PETGAS (6033) : Promising outlook for Petronas Gas
KUALA LUMPUR: Alliance DBS Research is maintaining a Buy rating for Petronas Gas (PetGas)for its promising outlook, supported by rising gas demand, a solid balance sheet and strong support.
It had on Monday maintained the discounted cashflow derived target price of RM28.60.
To recap, PetGas had signed a 65%/25%/10% joint venture agreement with Dialog and State Secretary of Johor to develop a new regasification (regas) plant at the Pengerang Deep Water Terminal, Johor.
The regas plant will have capacity of 3.5mtpa at an estimated cost of RM2.7bil, which is in line with management’s guidance.
The JV will also provide opportunities for development of new regas facilities at other strategic locations.
Alliance DBS Research said Petronas is the key off-taker. The new Pengerang regas plant is part of Petronas’ integrated Refinery and Petrochemical Complex (RAPID).
The regas plant will consist of a regasification terminal which will function to receive, process and store LNG unloaded from LNG carriers.
The LNG will be mainly supplied to Pengerang Integrated Complex within RAPID for its fuel requirements.
In addition, the gas will be injected into Petgas’ Peninsular Gas Utilisation pipeline system for other users and also towards national energy security supply.
Work on the project will start by 2Q15 and should reach commercial operations date by 4Q17.
“Petgas’ portion of the project cost is RM2bil, to be funded by a combination of equity and debt. Assuming a similar return like Petgas’ existing regas plant in Melaka, we expect a 7% per annum earnings enhancement for Petgas from FY18F onwards.
“Nevertheless, the group’s gearing will increase slightly to 0.1 times from FY17F onwards due to the additional borrowings for the new regas plant,” it said. - The Star
KUALA LUMPUR: Alliance DBS Research is maintaining a Buy rating for Petronas Gas (PetGas)for its promising outlook, supported by rising gas demand, a solid balance sheet and strong support.
It had on Monday maintained the discounted cashflow derived target price of RM28.60.
To recap, PetGas had signed a 65%/25%/10% joint venture agreement with Dialog and State Secretary of Johor to develop a new regasification (regas) plant at the Pengerang Deep Water Terminal, Johor.
The regas plant will have capacity of 3.5mtpa at an estimated cost of RM2.7bil, which is in line with management’s guidance.
The JV will also provide opportunities for development of new regas facilities at other strategic locations.
Alliance DBS Research said Petronas is the key off-taker. The new Pengerang regas plant is part of Petronas’ integrated Refinery and Petrochemical Complex (RAPID).
The regas plant will consist of a regasification terminal which will function to receive, process and store LNG unloaded from LNG carriers.
The LNG will be mainly supplied to Pengerang Integrated Complex within RAPID for its fuel requirements.
In addition, the gas will be injected into Petgas’ Peninsular Gas Utilisation pipeline system for other users and also towards national energy security supply.
Work on the project will start by 2Q15 and should reach commercial operations date by 4Q17.
“Petgas’ portion of the project cost is RM2bil, to be funded by a combination of equity and debt. Assuming a similar return like Petgas’ existing regas plant in Melaka, we expect a 7% per annum earnings enhancement for Petgas from FY18F onwards.
“Nevertheless, the group’s gearing will increase slightly to 0.1 times from FY17F onwards due to the additional borrowings for the new regas plant,” it said. - The Star
