Affin Daily Insight (LV) - 7 April 2014 - PGAS / ECONOMY - TRADE / ECONOMY - US OUTLOOK / DMR

Top Calls

Company Update � PGas (REDUCE, maintain) - Focus on operational efficiencies Last Friday�s briefing provided further clarity on PGB�s new term agreement with PETRONAS. All in, we gathered that the new agreement: (1) should be bottomline neutral vis-�-vis the 4th Term; (2) should remunerate PBG as a gas infrastructure company and therefore not susceptible to uncontrollable elements (gas volume and gas composition); and (3) should clearly demarcate the gas processing and transportation income structure to prepare for the liberalisation of Malaysia�s gas market with the potential entry of new third party gas (LNG) importers. We understand that continuing with the 4th term is unfavourable to PGB as upstream gas is expected to be learner and thus, there is less export volume of liquid products (lower performance based structure income). No change to earnings estimates � we project 3-year core earnings CAGR of 10% with LNG and power plant. Maintain REDUCE with an unchanged RNAV-based TP of RM20.20/share.

Other Calls

Economy � Trade - Exports rose by 12.3% in February, supported by E&E

Economy � US Outlook � Weekly Wrap (31 Mar � 4 Apr 2014) - US economic indicators improved in March, led by jobs

Debt Market Research - Expect support because of well received SPK auction, worse than expected NFP and better M�sia exports

Morning News & Market Summary

For important disclosures, please refer to the Disclosure section at the end of the individual linked research reports.

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