• 4Q20 results were in line with our and consensus estimates, achieving 98%/99% of respective forecasts
   
• 2020 total DPS came in at 127 sen (vs 82 sen in 2019), translating to a 126% payout ratio (2019: 86% payout). Special dividend in 2020 was higher at 55 sen vs. 10 sen in 2019
   
• Maintain Hold rating and 12-month target price of RM17.40. Dividend yields are decent at c.5%

In Line With Expectations

4Q20 revenue rose by a marginal 1% yoy to RM1.4bn as higher regasification and transportation RP1 tariffs helped offset the lower excess electricity offtake from the utilities segment. Overall 2020 core profit of RM2bn, which grew by 6% yoy, was underpinned by revenue growth of 3% yoy, largely driven by higher regasification and transportation tariffs, and as it also benefited from lower processing assets depreciation, lower internal gas consumption and a higher Pengerang ASU contribution.

Higher Operational Costs in 4Q

4Q20 revenue inched down by 1% qoq, but operating profit declined by 21% qoq with the operating margin registering a 10 ppts drop, due to lower transportation and regasification profits on the back of higher internal gas consumption and repair maintenance costs.

More Special Dividends in 2020

PTG declared a 4Q interim dividend of 22 sen, and an unexpected second special dividend of 5sen, bringing the total 2020 DPS to 127 sen and implying a 126% payout (2019: 82 sen, 86% payout). This is against our previous full-year DPS assumption of 120 sen. 2020’s special dividend was higher at 55 sen vs. 2019’s 10 sen. PTG adopts a minimum 50% dividend policy. We forecast an average 80% payout for 2021-2023, similar to 2018–2019 (excluding special dividend), translating to decent dividend yields of 4.9–5.2%.

Reiterate Hold

We maintain our Hold rating and target price of RM17.40. PTG offers a decent yield of c.5%, but the lack of earnings growth calls for a Hold rating. Key risks: unforeseen operational disruption of existing assets, faster recovery or further deterioration in the economic environment affecting its volumes, and a negative IBR tariff revision.

Source: Affin Hwang Research - 23 Feb 2021