KL Trader Investment Research Articles
Gas Malaysia - Stable Cash with Net Cash Position
Gas Malaysia
Stable Cash with Net Cash Position
- Gas Malaysia (GMB) is one of the only two natural gas (NG) supplier in Peninsular Malaysia (the other is Petronas Gas).
- GMB will cover new market with initial demand of < 5mmscfd (previously 2mmscfd), giving more upside to GMB market share. GMB is effectively monopolizing this market segment with no direct competitor.
- GMB Margin is under government’s discretion.
- The demand for NG is likely to stay robust given its relative advantages and government’ initiatives to meet low emission target by 2020.
- GMB had signed agreement with PGB to increase NG supply to 492mmscfd by 2015 (currently 382mmscfd) on a step up basis, in order to meet the increasing demand.
- Stable earnings and cash flow, ensuring stable dividend payout. GMB will payout at least 75% of earnings, which translate into 4-5% net dividend yield.
- We believe the fair value for GMB is RM2.55 based on 22x FY13 P/E and 3.4x FY13 P/B.
Source: Hong Leong Investment Bank Research - 21 May 2012
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Discussions
2 people like this. Showing 6 of 6 comments
RM1.5 means must have pressure from public, then public to Gov. I still believe that they still can adjust to 2.0 before launch. GMB, PLEASE.
2012-05-21 17:11
How can the dividend yield be 4-5% when PE is 22x and the payout ratio is 75%. Based on this PE and payout ratio the dividend yield should be 3.4%.
2012-05-22 22:33
I have a tendency to support your calculation. we have to scrutinize the finer points lest we get caught like the recent IPO skp. It should be cheaper like 1.90 - 2.00 perhaps can consider very bad sentiments globally.
2012-05-22 22:46
I think I got his calculation he is using RM2.55 for 22x PE and this gives the value of about 4% based on the IPO price of RM 2.20.
2012-05-22 23:07
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Everything is fine except the last point sound not convincing, GMB should adjust the price/unit, the fair value for GMB wish to be RM2.0; fair value.
2012-05-21 16:48