Ke­nanga IB low­ers rat­ing on Gas Malaysia

New Straits Times - - BUSINESS / NEWS -

KUALA LUMPUR: Ke­nanga In­vest­ment Bank (Ke­nanga IB) has down­graded Gas Malaysia Bhd to “mar­ket per­form” from “out­per­form” as it be­lieves all pos­i­tives have al­ready been priced-in fol­low­ing a seven per cent run in its share price in the past two weeks.

It re­mains pos­i­tive on Gas Malaysia’s out­look for its steady vol­ume growth cou­pled with mar­gin spread cer­tainty.

“The higher ef­fec­tive tar­iff rate of RM32.69/mmbtu in the sec­ond half of this year will have a neu­tral im­pact on Gas Malaysia’s bot­tom line as it is a cost pass-through from higher gas costs. None­the­less, we still con­tinue to like the in­cen­tive-based reg­u­la­tion (IBR) frame­work as it of­fers bet­ter earn­ings vis­i­bil­ity,” it said in a note yes­ter­day.

Ke­nanga IB be­lieves the IBR frame­work would stay be­yond next year as it is a fair and trans­par­ent mech­a­nism.

Gas Malaysia an­nounced that the gov­ern­ment had ap­proved the half-yearly nat­u­ral gas base-tar­iff rate re­vi­sion for non-power sec­tors in Penin­su­lar Malaysia to RM31.92/mmbtu on av­er­age for July-De­cem­ber this year, from RM30.90/mmbtu in Jan­uary to this month.

The re­vi­sion is in line with the na­tional ra­tio­nal­i­sa­tion plan and Gas Cost Pass-through (GCPT) an­nounced in De­cem­ber 2016.

In ad­di­tion, un­der the GCPT frame­work, a sur­charge of RM0.77/mmbtu will ap­ply to all tar­iff cat­e­gories due to higher ac­tual gas costs against the ref­er­ence gas costs, trans­lat­ing to an av­er­age ef­fec­tive tar­iff of RM32.69/mmbtu which is slightly higher than RM32.52/mmbtu for the first half this year.

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