Petronas Gas Berhad (PetGas) core profit of RM910mn improved by 12.7% YoY in 1H23 thanks to higher revenue from Utilities segment driven by higher product prices. The result was in line with ours and market forecast, accounting for 48.8% and 48.5% full year estimates, respectively. A 2nd interim DPS of 16sen was declared bringing the 1H23 payout to 32 sen. Moving forward, we anticipate earnings to remain stable for several reasons: 1) decreased foreign exchange volatility due to full early settlement of lease liabilities for floating storage units at LNG RGTSU, 2) extension of the ICPT surcharge in 2H23 at 17 sen/kWh, 3) long-term contracts and sustainable income stream under the 2nd Term of the Gas Processing Agreement (2024-2028), 4) declining gas prices, 5) new compression tariff for PGU in RP2 to offset the lower gas transportation tariff, 6) absence of prosperity tax, and 7) commendable operational excellence across all segments. Reiterate a HOLD call with a TP of RM15.98; based on DCF valuation method with a WACC of 7.9% and terminal growth of 0.3%.
Source: BIMB Securities Research - 28 Aug 2023
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PETGASCreated by kltrader | Jul 17, 2024
Created by kltrader | Jul 17, 2024
Created by kltrader | Jul 17, 2024