Limited impact on Petronas Gas earnings after pipeline incident
The research house said PetGas's steady earnings outlook, strong balance sheet and solid dividend yield continue to support its valuation, with a discounted cash flow-based target price unchanged at RM19.08.
"At a forecast price-to-earnings ratio of 17.7 times for the financial year 2025, the stock appears fairly priced given its strong fundamentals and stable cash flow profile," it said in a note today.
The firm also downplayed concerns over regulatory penalties or third-party liabilities, noting that official investigations had attributed the incident to environmental and geological factors beyond the company's control.
The Department of Occupational Safety and Health concluded that unstable soil beneath the gas transmission pipeline led to physical failure and a gas leak, which triggered the fire.
Police investigations found no evidence of foul play, while the pipeline was confirmed to have met all technical specifications.
Selangor Menteri Besar Datuk Seri Amirudin Shari said the incident was due to multiple environmental factors, including unstable soil, prolonged underground water retention, compromised drainage systems and urban development.
PetGas has estimated a total earnings impact of RM60 million for the financial year ending Dec 31, 2025, which will be largely recognised in the second and third quarters.
The company expects repair and asset restoration costs to reach approximately RM170 million, with a portion to be capitalised under capital expenditure (capex).
Insurance claims are projected to recover less than RM50 million, while revenue loss from service disruption is estimated at around RM20 million.
Despite the setback, PetGas is forecast to post a core net profit of RM1.97 billion in financial year 2025, up from RM1.82 billion in 2023. Dividends are expected to increase slightly to 75 sen per share, representing a yield of 4.3 per cent.
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