KUALA LUMPUR: Maybank Investment Bank (Maybank IB) has revised upward its net profit forecasts for Petronas Gas Bhd (PetGas) for fiscal years 2024, 2025, and 2026 (FY24/FY25/FY26) by 4.0 per cent, 4.0 per cent, and 3.0 per cent respectively, following amendments to the Gas Processing Agreement (GPA).
According to Maybank IB, the updated terms of the GPA seem marginally more favoUrable than before, resulting in an estimated 4 per cent increase in earnings for FY24.
"Following the approval of the GPA, there are no significant regulatory events expected in the near future," it added.
In the third five-year period of the GPA from 2024 to 2028, Maybank IB noted a 6.0 per cent rise in the fixed reservation charge to RM1,704 million annually, an increase of RM92 million.
Furthermore, the incentive for the performance-based structure (PBS) linked to liquids has been boosted by 33 per cent to RM120 million annually, leading to an additional RM30 million.
"However, there are no changes to the flow rate charges, which remain at 20 sen per gigajoule (GJ) above 1,750 million standard cubic feet per day (mmscfd) of sales gas," it added.
Maybank IB forecasts an annual revenue rise of RM122 million for the processing segment, with no expected additional costs, as the internal cost consumption mechanism remains largely unchanged.
"We foresee the majority of the extra revenue directly impacting earnings.
"Following our adjustments to earnings estimates, we project that the processing segment will contribute to 37 per cent of PetGas' FY24 earnings before interest and taxes (EBIT), marking a 2-percentage-point increase," it added.
Maybank said that it maintains a 'hold' recommendation on PetGas but increases the target price to RM18, up from RM17.50.
"Gas Malaysia holds a slight preference among gas utilities," said Maybank IB.