又有阴谋论？
塞翁失马，焉知非福？
没中的应该在窃笑。
中的应该在暗锤。
中一点不中一点的，听天由命。
我呢？顺其自然。
因为我说过：
About Gas Malaysia:
Target Price: 2.42 (Kenanga, Alliance, PBB, OSK),
Business Involved …
Established in 1992 to provide an alternative source of energy to the country, it sell, market and distribute natural gas as well as construct and operate the Natural Gas Distribution System in the peninsular.
Gas Malaysia is the sole supplier of natural gas to the on-power sector and currently supplies energy to over 700 industrial, 13,352 residential and 528 commercial customers throughout Peninsular Malaysia.
Gas Malaysia is the sole licensed distributor and retailer of natural gas to non-power companies in the country which consume less than two million mmbtu per day. Gas Malaysia enjoys monopoly in gas distribution to the non-power sector.
It also has rights to supply liquefied petroleum gas in the region.
It operates a network of approximately 1,800 km of pipelines throughout the peninsular, and source its natural gas supply from Petronas via the Peninsular Gas Utilisation Transmission System which is owned and operated by Petronas Gas Bhd.
The Risk …
While consumption of natural gas in Malaysia has grown from about 315 bcf (1 bcf equals to 1 trillion BTUs) in 1990 to an estimated 1,260 bcf in 2010, the ability to satisfy this demand has been constrained since 2007 due to the shortage of supply.
However, with the completion of the liquefied natural gas regasification facility in Malacca, it will provide a new source of allocation to Peninsular Malaysia. In addition, the volume of gas from the North Malay Basin project will also help sustain the natural gas supply to customers in the Peninsula.
The company in 2009 signed a formal agreement with Petronas for the supply of 300 million standard cu ft per day (mmscfd) of gas which Gas Malaysia said effectively allowed it strategise its long-term business plan more effectively.
The company faces an ongoing challenge of securing more gas to meet the growing demand of its consumer, commercial and industrial customers.
The gas utility managed to secure an additional 82 million mmscfd on top of the current 300 mmscfd in December 2009 until December 2011. Although the additional gas supply addresses current supply constraints to some extent, it is believes that the long-term security of supply remains a key business issue.
Gas Malaysia will continue to receive strong regulatory support due to its role as the sole piped natural gas utility in Peninsular Malaysia
In February 2012, Gas Malaysia signed a gas supply agreement with Petronas for the supply of 492 million standard cubic per day (mmscfd), a 29% increase from its previous supply of 382 mmscfd. The new agreement starting January 2013 will be for a duration of 10 years with an option to renew for another five years.
Its Growth & Capex …
In terms of growth for Gas Malaysia, its infrastructure is already quite well developed with its extensive reach to most industrial estates in the peninsular that entails little capital expenditure to expand its operations.
The demand for gas was almost recession-proof due to a large pool of customers on the waiting list.
Capital expenditure would be incurred to meet customer demand. The main risk surrounding the company would be the security of its gas supply and the margins it obtained.
Gas Malaysia is governed by the Gas Supply Act 1993 (Gas Act) and Gas Supply Regulations 1997. The Gas Act enables Gas Malaysia to pass through any increases in gas cost by Petronas to customers via increases in the gas tariffs; hence providing the former with a stability to its revenue and profitability to a certain extent.
Gas Malaysia is one of the two licensed natural gas and LPG distributor in Malaysia with a market share of 13.5%. The remaining market share is owned by Petronas Gas Bhd.
The agreement signed on Feb 2012 with Petronas would boost Gas Malaysia’s volume as Petronas is required to increase its supply to Gas Malaysia. This opens up the opportunity for Gas Malaysia to into new markets and supply more natural gas from 2 mmscfd to 5 mmscfd per customer. Gas Malaysia is allowed to supply gas to customers which uses less than 2 mmscfd.
Gas Malaysia mainly supplies natural gas and LPG to industry, commercial and residential customer. Its main customers are rubber glove, F&B and building materials
It is spending rm140 million in 2012 to build 90km of new pipes.
Meanwhile Gas Malaysia will be in a period of growth for the next two to three years (2012-2014), especially with more gas supply coming into place as the liquefied natural gas (LNG) plant in Malacca is getting ready.
With the completion of the liquefied natural gas regasification facility in Malacca, it will provide a new source of allocation to Peninsular Malaysia. In addition, the volume of gas from the North Malay Basin project will also help sustain the natural gas supply to customers in the Peninsula.
Petronas had also announced in 2011 the possibility of building a second LNG receiving and re-gasification terminal while the LNG import terminal in Malacca is expected to be ready by end 2012.
A Dividend Recurring Stock …
Gas Malaysia is a strong dividend-recurring stock with more potential upside with the new Petronas contract and its commitment to pay most of its profit back to shareholders.
It is seen as a dividend play due to its attractive dividend payout policy. Nevertheless, market observers project its earnings to decline until 2025 due to the regulated pricing mechanism which would result in compressed margins.
While Gas Malaysia is one of two gas distribution in Malaysia, the price of gas is heavily regulated by the government.
The government is required to raise gas prices by rm3 per mmBTU every six months until end 2015 but the price hike has been delayed since Dec 2011 due to the impending GE.
Gas Malaysia faces regulatory risk as any delay in price revision would put a dent in margins. During the last price revision in June 2011, Gas Malaysia’s purchase price increased by 27.1% while its selling price only rose by 7.1%. This resulted in a significant dent in margins.
Industry observers added that the government is unlikely to increase gas prices until the impending GE is over.
Nevertheless it is expected to dish out good dividends due to its strong balance sheet and positive cash flow. As at end 2011, it was in a net cash position of rm327 million.
Gas Malaysia has a dividend payout policy of 100% of FY2012 and a payout of above 75% thereafter.
Financial Results & Dividend Policy …
For its financial year ended 2011, the company hit a revenue of RM2bil from RM1.8bil recorded previously, driven by the gas tariff revision announced by the government, which took effect on June 1, 2011, in addition to increase in sales volume.
However, its net profit decreased by 23% to RM229mil in 2011 from RM298mil recorded in the previous year due to the new gas tariff, which resulted in Gas Malaysia's average margin declining by 48.9% to RM2.02 per mmBtu, or just 12.5% as margins compared to 26.3% recorded previously.
Gas Malaysia Bhd's pre-tax profit for the first quarter ended March 31, 2012 fell to RM46.07 million from RM99.18 million in the same quarter last year.
Revenue, however, improved to RM506.58 million from RM464.06 million previously. The increase in revenue was mainly due to higher volume of gas sold by 1.5 per cent and the upward revision in tariff which was effective June 1 last year.
As for the lower profit, it was mainly due to margin compression resulting from the revision in gas tariff. The lower pre-tax profit was mainly driven by lower sales volume due to shorter billing days, coupled with Chinese New Year holidays during the current quarter, and the adjustment of gas cost and reversal of provision for shared cost in the previous quarter.
The company intends to pay out 100% of its net profit for its financial year ending Dec 31, 2012, and subsequently targets a payout ratio of not less than 75% of its net profit moving forward.
The Shareholders …
The shareholders of Gas Malaysia, which include Tokyo Gas-Mitsui & Co Holdings Sdn Bhd, Petronas Gas Bhd and MMC-Shapadu (Holdings) Sdn Bhd, will be undertaking an IPO of 333.84 million shares at an indicative price to be determined later.
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