PGB’s 4QFY20 core PATMI of RM442.1m (-13.6% QoQ; -6.3% YoY) and FY20 of RM2.0bn (+6.1% YoY), was within HLIB’s expectation (95.2%) and consensus (98.5%). Declared 4th interim dividend of 22 sen/share and 2nd special dividend of 5 sen/share, resulting total dividend payout for the year at 127 sen/share (or 7.9% yield). We maintain our BUY recommendation on PGB with unchanged SOP-derived TP of RM19.22, supported by: (i) healthy balance sheet with net cash position (72.7sen/share); (ii) sustainable earnings and strong cash flow; and (iii) dividend yield of 5.3% (with potential upside from special dividend).

Within expectation. PGB’s reported 4QFY20 core PATMI at RM442.1m (-13.6% QoQ; -6.3% YoY) and FY20 at RM2.0bn (+6.1% YoY). We deem the results within HLIB’s expectation (95.2%) and consensus (98.5%). During FY20, the group recognised the following EIs: unrealized forex translation gain of RM23.8m and inventory related write-off and impairments of RM13.9m.

Dividend. Declared 4th interim dividend of 22 sen/share and 2nd special dividend of 5 sen/share (both ex-date: 9 Mar 2021). Total dividend payout for FY20 amounts to 127 sen/share (normal dividend 72 sen + special dividend 55 sen) or 7.9% yield.

QoQ. Core earnings declined by -13.6% to RM442.1m due to higher internal gas consumptions and catch up in repair and maintenance activities for Transportation and Regasification segments during the quarter following relaxation of MCO restrictions.

YoY. Core earnings declined by -6.3% mainly due to higher effective tax expenses during the quarter.

YTD. Core earnings improved by +6.1% to RM2.0bn on higher segmental gross profits from Gas Processing (new revenue stream for LPG import/export service, higher PBS incentives and lower depreciation), Regasification (higher tariffs) and Utilities (higher sales mix from steam and industrial gases and lower depreciation).

Outlook. PGB’s businesses are expected to be stable, being protected under existing long-term contract with Petronas (Gas Processing) and related parties (Utilities) and RAB structure (Gas Transportation and Regasification). The on-going development of Covid-19 pandemic will not post material impact to the group.

Forecast. Unchanged.

Maintain BUY, TP: RM19.22. We maintain BUY on PGB with TP of RM19.22, based on SOP, supported by: (i) healthy balance sheet with net cash position (72.7sen/share); (ii) sustainable earnings and strong cash flow; and (iii) dividend yield of 5.3% (with potential upside from special dividend).

Source: Hong Leong Investment Bank Research - 23 Feb 2021