HwangDBS maintains 'buy' on Gas Malaysia

HwangDBS Vickers Research maintained its 'buy' call on Gas Malaysia Bhd for its resilient earnings, sustainable four per
cent yield and attractive growth driven by rising gas demand.

In a research note today, HwangDBS said the outlook for the gas company is promising given the rising gas demand and larger gas volume with liquefied natural gas (LNG) imports.

"It is also set to gain market share after securing approval to supply to customers who consume up to five million standard cubic feet per day (mmscfd); the cap has been raised from two mmscfd previously," HwangDBS said.

In a separate note today, Kenanga Research said the new 40 mmscfd gas supply from the Melaka Regasification Terminal (RGT) in July 2013 will be an earnings catalyst, which will bring an increase in the gas supply.

"The subsequent 30 and 40 mmscfd additional gas supplies from the same Melaka RGT in January 2014 and 2015, respectively, will ensure consistent earnings growth post-2013," Kenanga Research said.

However, Kenanga Research downgraded Gas Malaysia from 'market perform' to 'underperform' due to a surprise increase in gas supply allocated by Petronas and widen in margin spread, which positively will impact its profitability.