PETALING JAYA: Gas Malaysia Bhd
is expected to face a more challenging second half of 2026 (2H26), with softer gas demand and elevated costs likely to weigh on earnings.
Still, higher regulated gas prices and the group’s dominant market position should provide some support as it expands its network and renews key contracts.
MBSB Research said the group’s outlook would be shaped by higher Malaysian Reference Price (MRP) levels, although weaker demand and margin pressures could limit the upside.
MRP is projected at about US$36 to US$40 per million British thermal units (MMBtu) in 2H26, in line with the six-month lag in its correlation with Brent crude prices.
As a result, average selling prices (ASPs) for subsidiary Gas Malaysia Energy and Services Sdn Bhd or GMES are expected to peak in the fourth quarter of 2026 (4Q26), reaching about 40% above 1H26 levels.
Despite this, gas demand is expected to be slightly lower in 2H26, due to global operational uncertainties which impact broader industrial production and supply chain dynamics, it said.
The research house has cut its earnings forecasts for 2026 to 2028 by 7% each, taking into account the group’s 1H26 results and expectations of weaker demand in the coming quarters.
It also lowered its target price to RM5.21 from RM5.54, based on an 18 times price-to-earnings ratio (PER) applied to revised 2026 earnings per share (EPS) of 29 sen.
It maintained its “neutral” call on the stock, citing limited upside at this juncture.
The valuation is broadly in line with the utilities sector’s 16.5 times to 18.5 times PER range, leaving limited scope for a significant expansion.
Despite the near-term challenges, MBSB Research said Gas Malaysia retains a defensive floor from its stable dividend yield and dominant position, with about 84% of the retail gas supply market.
MBSB Research said it expects ASP fluctuations, to keep margins under pressure.
