February 18, 2015

AllianceDBS maintains 'buy' call on PetGas

Stock Name: PETGAS
Research House: ALLIANCEPrice Call: BUYTarget Price: 25.40

KUALA LUMPUR: AllianceDBS Research has maintained its "buy" rating on Petronas Gas Bhd (PetGas) at RM25.40, following the company's promising outlook with resilient earnings, a solid balance sheet and strong parentage.

"Also, PetGas is unaffected by the recent fall in crude oil prices as it merely provides throughput services," the research house said in a note today.

PetGas reported a fourth quarter 2014 core profit of RM417 million, six per cent higher year-on-year.

"This took its financial year 2014 core earnings to RM1,689 million and 16 per cent higher, while coming within our estimates," it said.

PetGas has a 65 per cent stake in the RM2.7 billion Pengerang regasification terminal with a 3.5 million metric tonne annual capacity. It is expected to be operational by the fourth quarter of 2017.

"We have penciled in a seven per cent boost to earnings from this terminal in FY18.

"The potential third regas plant in Lahad Datu will be the next catalyst for PetGas, as Petronas continues to plan ahead for energy supply security," it said. - BERNAMA