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Overview
Financial Highlight
HeadlinesBusiness Background Petronas Gas Bhd is a Malaysian gas infrastructure and utilities company of which Malaysia’s nationalized oil corporation, PETRONAS, holds a majority interest. Petronas Gas segments its primary operations into Gas Processing, Gas Transportation, Utilities, and Regasification businesses. While each of these contributes significantly to the company’s total revenue, its Gas Processing and Gas Transportation units combine to generate the majority. In Gas Processing, Petronas Gas receives processing fees under multi-year contracts by processing natural gas piped offshore for its parent company, PETRONAS. The Gas Transportation business encompasses the transmission of offshore natural gas through pipelines to customers in Malaysia and Singapore under multi-year agreements with PETRONAS.
  unicornbird obs, apart from Petgas, do you buy any other similar companies with stable dividend? 01/07/2021 7:49 PM unicornbird PetChem has large joint venture with BASF in Kuantan & Pengerang. So I guess they will do very well in long term. Looks like Malaysia will become the next booming economy, as many MNC are forced out of China due to trade war 01/07/2021 7:51 PM observatory unicornbird, you can check my past comments. I discussed some of them in this forum. But I don't hold ICAP, a stock with questionable corporate governance which I've spent some time studying. I suggest you check out the Allianz forum which I've learned a lot others. If you decide that you're interested you may consider buying the illiquid ICPS. It is traded at a slight premium than ordinary shares but it pays 20% more dividend. 01/07/2021 9:11 PM observatory A good dividend stock must not only have stable dividend, but earning & dividend must also grow with time. And has to be bought at a fair price. Petgas can be considered a stable dividend stock. Not expensive. But its growth potential is rather limited. It currently pays out about 70% earning. If ROE is maintained at 15%, that means theoretically the earning growth = (100% - 70%) * 15% = 4.5%. Some stocks have even higher payout ratio. MNCs like Nestle, Carlsberg and Heineken payouts 90% to 100% earning. Despite high ROE, growth is still limited to ~5% retained earning x ROE. Besides such stocks are rarely sold at bargain price. Certainly not now. There might be a sweet spot for less well known, yet stable growth + dividend stocks with at least 3% to 4% dividend yield. But the stocks should have at least 10 year track record in revenue, profit and dividend growth. If the EPS (after adjusting for capital changes like bonus issue etc) has a CAGR of 10%, a 1 sen EPS ten years ago should have grown to 2.6 sen today. If such a stock trades at say 10X PE, with 40% payout ratio, then the dividend yield is 4%. If the stock can maintain a 15% ROE in coming few years, in theory the earning could grow at (100% - 40%) * 15% = 9%, which is respectable. There are probably not many such stocks. But this could be a good screen to shortlist some potential dividend growth stocks. 01/07/2021 9:42 PM unicornbird obs, for preference share. I see that Sunway Pref pays about 5.5% dividend. that's not impressive, because the FD rate in bank is already about 3.5% in normal times. And the dividend yield of strong company like Petgas is close to Pref share. Do you know any solid companies paying higher rate? 02/07/2021 9:23 AM unicornbird If you follow the investment amount declared by MITI, the amount of investment into Malaysia is insane. It runs into hundreds of billion USD, that's the largest amount probably in human history. All these injections aim to drive energy intensive industry like semicon, chemical plants, iron smelter, etc. Those will drive Petgas volume, as I think Petgas supply gas to the power plants. 