Gas Malaysia Bhd is anticipated to report a solid performance for 2QFY24 with an estimated net profit of RM100 million to RM105 million, slightly below 1QFY24's RM102.3 million, as per Kenanga Investment Bank (Kenanga). This expected result reflects the benefit of higher gas sales prices, despite a stable sales volume, which aligns with market expectations.
The net profit for the first half of FY24 is projected to be between RM202.3 million and RM207.3 million, contributing 56% to 57% of Kenanga's full-year forecast and 55% to 56% of the consensus estimate.
Kenanga maintains its MARKET PERFORM rating on GASMSIA, with a target price of RM3.59, acknowledging the company's strong market position and attractive dividend yield of over 6%. The firm's consistent earnings visibility, supported by long-term customer contracts and substantial free cash flow, continues to underpin its stable investment case.
However, with valuations at current levels deemed fair, Kenanga advises a hold strategy for the stock.
GASMSIA's 2QFY24 performance is supported by improved gas selling prices, as the Malaysia Reference Price (MRP) increased by 6% QoQ. Despite historical trends of slightly lower sales volumes in 2Q, the gas sector's general recovery and increased business activities, especially in the glove sector, have stabilised sales. The company's strategic shift to a new plant in Pulau Indah by 2025 is expected to enhance efficiency and reduce costs.
