Petronas Gas Bhd
Market Perform. Target price: RM17.80
PETGAS’S FY23 full-year core profit of RM1.85 billion met expectations. It declared a fourth interim NDPS of 22 sen (ex-date: March 11; payment date: March 25), bringing FY23 full-year NDPS to 72 sen, which matches the pay-out in FY22 but below our assumption of 81.5 sen (as we imputed a special dividend).
YoY, its FY23 revenue rose 5%, mainly attributable to the utilities segment (+18%) while the gas processing (+2%), gas transportation (-2%) and regasification (RGT, -4%) segments were flattish to slightly negative. However, its EBIT was flat (-2%) as the doubling in utilities profits were offset by earnings decline at gas processing (-11%) and RGT (-15%). Nonetheless, its core profit grew 7%, thanks to a high share of profits from JV companies (+87%), a lower effective tax rate (-5% as FY22 was impacted by Prosperity Tax) and lower minority interest (-28%).
Gas processing: The segment’s EBIT fell by 10%, despite a 2% hike in top line, due to higher depreciation following the completion of several capital projects.
Gas transportation: The segment’s EBIT was flattish, although topline dipped 2%, as lower revenue was partially offset by lower internal gas consumption.
Utilities: The segment’s top line grew 18% on higher product prices as well as higher electricity tariff with upward revision of ICPT surcharge.
RGT: The segment’s EBIT fell 15% as revenue fell 4% due to lower RP2 tariff for Pengerang RGT coupled with higher floating storage charges and depreciation expense.
QoQ, its Q4’23 revenue rose 2% on the back of higher revenue contributions from utilities (+5%) and gas transportation (+3%).
We raise our FY24F net profit forecast by 1%, lift our TP by 2% to RM17.80 (from RM17.45) and maintain our MARKET PERFORM call.