Gas Malaysia Bhd has received mixed calls from analysts following its strong nine-month financial year of 2024 (9MFY24) performance. MIDF Amanah Investment Bank Bhd (MIDF Research) maintained a BUY rating with an upward revision of its share target price to RM4.09 from RM3.96, citing resilient earnings and sectoral demand. Conversely, Maybank Investment Bank Bhd (Maybank IB) maintained a HOLD call, albeit raising its target price to RM3.80 from RM3.60, noting potential headwinds from declining gas prices but highlighting the utility's attractive dividend yield.

Gas Malaysia reported 9MFY24 net profit of RM329 million, an 18% year-on-year (YoY) increase, despite a 4.6% decline in revenue to RM6 billion due to lower average natural gas selling prices (ASP). Higher gas volumes, increased tolling fees and joint venture contributions offset the revenue decline, reflecting strong operational performance. Notably, 3Q24 net profit rose to RM116 million, a 35% YoY increase, attributed to higher gas sales volume and elevated spreads.

MIDF Research highlighted Gas Malaysia's operational resilience, supported by Malaysia's economic recovery and continued gas demand growth. However, the research house revised its FY25–FY26 earnings estimates downward by 17% and 20%, respectively, to align with expectations of lower Brent crude prices, projected at US$75–US$78 per barrel in 2025. The revision incorporates potential volatility in global oil markets, which may impact Gas Malaysia's ASP.

Maybank IB emphasised Gas Malaysia's commendable 3Q24 sales volume growth, estimating a 10% quarter-on-quarter increase. However, it projected a decline in FY25 earnings due to the downward trend in the Malaysia Reference Prices for gas. Maybank IB noted that Gas Malaysia's more than 6% dividend yield remains a key draw for investors, providing a cushion against potential downside risks.

Both research houses acknowledged Gas Malaysia's strong fundamentals and strategic positioning in the gas utilities sector. MIDF Research cited operational efficiency and sectoral trends as drivers for future growth, while Maybank IB focused on short-term challenges tied to fluctuating gas spreads and ASP.