Gas Malaysia's Q1 results exceed market estimates: Affin Hwang

By Azanis Shahila Aman - May 6, 2021 @ 11:12am

KUALA LUMPUR: Gas Malaysia Bhd's remaining quarters will likely make up for the shortfall on higher gas tariff revision which is done on a quarterly basis, said Affin Hwang Capital.

The firm said Gas Malaysia's first quarter (Q1) ended March 31 2021 results had exceeded its and consensus full-year estimates as margin positively surprised.

Affin Hwang said Gas Malaysia's revenue had fallen 28 per cent year-on-year (yoy) in Q1 to RM1.1 billion due to the revised lower gas tariff during the quarter, which had no impact on margins.

"Gas sales volume, however, rebounded strongly, growing nine per cent yoy, which was partially impacted by the Movement Control Order imposition last year.

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"Nevertheless, core net profit increased 16 per cent yoy on the back of better spreads, supported by shipper function margins. The non-regulated business is showing signs of stability, having reported its third consecutive quarter of profit, which is rather commendable," the firm said in a report today.

Affin Hwang raised its earnings forecasts on Gas Malaysia by seven per cent to factor in better margins.

"We reiterate our 'Buy' rating and raise our dividend discount model derived target price to RM3.25 from RM3.18. Dividend yield at 6.2 per cent is attractive," it said.