Gas Malaysia’s gas sales volume is expected to expand in FY18, driven by rubber, oleo-chemical, consumer products and glass manufacturing industry, analysts observed. — Bernama photo
KUCHING: Gas Malaysia Bhd’s (Gas Malaysia) gas sales volume is expected to expand in financial year 2018 (FY18), driven by rubber, oleo-chemical, consumer products and glass manufacturing industry, analysts observed.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) reiterated its view that it opined gas sales volume for FY18 will continue to sustain and register year-over-year growth.
“Our current gas volume growth projection is between six to 6.5 per cent,” MIDF Research said.
The research arm’s assumption was premised on resilient national gross domestic product (GDP) growth of 4.8 per cent for 2018.
“Moving forward, we believe that the growth in the gas sales volume will be primarily driven by rubber, oleo-chemical, consumer products and glass manufacturing industry supported by 2018 GDP growth of approximately 4.8 per cent.”
MIDF Research also noted that the incentive-based regulation (IBR) framework is clearly having a positive impact on Gas Malaysia’s revenue and earnings as the group’s regulated assets continue to increase.
As per Gas Malaysia’s latest financial statements, the group’s revenue for the financial period ended September 30, 2018 was RM4.495 billion compared to RM3.86 billion in the corresponding period in 2017, representing an increase of 16.4 per cent due to the higher natural gas tariff and higher volume of natural gas sold.
Meanwhile, the group’s profit attributable to owners of the parent for the financial period ended September 30, 2018 amounted to RM129.314 million, up 29.6 per cent from RM99.793 million in the corresponding period of the previous year.
“In addition, the IBR will provide financial neutrality to the company with respect to any gas costs fluctuations,” MIDF Research said.
“Management guided that the increase in volume sold and rise in new customers acquisition is likely to sustain throughout 2018.”
On another note, with Tenaga Nasional Bhd getting the group’s first Imbalance Cost Pass-through (ICPT) surcharge in the second half of 2018 (2H18) and the continuity of IBR, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) believed the government is unlikely to review the base-tariff under the current Gas Cost Pass-through (GCPT) regulatory period of 2017 to 2019.
“Furthermore, it does not impact the public directly given that it deals only with businesses, which ensure Gas Malaysia’s margin spread certainty at between RM1.80 per one million British thermal units (mmbtu) and RM2 per mmbtu,” Kenanga Research said.
Overall, Kenanga Research is still optimistic on Gas Malaysia for the group’s steady volume growth coupled with the margin spread certainty.