GASMSIA (5209) GAS MALAYSIA BERHAD
KUALA LUMPUR: CIMB Equities Research is maintaining its Add call for Gas Malaysia with a revised target price of RM3.95 following the new selling prices which takes effect on Saturday.
The gas prices were increased by an average of 2.3% or 45 sen per MMBtu to RM19.77 from RM19.32.
The research house said on Thursday the 2.3% increase was low compared to the previous hike in April 2014 of 20.4%.
The steepest hike is for Category C users (601 to 5,000 MMBtu a year consumption) of 3.1% while there will be no change to the selling prices for customers under the residential categories.
Furthermore, the tariff increase does not apply to liquefied natural gas (LPG). Gas Malaysia's buying price will also be revised, although this has yet to be announced. The new tariff will take effect by the beginning of November
“Despite the small quantum, Gas Malaysia's revision of the non-power gas tariff is positive as it implies that the government is sticking to its six-month gas price revision plan.
“The new gas tariff will take effect by the beginning of November while we anticipate another revision by April/May 2015.
“We maintain our Add call on Gas Malaysia, with a revised target price of RM3.95, still based on 24 times FY15 P/E, after trimming FY14-16 EPS by 0.2% to 0.4% per annum given the new selling prices,” it said.
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