively, noting that Tokyo Gas and VTTI bring deep LNG‑infrastructure experience across Asia and Europe, reducing execution risk.
However, it stressed that the 70:15:15 structure applies only to the development phase and does not represent final equity stakes.
A new JV agreement will be executed once FID is reached, potentially with additional partners.
Pending clarity, CGSI Research assumes Gas Malaysia will ultimately hold a 50% stake. Based on this, it modelled US$500mil in fixed‑infrastructure capex, a leased floating storage and regasification unit (FSRU) at US$175,000 per day, and a regasification tariff of RM3.65 per gigajoule.
This implies a valuation uplift of about 80 sen per share using discounted cash flow metrics.
However, with the stock up 28% year‑to‑date, CGSI Research believes the market has largely priced in both RGT optionality and a higher‑for‑longer oil‑price environment. It maintained a “hold” call with a RM5.50 target price.
MBSB Research said the JDA could reshape Gas Malaysia’s business model by allowing it to take control of upstream supply rather than relying solely on third‑party gas purchases.
A 70% stake in the FSRU and terminal would enable the group to bypass bottlenecks and import LNG directly. The Yan site also offers strategic upside, supporting industrial demand across Kedah, Penang and Perak.
MBSB Research estimated the total project cost could reach RM3bil, likely financed via a typical 70:30 debt‑equity structure.
Gas Malaysia’s share of equity funding could amount to RM630mil over several years, while about RM2bil would come from borrowings.
The initial RM50mil development‑phase commitment represents only 1.4% of the group’s RM4bil asset base and should not strain its balance sheet or dividend capacity, it said.
Based on peer comparisons, MBSB Research estimated an internal rate of return of about 12%, translating into potential annual earnings of RM50mil to RM70mil.
It also highlighted potential cost savings of at least 20 sen per gigajoule from bypassing third‑party LNG infrastructure.
Despite the long‑term upside, MBSB Research maintained a “neutral” rating with an unchanged RM5.56 target price, noting that the project remains pre‑FID with no near‑term earnings contribution.
Tokyo Gas is a related party through its indirect 18.5% stake in Gas Malaysia.
