Petronas Gas - 2Q12 in line, Melaka RGT is delayed again

Period    3Q12

Actual vs. Expectations   The 9M12 results met our expectations with the core net profit of RM1.01b accounting for 74% of our FY12 full-year estimates. The 9M12 core earnings made up 62% of the market consensus.

Dividends   No dividend was declared in 3Q12

Key Results Highlights  The 3Q12 headline net profit declined 31% QoQ to RM317.7m as the previous 2Q12 results included the RM100m disposal gain of Gas Malaysia Bhd (“GASMSIA”, OP; TP: RM2.94) pursuant to its IPO exercise. The 3Q12 results were also hit by a lower Gas Processing segment earnings 

 On a YoY comparison, the 3Q12 net profit contracted 9% from the RM350.2m in 2Q11 as revenue dipped 7% due to lower earnings contribution from the Gas Processing segment.

 YTD, the 9M12 net income rose 11% YoY to RM1.11b due to the RM100m GASMSIA disposal gain while the weak Gas Processing’s earnings was mitigated by a higher transportation capacity for the Gas Transportation segment. Note that there was a RM90.7m impairment loss reported for the Gas Transportation unit in 9M11.

 Segment-wise, Gas Processing’s 3Q12 PBT dropped (-17% QoQ, -28% YoY) to RM171.9m as its revenue dipped (-7% QoQ, -17% YoY) to RM355.1. This was due to lower export volume and prices for propane and butane

 While Gas Transportation reported the expected earnings, the Utilities unit's profitability was eroded by higher depreciation and fuel costs, with its 3Q12 PBT declining 28% QoQ and 29% YoY.  

Outlook   The company also announced that its Melaka

RGT would be delayed once again to 2Q13 from Jan 2013.

 Nonetheless, Melaka RGT will still be the new earnings kicker for FY13 while the Kimanis IPP will take PETGAS’ FY14 earnings to new heights. 

Changes To Forecasts   We are now assuming Melaka RGT to start in Apr 2013 from the previous expected Jan 2013, leading to cuts in our FY13 EPS and GDPS by 3%. However, we are keeping our FY12 and FY14 estimates unchanged.   

Rating  MAINTAIN MARKET PERFORM

 

Valuation    Post-earnings revision, our RNAV-based TP is now RM19.86/share (previously RM19.90/share). 

Risks   The delay in the commencement of Melaka RGT, Kimanis IPP and Lahad Datu RGT.   

Source: Kenanga