GASMSIA (5209) : Gas Malaysia Berhad - Higher volume of gas sold (ADD - Maintained)
Target RM3.95 (Stock Rating: ADD)
Gas Malaysia's 3Q14 core net profit of RM69.4m brought its 9M14 core net profit to RM144.3m, accounting for 74% of our and consensus full-year forecasts, which is in line with expectations. Core net profit for the quarter grew 16.5% yoy on the back of 25.8% revenue growth, which was driven by greater volumes sold and higher selling prices. No dividends were declared during the quarter, which is the norm as Gas Malaysia usually declares dividends in the 2Q and 4Q. We make no changes to our earnings forecasts and our target price of RM3.95, based on 24x FY15 EPS. We maintain our Add call on the stock.
3Q14 results review
Gas Malaysia's 3Q14 revenues of RM734.4m implied yoy growth of 25.8% over 3Q13's revenues of RM583.7m. The growth was underpinned by greater sales volumes for gas, coupled with higher selling prices resulting from the gas price revision in the 2Q14. Gas Malaysia's EBITDA expanded 16.3% as operating costs were higher yoy. This flowed down to pretax profit of RM69.4m, which grew 17.3% yoy. Core net profit climbed 16.5% yoy as the tax rate during the quarter was higher by 0.6% pt yoy. For the 9M14, core net profit rose 9.9% yoy to RM144.3m on the back of 16.3% yoy revenue growth.
Gas prices recently revised
Gas Malaysia recently announced a hike in its selling prices of RM0.45/MMBtu to RM19.77/MMBtu from RM19.32/MMBtu previously. The new gas price took effect at the beginning of November. Gas Malaysia's buying price will also be revised accordingly, which we think will likely maintain its RM2/MMBtu margin. We note that the hike in selling prices itself was actually minimal as prices were only raised by 2.3%, which was low compared to the 20.4% hike in April.
6-month review likely to stay
Despite the minimal hike, we are positive that the gas pricing has been revised as it implies that the government is keeping to its 6-month review programme. We believe that the 6-month gas price review will continue, which will allow Gas Malaysia to pass on the costs to its customers. We expect the next revision to come in April.
Source: CIMB Daybreak - 13 November 2014
Target RM3.95 (Stock Rating: ADD)
Gas Malaysia's 3Q14 core net profit of RM69.4m brought its 9M14 core net profit to RM144.3m, accounting for 74% of our and consensus full-year forecasts, which is in line with expectations. Core net profit for the quarter grew 16.5% yoy on the back of 25.8% revenue growth, which was driven by greater volumes sold and higher selling prices. No dividends were declared during the quarter, which is the norm as Gas Malaysia usually declares dividends in the 2Q and 4Q. We make no changes to our earnings forecasts and our target price of RM3.95, based on 24x FY15 EPS. We maintain our Add call on the stock.
3Q14 results review
Gas Malaysia's 3Q14 revenues of RM734.4m implied yoy growth of 25.8% over 3Q13's revenues of RM583.7m. The growth was underpinned by greater sales volumes for gas, coupled with higher selling prices resulting from the gas price revision in the 2Q14. Gas Malaysia's EBITDA expanded 16.3% as operating costs were higher yoy. This flowed down to pretax profit of RM69.4m, which grew 17.3% yoy. Core net profit climbed 16.5% yoy as the tax rate during the quarter was higher by 0.6% pt yoy. For the 9M14, core net profit rose 9.9% yoy to RM144.3m on the back of 16.3% yoy revenue growth.
Gas prices recently revised
Gas Malaysia recently announced a hike in its selling prices of RM0.45/MMBtu to RM19.77/MMBtu from RM19.32/MMBtu previously. The new gas price took effect at the beginning of November. Gas Malaysia's buying price will also be revised accordingly, which we think will likely maintain its RM2/MMBtu margin. We note that the hike in selling prices itself was actually minimal as prices were only raised by 2.3%, which was low compared to the 20.4% hike in April.
6-month review likely to stay
Despite the minimal hike, we are positive that the gas pricing has been revised as it implies that the government is keeping to its 6-month review programme. We believe that the 6-month gas price review will continue, which will allow Gas Malaysia to pass on the costs to its customers. We expect the next revision to come in April.
Source: CIMB Daybreak - 13 November 2014
