KUALA LUMPUR (Jan 17): Shares of PETRONAS GAS BHD [] advanced on Tuesday after MIDF Research maintained its Buy call on the stock and raised its target price (TP) to RM16.50.
At 11.10am, Petronas Gas added four sen to RM15.38 with 629,000 shares done.
MIDF Research said Petronas Gas was a good proxy play to the evolution of domestic LNG/natural gas sector, leveraging on the liberalization initiatives by the government.
It said Petronas Gas should trade above its historical PE mean since 2007 of 18.5x, factoring in positive newsflow and catalysts moving forward. (i) Potential earnings upgrade; (ii) Third party LNG imports; and (iii) Rising natural gas demand namely from the power sector driven by potential electricity exports to Singapore as well as the establishment of new power plants, are postive to PGas.
“We are reiterating our BUY recommendation for PGas with a higher TP of RM16.50 (from RM15.60), derived from 19.5xPER12 (18.5x previously) which is +0.5-standard deviation above average, plus net cash of RM1 per share (as at 3QCY11).
“A 10% earnings growth will enhance our TP for PGas by about RM1.60.
At 11.10am, Petronas Gas added four sen to RM15.38 with 629,000 shares done.
MIDF Research said Petronas Gas was a good proxy play to the evolution of domestic LNG/natural gas sector, leveraging on the liberalization initiatives by the government.
It said Petronas Gas should trade above its historical PE mean since 2007 of 18.5x, factoring in positive newsflow and catalysts moving forward. (i) Potential earnings upgrade; (ii) Third party LNG imports; and (iii) Rising natural gas demand namely from the power sector driven by potential electricity exports to Singapore as well as the establishment of new power plants, are postive to PGas.
“We are reiterating our BUY recommendation for PGas with a higher TP of RM16.50 (from RM15.60), derived from 19.5xPER12 (18.5x previously) which is +0.5-standard deviation above average, plus net cash of RM1 per share (as at 3QCY11).
“A 10% earnings growth will enhance our TP for PGas by about RM1.60.
