PETGAS–Fundamental Analysis (11 May 2016)

Excel – Download the analysis file

Latest Financial – Q2 2016 Financial Report (9 Aug 2016)

FY16 Q2 Results Highlight:

  • YoY:
    • PETGAS’s revenue for 1HFY16 sustained at RM2.2b, an increase of 3.0% compared to 1HFY15. This is primarily driven by higher utilities revenue, as a result of higher average sales prices to customers in line with upward fuel gas price revision effective 1 Jan 2016, Performance Based Structure income and regasification revenue.
    • PBT stood firm at RM1.1b, a marginal decrease of 2.0% compared to 1HFY15 due to higher operating costs. However, EBITDA were higher by 0.3%.
  • QoQ:
    • 2QFY16 revenue grew by 3.0% yoy to RM2.25bn, mainly driven by the utilities segment which saw higher offtake by customers and benefitted from upward revision in fuel gas price on 1 Jan 2016. Nonetheless, PGas’
    • 2QFY16 EBITDA margin fell by 7.1ppt to 61.9% mainly due to higher repair and maintenance costs in both the gas processing and transportation segments, as well as higher storage costs in the regasification segment as a result of the weak RM.

Going Forward:

  • The stock price movement of PetGas has been fairly resilient, trading sideways within the band of RM21-23 per share since mid-August 2014 despite the >-50% drop in global crude oil prices
  • Upside room of this stock is slightly limited due to a lack of fresh catalysts (the Pengerang regasification terminal will only come onstream at the end of the decade)
  • In my opinion, fair value of PETGAS is from 22.3 to 23.5 (Uncertainty Risk: from MEDIUM to HIGH).
  • Valuations may not very compelling, but not bad. PETGAS still appeals to funds seeking earnings stability
  • I will continue to hold PETGAS, and may accumulate PETGAS in the future.

At the time of writing, I owned shares of PETGAS.


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