Latest news with #PetGas'
The Star
27-05-2025
- Business
- The Star
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.
The Star
12-05-2025
- Business
- The Star
Upbeat outlook for PetGas' Labuan power project
PETALING JAYA: Analysts are upbeat about Petronas Gas Bhd 's (PetGas) upcoming power plant project in Labuan. MIDF Research noted that the ever-growing demand for energy security will always support the need for both conventional and clean fuels. As such, it said PetGas' new project is 'appropriate to the times'. 'However, we also note the risks that come with natural gas – largely on the leakages – and how it would impact the operations of power generating plants and the consumers from the domestic, commercial and industrial sectors. 'Nevertheless, we believe that PetGas will continue to take precautions, more so with PETRONAS and the Sabah state government-linked companies overseeing the safety and regulations of Rancha Power plant.' PetGas announced last week that it had entered into shareholders agreements with Sabah Electricity Sdn Bhd and Sabah Energy Corp Sdn Bhd to develop a new power plant with a capacity of 120MW in the Federal Territory of Labuan. In a filing with Bursa Malaysia, PetGas said the project is pursuant to a letter of notification dated Feb 21 from the Energy Transition and Water Transformation Ministry. 'The parties intend to collaborate via a joint-venture company, namely, Rancha Power Sdn Bhd, for the design, development, construction, installation, testing, commissioning, ownership, operation and maintenance of the said power plant and associated facilities with target of commercial operation date no later than Jan 1, 2028.' PetGas said the project aligns with its strategy to expand its presence in the energy sector and contribute to sustainable energy development in Malaysia. 'This project is expected to enhance the energy supply in Federal Territory of Labuan and Sabah as part of Sabah Energy Roadmap and Master Plan 2040. The project will be funded through internally generated funds and external financing,' it said. MIDF Research said this new project is set to surpass the existing capacity of power plants in Labuan, including the Patau-Patau Power Station, which boasted a capacity of 113MW. With PetGas' involvement in the project, MIDF Research anticipates the main feeder for the power generation plant will be natural gas. 'We are positive on this project largely for the use of natural gas, as it has low emissions of carbon dioxide and greenhouse gases. 'Additionally, the government had been encouraging the transition to a cleaner fuel for power stations, making this project on par with the National Energy Transition Roadmap and Malaysia Renewable Energy Roadmap,' it said. It is maintaining a 'buy' call on PetGas with a target price of RM18.67.