02/07/2021 9:27 AM unicornbird Nestle & Carls high price probably caused by money printing in EU. they print too much money, so those funds get 0% loans to buy Carls at 2% yield. Wait for Fed to raise rate, and hopefully these consumer stock will have a more friendly price. I hope to buy some of these 02/07/2021 9:30 AM observatory Hi unicorn, I just checked. According to Azmin, 2020 full year DDI (domestic direct investment) + FDI was RM164b. So far in 1H21 it was about RM100b. https://www.malaymail.com/news/malaysia/2021/06/17/miti-expects-malaysia-to-achieve-higher-total-investments-this-year-says-az/1982972 For perspective, approved DDI was RM175b in 2014, declining to RM129b in 2019. Approved FDI was RM65b in 2014 and RM83b in 2019. So at best the recent increase in direct investment is just a recovery. https://www.mida.gov.my/mida-news/insight-domestic-or-foreign-investment/ The other point is, the most energy intensive industries like aluminum smelting will rely on non-fossil fuel power. For example, Press Metal taps into Sarawak hydro power to produce green aluminum. At the same time, increasingly manufacturers are installing roof top solar to improve their ESG score. The latest announcement is from Top Glove. Energy consumption growth in Malaysia will be slower than its GDP growth. This is also a trend in more developed economies. Actually future electricity demand is quite predictable as they have to be planned years ahead. As stated in the Peninsular Malaysia Generation Development Plan agreed by the cabinet in Oct 2020, “the net demand is projected to grow by 0.6% p.a. for 2021-2030 and 1.8% p.a. for 2030-2039. This net demand will be used for supply planning at the transmission side.” (page 5) https://www.st.gov.my/en/contents/files/download/169/Report_on_Peninsular_Malaysia_Generation_Development_Plan_2020_(2021-2039)-FINAL.pdf Refer Figure 5, new capacities planned until 2028 will be exclusively in renewable energy. In fact the share of gas in electricity generation will decline from current 45% to 35% in 2028 before increasing again due to coal fired plants being phased out. For this reason, I feel that PetGas will experience weak to moderate growth in the medium term. May be this is one more reason the share comes under selling pressure in recent years. 02/07/2021 2:01 PM observatory A note on Sunway vs Allianz ICPS. There are two differences. One is the former has mandatory conversions in 2024 and 25. The latter is irredeemable on perpetual basis. Second is Sunway ICPS dividend is capped at 5.25%. Holders cannot enjoy upsides like special dividend for ordinary shareholders. Meanwhile Allianz ICPS is set at 20% more than the ordinary share dividend. So it can ride on the company growth. 02/07/2021 2:03 PM unicornbird obs, very detailed research. Do you have any idea where Malaysia will install those solar panels? Don't think roof top is enough to generate enough energy for factory. No wonder so many large solar companies invest in Penang there are Jinko solar at bayan lepas, and Risen in Kulim https://ir.jinkosolar.com/news-releases/news-release-details/jinkosolar-plans-build-cell-module-manufacturing-facility-penang https://www.nst.com.my/business/2021/06/701876/chinas-risen-energy-picks-malaysia-first-southeast-asian-mega-plant-invest 02/07/2021 7:41 PM unicornbird Do Petgas benefit from export? Example, to pipe gas from offshore gas field & then liquefy to sell to China 02/07/2021 7:44 PM unicornbird for Allianz ICPS, is it equal to common stock, but have 20% dividend? Usually for preferred share, the dividend is fixed. How does it set the 20% extra compared to common stock? thanks 02/07/2021 8:00 PM observatory There are many Large Scale Solar (LSS) projects. The bidding for LSS4 have just concluded recently. Many listed companies are involved. You can google them. Just that I think it's a low margin and capital intensive business. Petgas is domestic focus. It has four segments -- gas processing, transportation. regasification and utilities. You can check out the Annual Report. LNG sales to foreign countries by Petronas involves shipping instead of pipelines. Petronas subsidiary MISC is involved. When I wrote Allianz ICPS distributes 20% more dividend, I actually means ICPS holders get 1.2X the dividend received by ordinary shareholders. For example, FY20 dividend is 58 sen per ordinary share, or 58sen * 1.2 = 69.6 sen per ICPS. I just quote this as an example of dividend stocks with growth potential, among several stocks that I've commented in i3. 