FW: AmBank Research - Petronas Gas : Uncertainties with looming TPA implementation SELL, 14 Nov 2017

 

 

STOCK FOCUS OF THE DAY         

Petronas Gas : Uncertainties with looming TPA implementation                SELL

 

We maintain our SELL recommendation for Petronas Gas (PGas) with unchanged forecasts and sum-of-parts-based (SOP) fair value of RM16.60/share, which implies an FY17F PE of 18x, a 20% discount to the 2-year average of 23x. Since our downgrade from HOLD on 18 November last year, the share price has fallen by 18% on concerns of value erosion from the Energy Commission’s (EC) plan to implement Incentive-Based Regulation (IBR) initiatives on the group’s gas transportation tariff under the Gas Supply Act 2016.

 

During a teleconference held yesterday post-9MFY17 results yesterday, management did not provide much clarity on the third-party access (TPA) negotiation with the EC other than reaffirming that the group is working with the authorities to minimise the impact to its business operations. The group's licence submissions for the Peninsular Gas Utilisation system together with the Melaka and Pengerang regasification terminals were made on 24 October this year. The group’s 65%-owned Pengerang LNG regasification terminal (RGT) has reached commercial operation on 1 November 2017 and will marginally contribute to the group’s revenue and earnings in the final 2 months of this year.

 

The stock currently trades at an unjustified FY17F PE of 20x with its earnings likely to erode over the longer term under the new TPA terms.

 

 

Others :

IJM Corp : Awarded RM378mil Uptown 8 building job                     BUY

Property Watch : Lucentia Residences, BBCC      

 

 

STOCKS ON RADAR

Carimin Petroleum, Onapaper, Leader Steel, Halex Holdings

 

 

ECONOMIC HIGHLIGHT

Malaysia : Labour force improves

 

 

NEWS HIGHLIGHTS

Property Sector : Stratified properties overhang worsens

Maybank : Confident mobile banking deals will hit RM22b by year-end

Tadmax : To develop Pulau Indah plant with S Korea’s Kepco

E-commerce : Lazada Malaysia smashes sales record on Nov 11

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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