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PETALING JAYA: The sustainability of Petronas Gas Bhd
(PetGas) ‘s performance and efficient operations saw it post the highest quarterly revenue of all time and the highest quarterly net profit in five years, even at a time when Covid-19 wreaked havoc on businesses.
The wholly owned subsidiary of Petroliam Nasional Bhd (Petronas) posted a net profit of RM591.01 thousand for the third quarter ended September 30, representing a year-on-year (YoY) improvement of 36.94%.
This was due to revenue of RM 1.41 billion, an increase of 5.18% from the same quarter last year.
Going forward, PetGas said that the pandemic is not expected to significantly affect the group’s overall profits, as its business model and long-term contracts ensured steady revenue streams, particularly for the gas processing, gas transportation business segments. and regasification.
The group attributed its strong net income to higher contributions from all segments, particularly the regasification and gas processing segments due to lower operating costs.
The image in the file shows the PetGas terminal in Malacca.
The regasification segment’s results grew 26% to RM247.8 thousand, due to lower depreciation expense and lower maintenance cost.
The depreciation cost was lower as a result of fully depreciated assets and the extension of the plant’s service interval.
For the gas transportation segment, its profits grew 12.2% to RM225.6 thousand as the reduction in internal gas consumption and other operating costs were offset by the impact of a lower regulated asset base due to the cost transition replacement depreciated to net book value under incentive-based regulation.
The regasification business posted a strong reliability performance close to 100% at its regasification terminals in Sungai Udang, Melaka and Pengerang, Johor, generating a 16.6% increase in profit to RM216 thousand.
Overall, PetGas was also positively affected by a higher unrealized foreign exchange gain.
An unrealized foreign exchange gain on asset and liability conversion totaling RM92.8 million was recorded due to the favorable movement of the ringgit against the US dollar during the quarter, compared to a loss of RM14.7 million in the corresponding quarter.
Meanwhile, so far this year, the group’s net profit increased 3.88% year-on-year to RM1.51 billion, while revenue grew 2.88% year-on-year to RM4.2 billion.
PetGas declared a third interim dividend of 18 sen per common share that amounts to a total of RM356.2 thousand.
PetGas Managing Director and Chief Executive Officer Kamal Bahrin Ahmad said the group’s performance over the remaining months was expected to be stable, supported by its efficient operations and long-term business agreements.
“Our stable performance is reinforced by the group’s digital strategy.
“We look forward to our role in Petronas Integrated Services to provide customers with reliable and cost-competitive cleaner energy solutions.
“This is in line with the Petronas group’s commitment to sustainability,” he explained.
The PetGas regasification facilities at Sungai Udang and Pengerang are part of Petronas’ recently introduced virtual pipeline system that delivers natural liquefied (LNG) using cryogenic trucks equipped with ISO tanks to small-scale and off-grid customers located far from the main gas pipes. .
Another additional new business is the LNG Bunkering Vessel (LBV) service, which enables the transfer of LNG from ship to ship to the LBV, as well as the loading and unloading of LNG for smaller LNG vessels.
These facilities serve as a comprehensive cargo and logistics service center for customers who opt for LNG as an alternative form of cleaner energy.
Regarding its outlook, PetGas said in a filing with Bursa Malaysia that it is anticipated that the transportation and regasification business segments will continue to contribute positively to the group’s earnings under Regulatory Period 1 (RP1) rates.
“The group’s gas processing segment is expected to remain stable thanks to its strong and sustainable revenue stream under the second term of the 20-year Gas Processing Agreement effective from 2019 to 2023,” he said.
AmInvestment Bank Research said in a report that the group’s revenues so far this year increased due to a higher performance incentive from gas processing plants and increased regasification fees under the new RP1.
This was partially offset by the transportation segment, as the optimized replacement cost valuation currently in use will be removed and replaced with historical cost during these transition periods.
“From quarter to quarter, PetGas’ third quarter core net income slipped to RM 498 million, excluding the unrealized foreign exchange gain of RM 93 million, on fixed income of RM 1.4 billion, diminished by the halving the associate contribution of the 60% owned Kimanis Power scheduled shutdown. and a four percentage point increase in the effective tax rate to 24%. “
The research house said PetGas is currently net cash compared to its peers with a debt-to-equity ratio of 55%.
“As such, we believe that PetGas’s dividend payment improvements have only just begun, which will catalyze the stock’s downgrade appeal.
“It is currently trading at an attractive fiscal 2021 (FY21) expected price-to-earnings ratio of 15x, 21% below its 19x three-year average along with a very attractive dividend yield.
“This is not justified as its forecast of fiscal year 23 profit decline of 5% from the continuation of the Energy Commission’s incentive-based regulatory framework is unlikely to significantly reduce the group’s dividend trend,” AmInvestment said. Bank.
Petronas Gas rose 14 sen or 0.87% to RM16.32 yesterday, with 778,500 shares made.
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