Kenanga IB raises target price for Petronas Gas to RM17.60

KUALA LUMPUR (Jan 17): Kenanga IB Research has maintained its “Market Perform” rating on Petronas Gas Bhd (PetGas) at RM16.50 with a higher target price (TP) of RM17.60 (from RM15.75) and said it raised PetGas’s FY20 earnings estimate by 16% as the effective tariff cut in RP1 is smaller than expected.

In a note today, the research house said headline tariff for Peninsular Gas Utilisation hike of 5.3% is largely due to the inclusion of Internal Gas Consumption and hence causing a lower EBIT by 8%-10%, which is now part of its operating costs while Melaka Regasification Terminal should see higher EBIT by 3%-5% with the inclusion of Pengerang Jetty into Regulated Asset Base.

“Share price has jumped post-announcement which is pricing it to perfection, in our view.

“Thus, we keep our MP call but at higher TP of RM17.60,” it said.