Defensive earnings profile to support PetGas
Kenanga Research expects PetGas' 2Q25 numbers to be on the weak side.
PETALING JAYA: Analysts generally have a constructive view of Petronas Gas Bhd (PetGas) despite it having to absorb at least a RM170mil charge to rehabilitate the Putra Heights area following the pipeline fire incident in April.
CGS International (CGSI) Research stated PetGas' defensive earnings profile, underpinned by its ownership of gas infrastructure assets in Malaysia, remained a key strength that is backed by a healthy balance sheet.
'Visible free cash flow and dividend yields of over 4% support the sustainability of its payouts (dividends),' the research house stated in its latest report on PetGas.
It added the RM170mil estimated charge represented 1.2% of PetGas' current book value and 9% of 2025 forecast net profit.
CGSI Research has maintained a 'hold' call on PetGas with an unchanged discounted cash flow based target price (TP) of RM17.50 a share.
Kenanga Research noted that while PetGas' first quarter (1Q25) financial results were slightly below expectations, the company's regulated asset base continues to provide resilient earnings visibility.
The research house, however, expected PetGas' 2Q25 numbers to be on the weak side.
This is due to the operational disruptions following the Putra Heights fire incident.
'We fine-tune our financial year 2025 (FY25) and FY26 earnings forecast lower by 5% and 3%, respectively, to reflect the guided RM60mil profit impact in FY25, to incorporate adjustments to gas transportation and regasification terminal tariffs and some housekeeping,' Kenanga Research added.
It has a 'market perform' call on PetGas with a lower TP of RM16.80 a share.
PetGas posted a 1Q25 core profit of RM466.2mil on the back of RM1.6bil in revenue.
It announced a first interim dividend of 16 sen a share for the quarter.
MIDF Research, however, downgraded the counter to 'neutral' with a TP of RM18.67 a share on the ground that all factors that could impact the company's share price had been priced in.
It expected PetGas' FY25 performance to remain stable and resilient despite the operational setback caused by the pipeline incident.
'With higher demand for natural gas and liquefied natural gas, in tandem with the higher prices projected in 2025, all of PetGas' businesses will continue to perform on the positive.
'In line with the incident, we expect PetGas will strengthen its risk management, operational efficiency, and mitigation strategies,' MIDF Research said.
Its TP on PetGas is pegged to a price earnings multiple of 19 times to the revised earnings per share for FY25 of 98 sen.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Borneo Post
a day ago
- Borneo Post
Bintulu Port's 1QFY25 CNP falls 37 per cent y-o-y, disappoints analyst expectations
Analysts guide that Bintulu Port's negative variance was largely due to weaker-than-expected LNG cargo volume due to technical difficulties at the MLNG complex. KUCHING (June 4): Bintulu Port Holdings Bhd's (Bintulu Port) first quarter of financial year 2025 (1QFY25) core net profit (CNP) has fallen by 37 per cent year on year (y-o-y) to RM28.4 million, disappointing analyst expectations. In a results note, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) reported that the group's 1QFY25 results were below expectations as it met only 19 per cent and 18 per cent of theirs and consensus' full-year estimates. They guided that the negative variance was largely due to weaker-than-expected LNG cargo volume due to technical difficulties at the MLNG complex. 'Note that, there was a scheduled major maintenance plant shutdown from April 30 to May 29 at the Petronas MLNG complex which we expect to have severely impacted its 2QFY25 performance,' said the research arm. The technical difficulties caused the group's Bintulu Port to see a two per cent y-o-y drop in revenue while its Samalaju Industrial Port fell by 9 per cent drop due to weaker cargo volume from key customers like Press Metal Holdings Bhd (PMetal) and OMH Ltd (OMH). Its LNG cargo volume was 3.4 per cent y-o-y weaker while its non-LNG grew at a flattish 0.5 per cent as aluminium exports shifted from containers to bulk shipments as well as weaker gateways cargoes from heavy industries in Samalaju Industrial Park due to high ocean freight rates caused by the red sea crisis. Overall, the group's 1QFY25 revenue fell three per cent y-o-y while its CNP fell at a wider 37 per cent as it was exacerbated by a higher effective tax rate of 38.3 per cent compared to 22.7 per cent a year ago. Kenanga Research added that Bintulu Port's declared interim NDPS of 3 sen was also below expectations as it was lower than the 4 sen declared back in 1QFY24. Despite the missed expectations, Kenanga Research believed that the LNG cargo throughput at Bintulu Port will remains table with sustained demand from Japan and South Korea, and stronger demand from China thanks to trade diversion. 'Meanwhile, there has been a pick-up in inbound and outbound cargo volumes at Samalaju Industrial Port from its key customers, such as Press Metal and OM Holdings,' they added. To reflect new lower adjusted forecasts, Kenanga Research maintained their 'market perform' call on the port operator with a lowered sum-of-parts derived target price of RM5.15 which is based on a weighted average cost of capital of 5.5 per cent and terminal growth rate of two per cent. Bintulu Port Holdings Bhd
New Straits Times
3 days ago
- New Straits Times
DPM Zahid arrives in UK for four-day working visit
LONDON: Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi arrived in the United Kingdom (UK) on Sunday to begin a four-day working visit. He arrived at Heathrow Airport at 8.30pm local time (3.30am Malaysian time) and was greeted by Malaysian High Commissioner to the UK and Northern Ireland, Datuk Zakri Jaafar, as well as senior embassy officials and officers from relevant government agencies. The working visit aims to strengthen Malaysia-UK relations by focusing on areas of Technical and Vocational Education and Training (TVET), tourism and investment. Zahid, who is also the rural and regional development minister, is expected to meet representatives of leading institutions such as University College London, deliver a public lecture on the direction of the country's TVET, and interact with Majlis Amanah Rakyat (Mara)-sponsored students. He is scheduled to launch the Visit Malaysia Year 2026 campaign for the UK market tomorrow to boost tourism promotion activities, as well as attract investors from Europe to Malaysia. The visit will also serve as an important platform to strengthen the strategic value of Malaysia-UK, expand diplomatic ties and open up more opportunities for cooperation for the people and the country. The UK is an important trading partner for Malaysia, with total trade reaching RM16.80 billion (US$3.68 billion) in 2024. On June 4, Zahid will depart for Geneva on his series of international working visits.
The Sun
3 days ago
- The Sun
DPM Zahid arrives in UK for four-day working visit
LONDON: Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi arrived in the United Kingdom (UK) on Sunday to begin a four-day working visit. He arrived at Heathrow Airport at 8.30 pm local time (3.30 am Malaysian time) and was greeted by Malaysian High Commissioner to the UK and Northern Ireland, Datuk Zakri Jaafar, as well as senior embassy officials and officers from relevant government agencies. The working visit aims to strengthen Malaysia-UK relations by focusing on areas of Technical and Vocational Education and Training (TVET), tourism and investment. Ahmad Zahid, who is also the Minister of Rural and Regional Development, is expected to meet representatives of leading institutions such as University College London, deliver a public lecture on the direction of the country's TVET, and interact with Majlis Amanah Rakyat (MARA)-sponsored students. He is scheduled to launch the Visit Malaysia Year 2026 campaign for the UK market tomorrow to boost tourism promotion activities, as well as attract investors from Europe to Malaysia. The visit will also serve as an important platform to strengthen the strategic value of Malaysia-UK, expand diplomatic ties and open up more opportunities for cooperation for the people and the country. The UK is an important trading partner for Malaysia, with total trade reaching RM16.80 billion (US$3.68 billion) in 2024. On June 4, Ahmad Zahid will depart for Geneva on his series of international working visits.
