KUCHING: Petronas Gas (Petronas) announced its fourth Gas Processing and Transmission Agreement (GPTA) on March 31 with several changes including a separate remuneration computation from the processing and transportation division, different variable rates and a shorter duration of coverage of four years.According to AmResearch Sdn Bhd (AmResearch), the fixed reservation charge’s share of throughput revenue was expected to have fallen to 45 per cent for 2011 forecast from 78 per cent in 2009 given a lower flow rate charge in peninsular Malaysia and slightly higher rates for Miri and Bintulu.
Therefore, the new GPTA was more flexible given the higher variable component, the research house concluded.
Under this new structure, reported the research firm, the fixed revenue component for Petronas had fallen by 40 per cent but this was more than offset by an expanded component from the transportation department.
AmResearch also added that the combination of the reservation charge for both gas processing and transportation gave Petronas’ reservation component a rise by 14 per cent compared to an earlier projection of 10 per cent.
This is expected to further raise future revenues of 2011 and 2012 by four per cent and three to four per cent increase to 2011 to 2013 earnings as well as a three per cent increment in discounted cash flows to RM10 per share, the research house summarized, adding that although dividend yield remained at five per cent, there was a lack of growth catalysts on the horizon.
The stock’s current year price earnings forecast of 18 times is nearing its past five year average but at a premium to oil and gas sector’s 11 times due to defensive earnings profile, the research firm added.
The research firm emphasized that Petronas would not significantly increase its capital expenditure programme given declining gas reserves in peninsular Malaysia. The group had currently budgeted RM300 million for annual plant maintenance and RM1 billion to overhaul the lifespan of gas two processing plants.
Currently, the power purchase agreement for the 300MW Kimanis power plant has not yet been signed with Sabah Electricity Board according to the research house. This plant, as mentioned in the report, was estimated to add 13 sen or one per cent to Petronas’ discounted cash flow. Any earning contributions to Petronas would only commence in 2014.