Research houses stay upbeat on Gas Malaysia’s resilient finances

Gas Malaysia, with MMC Corporation and Petronas Gas as substantial shareholders, has reported a 7.9% higher net profit of RM102.63 million in Q1 FY2024. (Gas Malaysia pic)

PETALING JAYA: Kenanga Investment Bank Bhd (Kenanga IB) has raised its FY2024 and FY2025 net profit forecasts for Gas Malaysia by 9% and 12%, respectively.

In addition, shares of Gas Malaysia Bhd surged this morning after the natural gas seller and distributor posted a stronger net profit for the first quarter ended March 31, 2024 (Q1 FY2024).

At 10.38am, its shares edged up 2 sen to RM3.60, with 73,600 shares traded.

The company, which counts MMC Corporation and Petronas Gas as substantial shareholders, reported a net profit of RM102.63 million in Q1 FY2024, up 7.9% from the RM95.1 million recorded a year ago.

“This was despite revenue decreasing to RM1.87 billion from RM2.44 billion in the previous year,” said Kenanga IB in a statement.

The research house said the Q1 FY2024 results beat its forecast due to a higher sales volume and a better gas reference price, yet only met market expectations.

“We like Gas Malaysia for its strong market position, being a key natural gas retailer in Malaysia.

“It has strong earnings visibility underpinned by its ability to retain customers, typically, via three-year contract, and strong free cash flow generation, anchoring a dividend yield of more than 6%,” it said.

Kenanga IB also maintained its “market perform” call and lifted the target price (TP) by 7% to RM3.55 from RM3.33 previously.

Meanwhile, MIDF Research remained positive on Gas Malaysia’s continuous resiliency in financial performance.

“With the expectation of a healthy gross domestic product growth and continued domestic demand growth, we opine that the group will continue to operate efficiently and remain competitive in the business.

“The anticipation of a relatively stable Brent crude oil price in 2024 and growth in the local industrial and consumer sectors added to the optimism,” it said.

It maintained a “buy” call for Gas Malaysia with an unchanged TP of RM3.96.


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