02/07/2021 9:53 PM  stingray_ea 74.29. —-> US oil hit 76.2 usd … Target 100 usd Let see how petgas price react… down or up . 03/07/2021 7:20 AM stingray_ea stingray_ea: Petgas(6033) Vs US Oil movement https://klse.i3investor.com/blogs/stingrayeapetgas/2021-07-04-story-h1567805860-petgas_Vs_US_Oil_movement.jsp 04/07/2021 4:36 PM stingray_ea dividend is King at deep price .. https://klse.i3investor.com/blogs/stingrayeapetgas/2021-06-06-story-h1566077213-stingray_ea_Petgas_Vs_Petdag_Vs_Pchem_Which_is_your_choice.jsp 05/07/2021 8:56 AM lotuseater On what basis - Pls tell me how.. don’t make sweeping statements to scare people.. 05/07/2021 5:20 PM lotuseater Read and understand their business. It’s so easy to be an armchair critic and make irresponsible statements. 05/07/2021 5:21 PM  Banana John yup. someone need to shake out the weak investors and buy in cheaper. 05/07/2021 5:41 PM stingray_ea US Oil hit new high 76.63 usd ... hope petgas can go further down. remember buy cheap and deep high dividend yield petgas to hedge inflation 06/07/2021 9:43 AM unicornbird obs, Petgas has added a new service LNG Bunkering Vessel (LBV) service, which allows for ship-to-ship LNG transfer to the LBV as well as LNG break-bulking and reloading for smaller LNG vessels. https://www.thestar.com.my/business/business-news/2020/11/20/sterling-results-by-petronas-gas 10/07/2021 3:57 PM unicornbird Do you have any idea on this? I think this will be extremely profitable, because Petgas can do tranship for Qatar gas to China ships. I guess this big fat pie was originally owned by singapore. but now China allow malaysia to share the pie. 10/07/2021 3:59 PM observatory I'm not familiar with the LNG bunkering service. Do you have any source that indicates the need and market size for such services by third party vessels? The Annual Report has listed LNG bunkering as one of the several ancillary services offered by Petgas. In 2020 the total revenue from ancillary services was RM3.4 million as compared to group revenue of RM5.6 billion. 11/07/2021 9:56 PM unicornbird obs, it's estimated to be RM 2billion. let's see if Petgas get any share from these, in the upcoming quarters https://www.devdiscourse.com/article/headlines/1302844-malaysia-starts-lng-bunkering-operations-makes-first-delivery 12/07/2021 9:30 AM unicornbird the trade war between US & China should benefit Petgas, because China will need to buy via a US friendly agent. Petronas should get the deal, and the market size is huge. 12/07/2021 9:32 AM observatory @unicorn, I searched in 2020 Annual Report. It states that "Launch of LNG Reloading service at RGTSU for PETRONAS LNG bunkering services, the first in Southeast Asia". Basically, PetGas regasification terminal at Sungai Udang works like a gas station for ships. It sells Petronas LNG to LNG-powered vessels, quite similar to PetDag stations selling to LNG-powered taxis. I've googled to learn more about LNG bunkering. This article explains how bunkering is performed. Source: https://www.klawlng.com/lng-applications/lng-vessel-bunkering/ LNG-powered vessels become popular because ports have banned/ imposed surcharges on vessels using high sulfur marine fuels in their effort to control air pollution. The second driver is climate change. Source: https://www.bbc.com/news/uk-scotland-51114275 I don’t think LNG bunkering involves the Sino-American geopolitics. 