Not a bad year for Gas Malaysia
KUCHING: Gas Malaysia Bhd’s net profit eased to RM383.40 million for the financial year ended Dec 31, 2023 (FY23) from RM389.54 million in the previous year, mainly aributable to lower volume of natural gas sold, higher operating and administrative expenses as well as lower contributions from the group’s joint-venture companies.
However, it was partially offset by higher finance income in FY2023, the group said in a filing to Bursa Malaysia.
Revenue for the year, however, rose to RM8.08 billion against RM7.65 billion previously, in line with the higher average natural gas selling price mitigated by the lower volume of natural gas sold during the year.
As for the fourth quarter, Gas Malaysia’s net profit increased to RM104.33 million from RM95.23 million, while revenue fell to RM1.80 billion from RM2.22 billion due to lower average natural gas selling price.
This was mitigated by a higher volume of natural gas sold during the current quarter.
The team with Maybank Investment Bank Bhd (Maybank Research) saw that Gas Malaysia’s FY23 results were in line with it and consensus expectations as 4Q23 earnings trended sequentially higher from reversal of previous provisions.
With earnings potentially declining in FY24 due to lower gas prices, we see no strong rerating catalysts in the near term.
Gas Malaysia’s 4Q23 net profit of RM104 million brings FY23 net profit to RM383 million, which is three and five per cent above Maybank Research and onsensus forecasts respectively.
4Q23 EBIT was sequentially higher despite lower gas prices, due to reversal of previous provisions (possibly gas costs) and lower depreciation.
During the analyst briefing, the management noted that average Malaysia reference price (MRP) for 2024 is expected to be lower to RM41 to RM46 per quarter, as compared to the average range of RM55 to RM57 in 2023.
However, MIDF Amanah Investment Bank Bhd (MIDF Research) said the group is expected to increase its capex from RM220 million in FY23 to a range of RM275 million to RM300 million in FY24.
“The reason for the higher capex was to catch up to the delays caused by pipeline issues encountered in 2QCY23, which prompted emergency maintenance amounting to a provision of approximately RM28 million.
“We believe that this capex would help Gas Malaysia to improve its operations and provide more opportunities for Gas Malaysia to include more sustainable green projects in its future portfolio.”
MIDF Research remained positive on Gas Malaysia’s future operations, given the higher expected capex in FY24 and Brent crude oil stabilizing to a US$80 to US$85 per barrel range.
“This would eventually translate to a beer, less volatile average selling price. However, the lower expected MRP based off the previous six-month trend of Brent crude price still adds into the ogroup’s near-term risk.”