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GASMSIA (5209) - V Invest Together
V Invest Together
Publish date: Sat, 16 Jun 2018, 09:22 PM
GASMSIA (5209)
Sector: Industrial products
Company Background:
Gas Malaysia operated & maintains 2,186km of gas pipeline across Peninsular Malaysia, supplying natural gas to 819 industrial customers, 935 commercial customers and 12,339 residential customers; and supplying LPG to 1,325 commercial and 22,959 residential customers. Customer base stands at 38,377. Supply to local customers only.
They purchase Natural Gas & LPG from Petronas. The lower natural gas price benefit them.
Gasmsia get RM700million Sukuk Murabahah programmes with a tenure of 10 years. This is for their expansion plans. Not much information was shared yet.
99.1% of volume is sold to industrial customers (819 of them).
The Government has prescribed the Incentive Based Regulation (“IBR”) framework which sets the Base Tariffs for a Regulatory Period of three years from January 2017 and allows changes in the gas costs to be passed through via the Gas Cost Pass Through (“GCPT”) mechanism every six months.
With this GCPT, GasMsia can pass cost to their consumers fairly.
Natural gas margin is not that high (7.4%) however it contributed the most of Gasmsia’s revenue (98%).
Industries that require natural gas - Steel & Ceramics, Rubber Glove, Oleo-chemicals (Refineries) & Consumer product sectors.
Other Information:
1) In 2017, Gas Malaysia Energy Advance Sdn Bhd almost completed its first CHP plant for a major manufacturing in Prai, Penang. The 33MW capacity cogeneration plant which generates 128 tonne-per hour of steam recovery.
2) BioCNG - Sime Darby Gas Malaysia BioCNG Sdn Bhd (SDGMBioCNG), utilising biogas resources from palm oil mills, to displace diesel or LPG as fuel as well as enable grid-connected electricity generation and wastewater management for palm oil mills, this will reduce greenhouse gas emissions.
Began operations in July 2016 & started to supply 15,000 MMBtu of BioCNG per annum. (not so significant at the moment)
Risks:
1) An economic recession affecting demand for natural gas
2) Start-up losses from the group’s joint ventures. (SDGMBioCNG)
3) Slow growth as they only supply to local.
Notes:
1) Dominant natural gas supplier in Malaysia.
2) Growth depends on growing in manufacturing sectors hence a close monitoring is required
3) Dividend stock - dividend policy of 75% with around 4.4% dividend yield from current price.
DISCLAIMER: This is not a call buy or call sell recommendation, this post is intended for learning and educational purposes only, please trade at your own risk.
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