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STOCKWATCH: MAYBANK IB MAINTAINS BUY CALL ON GAS MALAYSIA
KUALA LUMPUR, Jan 14 -- Maybank Investment Bank (Maybank IB) Research has maintained its 'buy' call on Gas Malaysia Bhd (GMB) with a target price of RM3 per share, pending further updates following the recently announced sharp tariff cut.
In a research note today, Maybank IB said the unchanged call was premised on GMB potentially delivering a bumper fourth quarter 2020 (Q4 2020) earnings from a possible revenue cap adjustment.
The research house said GMB had lowered its net tariff for Q1 2021 to RM22.14 per million British thermal units (mmBTU), representing a sizable 34.21 per cent cut from 2020.
“We believe the lower tariff is entirely attributable to the lower cost of gas from Petronas, as the liquefied natural gas-indexed gas prices published by the regulator indicated an almost halving of prices throughout 2020.
“Apart from directly impacting the end tariff, the lower gas cost also reduces retail margin (derived from an undisclosed and possibly unchanged percentage of gas cost),” it said.
Maybank IB added that for sensitivity purposes, every 5 sen/mmBTU change to its spread assumption (RM2.15/mmBTU) would move its financial year net profit forecast by 3.9 per cent.
-- BERNAMA
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