RHB Research maintains earnings forecast on Petronas Gas

RHB Research has maintained its earnings forecast on Petronas Gas Bhd following its RM2.7 billionPengerangregasification terminal project news.

In a note, the research house said it was also maintaining the “neutral” recommendation on PetronasGaswithanunchanged target price of RM21.98.

RHBResearchsaidtheproject would only start contributing from financial year 2018.

It would be carried out via a 65:25:10 jointventure,Pengerang LNG (Two) SB, between Petronas Gas, Dialog Group and the Johor state government.

“We are positive on Petronas Gas’ latest venture that will underpin its earnings growth over the longer term.

“The RM2 billion capital outlay will result in Petronas Gas having a net debt and gearing of RM1.9 billion and 0.18 times respectively, which is still highly manageable, from a net cash of RM69 million as at endthird quarter 2014,” it said.

RHB Research said it believed the market has priced in the near-term earning catalysts of Petronas Gas, such as contributionsfromanew300MW power plant in Kimanis, Sabah, and a regasification terminal in Sg Udang, Melaka.

However, it said Petronas Gas’ long-term outlook remains favourable,backed bycontinued industrialisation in Malaysia, and hence rising demand for gas.

Petronas Gas shares were flat at RM21.66 as at 10.06 am with 800 lots changing hands. Bernama