KUCHING: Petronas Gas Bhd (Petronas Gas) was among the top losers in trading yesterday on price correction despite posting a better first quarter earnings.
At closing, Petronas Gas shares lost 28 sen to RM21.92 with 1.08 million shares changing hands.
The group, which has recorded a decent start to financial year 2015 (FY15), is expected by analysts to continue having stable earnings and unaffected by macro conditions.
In a filing on Bursa Malaysia, the group said profit before tax (PBT) for the quarter ended March 31, 2015 had increased by RM28.1 million as compared to the corresponding quarter in line with higher revenue, partially offset by higher other operating expenses resulting from unrealised foreign exchange loss on finance lease liabilities following the weakening ringgit.
“Accordingly, profit for the quarter increased by RM32 million in tandem with higher PBT,” the group said.
The research arm of CIMB Research Investment Bank Bhd (CIMB Research) expected Petronas Gas’ earnings to remain stable and unaffected by macro conditions due to the group’s agreements with Petroliam Nasional Bhd (Petronas) for gas supply and transportation.
“Furthermore, its regasification terminal is also fully booked by Petronas, which means the terminal faces no demand risk,” CIMB Research said.
According to the research arm, Petronas Gas is currently constructing a new regasification terminal in Pengerang with a total investment of RM2.7 billion; this terminal is part of the Refinery and Petrochemicals Integrated Development (RAPID) project.
It noted that Samsung C&T has been contracted to do the engineering, procurement, construction and commissioning (EPCC) part of the project, which the is expected to be completed by 2018.
“We estimate that the Pengerang regasification terminal would add an additional eight to 10 per cent to its earnings by 2018,” the research arm said.
CIMB Research maintained its financial year 2015-17 (FY15-17) earnings forecasts pending any new information from its conferencecall later today.
The research arm’s sum of parts (SOP)-based target price of RM27.11 was unchanged, as is its ‘add’ call. Petronas Gas remained one of its top picks in the overall Malaysian utilities sector.
RHB Research Institute Sdn Bhd (RHB Research) also maintained its earnings forecasts.
The research house noted that Petronas Gas’ earnings growth is likely to be modest in FY15F-17F, but will rise more significantly in FY18F with maiden contribution from the Pengerang regasification terminal.
“We like the stock for its earnings defensiveness and strong long-term fundamentals backed by continued industrialisation in Malaysia, and hence rising demand for gas,” it said.