20 September 2016 | Corporate Update
Maintain NEUTRAL
Petronas Gas Berhad
Unchanged Target Price (TP): RM19.63
JV project with Linde Group in PIPC
INVESTMENT HIGHLIGHTS
•
•
•
•
JVC between PetGas and Linde Group to build industrial
RETURN STATS
air gas facility in RAPID
Price (19 September 2016)
RM21.50
PetGas in net cash position with headroom for gearing
Target Price
RM19.63
Venture
will
be
under
Utilities
segment
which
traditionally contributes 7% of gross profit
Expected Share Price Return
-8.7%
Maintain NEUTRAL with unchanged TP of RM19.63
Expected Dividend Yield
+2.6%
Expected Total Return
-6.1%
Joint venture with Linde Group. Linde Malaysia Sdn Bhd (a
subsidiary of The Linde Group) announced that it has established a
joint venture company (JVC) with Petronas Gas Berhad (PetGas) to
build a state-of-the-art industrial air gas facility that will produce
gaseous oxygen and nitrogen to supply the needs of PETRONAS’
world-scale Refinery and Petrochemicals Integrated Complex
(RAPID), within the Pengerang Integrated Petroleum Complex (PIPC).
Project details. The JVC, Pengerang Gas Solution Sdn Bhd (PGS),
has also secured long-term agreements for the supply of oxygen and
nitrogen to the world-scale refinery and petrochemical complex which
includes an ethylene oxide/ethylene glycol plant. PGS will build two
large air separation units and associated gas facilities resulting in a
total investment of EUR150m or approximately RM690m.
Our view. This joint venture is certain positive for PetGas (but not
earnings accretive in the immediate term). However, we continue to
believe that PetGas’ core businesses, i.e. the processing and
transportation of gas along with the regasification project, will remain
as the main earnings contributors for the group. We reckon that this
new venture will fall under the Utilities segment which traditionally
contributes approximately 7% of its gross profit. In addition, we
believe that funding for the joint venture will not be an issue as
PetGas has a cash pile of RM1.4b and is in a net cash position (total
borrowing approximately RM1.35b).
Impact on earnings. We are maintaining our earnings forecasts at
this juncture.
Maintain NEUTRAL. We are maintaining our NEUTRAL stance on
PetGas with an unchanged FY17 TP of RM19.63 per share. Our TP is
premised on forward PER17 of 21.2x pegged to EPS17 of 92.6sen.
The target PER is based on PetGas’ rolling four-quarter average PER
over six years.
STOCK INFO
KLCI
Bursa / Bloomberg
Board / Sector
1,651.71
6033 / PETGAS
MK
Main / Trading
Services
Syariah Compliant
Yes
Issued shares (mil)
1,978.7
Par Value (RM)
Market cap. (RM’m)
Price over NA
1.00
42,542
4.1x
52-wk price Range
RM20.90 –
RM23.60
Beta (against KLCI)
0.91
3-mth Avg Daily Vol
0.95m
3-mth Avg Daily Value
RM20.9m
Major Shareholders (%)
Petroliam Nasional Berhad
60.66
Employees Provident Fund
10.35
Kumpulan Wang Persaraan
5.65
PNB and its associated
funds
5.14
MIDF RESEARCH is a unit of MIDF AMANAH INVESTMENT BANK
Kindly refer to the last page of this publication for important disclosures
MIDF RESEARCH
Tuesday, 20 September 2016
INVESTMENT STATISTICS
FYE 31 Dec
FY13
FY14
FY15
FY16F
FY17F
Revenue (RM’m)
3,892.10
4,391.70
4,455.96
4,780.50
4,934.90
EBIT (RM’m)
1,903.70
2,142.10
2,016.96
2,195.10
2,230.10
Pretax Profit (RM’m)
1,896.40
2,354.50
2,002.11
2,208.50
2,244.50
Net Profit (RM’m)
2,078.70
1,843.20
1,987.45
1,798.10
1,832.00
EPS (sen)
105.1
93.2
100.44
90.9
92.6
EPS growth (%)
48.00
-11.40
7.70
0.80
1.90
PER(x)
21.1
23.8
22.1
23.7
23.2
Net Dividend (sen)
55
55
60
55
55
Net Dividend Yield (%)
2.5
2.5
2.7
2.6
2.6
Source: MIDFR
DAILY PRICE CHART
Aaron Tan Wei Min
[email protected]
03-2772 1650
Source: MIDFR, Company
2
MIDF RESEARCH
Tuesday, 20 September 2016
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(Bank Pelaburan)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
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MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS
STOCK RECOMMENDATIONS
BUY
TRADING BUY
NEUTRAL
SELL
TRADING SELL
Total return is expected to be >15% over the next 12 months.
Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been
assigned due to positive newsflow.
Total return is expected to be between -15% and +15% over the next 12 months.
Total return is expected to be <-15% over the next 12 months.
Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been
assigned due to negative newsflow.
SECTOR RECOMMENDATIONS
POSITIVE
The sector is expected to outperform the overall market over the next 12 months.
NEUTRAL
The sector is to perform in line with the overall market over the next 12 months.
NEGATIVE
The sector is expected to underperform the overall market over the next 12 months.
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