AmResearch maintains "buy" call on Petronas Gas with RM21.90 target price

AmResearch maintains "buy" call on Petronas Gas with RM21.90 target price
Business & Markets 2013
Written by Bernama
Friday, 17 May 2013 13:58


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KUALA LUMPUR (May 17): AmResearch maintained "buy" call on PETRONAS GAS BHD [] with an unchanged target price of RM21.90 and maintained the company's 2013-2015 financial year earnings, pending further developments on the take-up gas volume for the Lekas regassification (RGT).

It was reported that Petronas Gas Managing Director Samsudin Miskon had said the RM3 billion Lekas RGT in Sungai Udang, Melaka, would be up and running soon, having received its first cargo shipment of 152,888 cubic metre last week.

"While the plant has been commissioned, it will start operating at the end of this month," it added.

Samsudin was also quoted as saying the RGT would add four to five per cent to second half financial year 2013 earnings and 10 per cent for financial year 2014.

"Our channel checks indicate that this encompasses contributions only from the RGT and excludes any positive impact from additional gas transportation charges through the group's pipeline as the management is uncertain of the gas volume that will flow through the system," said AmResearch.

Based on the research house estimates, including the gas transportation charges via the group's pipelines, the earnings contribution would add 15 per cent to this year's financial year, assuming 35 per cent of the RGT's 530 Million Standard Cubic Feet per Day (mmscfd) capacity is taken up.

"While the stock is currently trading at a pricey financial year 2014 price-to-earnings ratio of 23 times, we expect further news flow on liquefied natural gas projects to sustain the stock's re-rating momentum," it added. -- BERNAMA