Stake in Gas Malaysia Will Boost Petronas Unit's Revenue: Report
Posted on: Sunday, 5 March 2006, 21:00 CST
PETRONAS Gas Bhd should see its revenue for its financial year ending March 31 2007 increase by 1-2 per cent after it acquires a 20 per cent stake in Gas Malaysia Sdn Bhd, AmResearch Sdn Bhd says.
Gas Malaysia reported a turnover and a net profit of RM602.4 million and RM58 million respectively for 2004.
"This is only a fraction of Petronas Gas' net profit of RM823.3 million for financial year 2005," AmResearch said in a research note.
It said although the additional earnings from Gas Malaysia may not be significant currently, the proposed acquisition will yield better returns of about 11 per cent for Petronas Gas compared to placing its net cash pile in fixed deposits with an interest rate of 3-3.3 per cent.
Petronas Gas had announced that will exercise its option to buy 8,559 shares in Gas Malaysia for RM102.03 million from Petroliam Nasional Bhd (Petronas). Both parties will execute a sale and purchase agreement in due course.
"The investment in Gas Malaysia seems to be at the right timing as Petronas Gas is forecast to be in a net cash position of RM101 million by March 2006," AmResearch added.
In addition, the proposed acquisition allows Petronas Gas to expand its income base to include downstream activities.
Gas Malaysia is principally involved in supplying natural gas and liquefied petroleum gas to homes, commercial businesses and industries.
Gas Malaysia is a joint-venture company between MMC-Shapadu Holdings (55 per cent), Tokyo Gas-Mitsui Holdings (25 per cent) and Petronas (20 per cent).
As at December 31 2005 Gas Malaysia has a network of gas pipelines covering a total of 1,441km and is expanding to reach a larger population.
AmResearch is maintaining its 'hold' recommendation on Petronas Gas, with a target price of RM9.80 as the proposed acquisition has no material impact on Petronas Gas' earnings in the near term.
Source: Business Times; Kuala Lumpur
Related Articles
- B.C. Takes on the Terminator, Plans to Drop Greenhouse Gas Levels 33 Per Cent
- Inflation Rate Drops to 2.2 Per Cent in February As Gasoline Prices Ease
- Inflation Rate Drops to 2.2 Per Cent in February With Cheaper Gasoline
- Cheaper Gasoline Pushes February Inflation Rate Down to 2.2 Per Cent
- Croatia: Russian Gas Supplies Reduced By 33 Per Cent
- Index Oil and Gas Inc. Update Re. Proposed Acquisition
- 700,000 Homes Face Power Bill Hike for Second Time This Year 13.5- Per Cent Gas Charge Rise for SSE Customers
- Millions Face Higher Bills As Scottish Gas Announces 14 Per Cent Rise
- South Korea's Energy Costs Rose 30.4 Per Cent in First Half of 2005
- Iran's Gas Distribution Capacity to Increase 400 Per Cent: Oil Minister
 |
 |
User Comments (0)
RSS Feeds