GAS MALAYSIA'S EARNINGS MOMENTUM TO TAPER IN UPCOMING QUARTERS -- RESEARCH HOUSES

KUALA LUMPUR, May 19 (Bernama) -- Gas Malaysia Bhd’s earnings momentum is expected to taper in the upcoming quarters due to the peaking of gas prices in the first quarter ended March 31, 2023 (1Q FY2023), said research firms.

In a research note today, Kenanga Research said, however, Gas Malaysia’s earnings visibility remained strong as most of its customers are locked in three-year contracts.

“Gas Malaysia’s 1Q FY2023 core profit stands at RM95.0 million, accounting for 27 per cent of Kenanga Research’s FY2023 expectation.

“We consider the results to be within expectation as we expect a sequential quarterly decline in earnings given the downtrend in gas prices. Expectedly, no dividend was declared as it usually pays a half-yearly dividend,” it said.

Kenanga Research said gas selling prices hit a record RM58 per one million British thermal units (mmbtu) in 1Q FY2023, but Gas Malaysia expected prices to ease to RM48 per mmbtu in 2Q FY2023. 

It said high repair and maintenance costs during the past three quarters were due to emergency repair work as opposed to less repair and maintenance work in the first half of FY2022, as Gas Malaysia was unable to source certain parts during the pandemic.

“However, the costs in FY2023 will be similar to that of FY2022,” it said. 

Meanwhile, Maybank Investment Bank (Maybank IB) Gas Malaysia’s 1Q FY2023 net profit of RM95 million represented 23 per cent of its full-year forecasts.

“Despite sequentially higher gas prices in the quarter, spreads trended lower quarter-on-quarter, with management belatedly revealing a cost accrual reversal in the 4Q FY2022,” it added.

-- BERNAMA