Maybank IB maintains Hold, TP of RM3 on Gas Malaysia as earnings meet estimates

KUALA LUMPUR: Maybank Investment research maintained its hold call on Gas Malaysia Bhd with an unchanged target price of RM3 as 2Q19 net profit came in line with its and consensus estimates.

In yesterday’s result announcement, Gas Malaysia’s quarterly net profit of RM49mil was 2% higher year-on-year, which brought 1H19 net profit to RM90mil, comprising 47% and 48% of Maybank’s and consensus full-year expectations.

“GMB noted in its commentary that 2Q19 volume grew both QoQ (in line with seasonality) and YoY.

“We estimate GMB’s 2Q19 spread at c.MYR2.00/mmBTU; thus, the 1H19 spread would have trended close to our MYR1.95/mmBTU assumption,” said the research house.

Maybank believes that Gas Malaysia continues to under-recover on gas cost, which increased the overall “under-recovery” position in 2Q19, and an increase in quarter-on-quarter receivables.

“This is consistent with the recent imposition of a larger MYR1.92/mmBTU surcharge for 2H19,” it said.

Maybank noted that regulatory inputs will be up for review with 2019 being the final year of RP1.

It added that the risk-reward is currently balanced as the share price has been largely stable in recent months.

Source: The Star