12/07/2021 12:42 PM unicornbird you're right. the bunkering is not transshipment. So Petgas only pump fuel for the ships the market will grow in 10X by 2027. The Sino US clash will result in more China ships choosing to bunker with Petgas, as China try to build up it's own non-US supply chain. If Petgas really dominate the LNG bunkering market in Straits of melaka, then it's a huge deal. 30% of ships in the world pass through the strait. https://www.alliedmarketresearch.com/lng-bunkering-market Global LNG bunkering market size was valued at $0.38 billion in 2019, and is projected to reach $5.14 billion by 2027, growing at a CAGR of 45.2% from 2020 to 2027. LNG bunkering is the process of transferring LNG to a ship for its own consumption. The advantages of using LNG as a marine fuel in the shipping industry include less shipping emissions, lower operating & shipment costs, safety, non-toxic, and others. Stringent environmental regulation toward pollution caused by ship transportation is expected to be the primary growth factor in the LNG bunkering market 12/07/2021 6:00 PM unicornbird Petgas may partner Dialog, and use Pengerang for transhipment https://www.hydrocarbonengineering.com/gas-processing/26112014/malaysia-boosting-domestic-gas-1691/ LNG trans-shipment: This is a highly likely option. While PLNG-2 is only providing regasification services for now, Petronas Gas stated that the joint venture could also offer such services to ‘other potential third party customers’. 12/07/2021 7:26 PM observatory Good info. Globally there were 118 and 143 LNG-powered vessels in 2017 and 2018. Currently this is still a very small market. Source: https://www.maritime-executive.com/editorials/2019-will-be-the-year-of-acceleration-for-lng-as-marine-fuel According to the 2020 Annual Report, the LNG bunkering asset has a book value of only RM31 million. The first LNG bunkering only took place as recent as in Oct 2020. We can keep an eye on how fast the business grows in 2021. I would expect more capex spending if this business can really gain traction. We can also make some guesstimate on the future market potential based on the articles you've shared. Your article forecasts the global LNG bunkering market to reach ~USD5 billion or RM20 billion by 2027. Your other earlier article says MIDA expects Malaysian market size to reach RM2 billion (no timeline given). Let’s assume the RM2 billion market is completely captured by PetGas. Revenue wise it's sizeable given 2020 revenue was only RM5.6 billion. However this could be a low margin business. If LNG bunkering is like a gas station business as operated by Petronas Dagangan, the net margin is only 2%, or about RM40 million net profit out of RM 2billion revenue. At this scale the net profit will be rather insignificant as compared with 2020 net profit of about RM2 billion. Actually there are other ancillary services mentioned in the Annual Report, such as the LNG Truck Loading and Gassing Up Cooling Down (GUCD) services. However no indication has been given on how large these non-regulated business could grow to in the future. 12/07/2021 8:02 PM observatory Based on my limited understanding, the LNG trans-shipment business refers to the GUCD services. The facilities are available in Sungai Udang and Pengerang. 12/07/2021 8:05 PM unicornbird Bunker = RM 6 b (i made a mistake earlier) Bunker Net profit = 2% X 6b = 120m Impact on Petgas Net profit = 120m/2b = 6% (not much) Let's observe if transhipment can do well. Probably that's better because the volume is much higher 13/07/2021 8:09 AM stingray_ea stingray_ea: Petgas(6033) Volume Trend ================================== https://klse.i3investor.com/blogs/stingrayeapetgas/2021-07-16-story-h1568013530-stingray_ea_Petgas_6033_Volume_Trend.jsp 19/07/2021 10:18 AM stingray_ea free tips from stingray_ea =================== hongseng 1.02 --->1.88 glotec 0.56 ---->0.715 petgas ?? keep buying by same group of fund now ===================== https://klse.i3investor.com/blogs/tech/2021-07-14-story-h1567979809- stingray_ea_Lowest_Tech_Tech_Tech_PE_counter.jsp Blog: stingray_ea : Lowest Tech Tech Tech PE counter Jul 14, 2021 11:21 AM | Report Abuse flag pattern breakout confirmed. Blog: stingray_ea : Lowest Tech Tech Tech PE counter Jul 14, 2021 11:24 AM | Report Abuse N wave Blog: stingray_ea : Lowest Tech Tech Tech PE counter Jul 14, 2021 3:14 PM | Report Abuse hongseng breakout .... ===================== 23/07/2021 11:00 AM  |
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