KUALA LUMPUR, Aug 18 ― MIDF Research has maintained its earnings estimates for Gas Malaysia Bhd for financial year ending December 31, 2021 (FY21) on the back of higher gas cost.

However, volume shortfall could offset the earnings estimates due to the possibility of a slow reopening of borders and lifting of movement restrictions, it added.

The research firm opined that with the current high demand for liquefied natural gas (LNG) and tight global supply, gas selling price will continue to grow in the near term, in addition to the gradual liberalisation that will effectively synchronise the local gas market with international gas market.

“This will consequently encourage future LNG imports and ensuring a consistent supply of gas in the long term,” it said in a research note today.

Gas Malaysia’s net profit for its second quarter ended June 30, 2021 rose to RM62.34 million from RM44.62 million in the previous corresponding period, mainly due to the higher gross profit and lower finance cost that was offset by higher operating expenses and higher share of losses from the group’s joint ventures.

Its revenue for the quarter was lower at RM1.38 billion compared with RM1.54 billion a year earlier. The group also declared an interim dividend of 4.8 sen per share.

Early this year, the Malaysian Gas Association announced that the local gas market is expected to be fully eased up in 2022 as a next step forward in attracting third party shippers into the market by importing LNG that will be supplied to local industries.

MIDF Research said currently, Gas Malaysia allowed third parties to use its gas distribution pipeline at regulated rates and many industry clients are still on long-term contracts with the group for supply security.

“Thus, third party shippers should be able to enter the market when the contracts expire at the end of FY21,” it added.

MIDF Research reiterated its “buy” recommendation on Gas Malaysia with an unchanged target price of RM3.22 per share.

As at 10.35am, shares of Gas Malaysia rose three sen to RM2.67 with 79,000 shares done. ― Bernama