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RESULTS UPDATE

TA Securities

Wednesday, February 18, 2015


FBMKLCI: 1,810.09
Sector: Power & Utilities

A Member of the TA Group


MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048

Petronas Gas Berhad

TP: RM23.67 (+7%)


Last Traded: RM22.38

Tax Boost

Hold

THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*

James Ratnam

Tel: +603-2167 9602

james@ta.com.my

Review
 PGBs FY14 results surpassed both ours and consensus expectations,
mainly due to a jump in JV (Kimanis power plant - KPP) profit in 4Q14.
Reported net profit decreased by 11.3% YoY to RM1.8bn, attributable to
the RM626.4mn investment tax allowance, relating to the Sg. Udang RGT
that was recognised in the preceding year. Core net profit, after excluding
RM52.0mn forex loss, amounted to RM1.9bn, 15% above our estimate. This
was largely due to JV & associate contribution jump to RM242.3mn in
4Q14, thanks to, 1) the commissioning of all three units of KPP, and 2)
recognition of an undisclosed amount of deferred tax allowance arising
from the investment tax allowance granted to KPP. The group also declared
dividend of 15 sen/share (4Q14: 40 sen/share). That brings the total
dividend in FY14 to 55 sen/share, similar to FY13.


The throughput services revenue increased 3.0% YoY to RM2.8bn,


underpinned by higher transportation fee (+8.2% YoY). The increase was
due to higher transportation capacity charges paid by Petronas under the
new GTA. Gross profit grew in tandem to RM1.0bn (+ 11.6% YoY).
Meanwhile, the gas processing segment recorded lower revenue of
RM1.5bn (-1.1% YoY), attributable to lower Performance Based Structure
(PBS) income. The impact, however, was partially offset by higher capacity
reservation charges under the new GPA.
The utilities segment booked 16.3% YoY jump in revenue to RM1.0bn,
thanks to higher offtake across all of its products and the increase in
electricity tariff with effect from Jan 1, 2014. Gross profit meanwhile
increased by a larger 53.4% YoY to RM195.9mn, as GP margin expanded to
19.4% (FY13: 14.7%). Meanwhile, the Regasification segment reported the
first full year revenue and gross profit of RM616.2mn and RM308.0mn,
respectively. The segment accounted for 14% of the groups gross profit.

www.taonline.com.my

Share Information
Bloomberg Code
PTG MK
Stock Code
6033
Listing
Main Market
Share Cap (mn)
1978.7
Market Cap (RMmn)
43,176
Par Value
1.00
52-wk Hi/Lo (RM)
24.96/20.60
12-mth Avg Daily Vol ('000 shrs)
1073.0
Estimated Free Float (%)
21.5
Beta
1.16
Major Shareholders (%)
Petroliam Nasional Berhad - 60.66
EPF -13.09
Kumpulan Wang Persaraan -5.57
Forecast Revision
Forecast Revision (%)
Net profit (RMm)
Consensus
TA/Consensus (%)
Previous Rating

FY15
nil
1,680
1,712
98
Hold (maintained)

FY16
nil
1,683
1,810
93

Financial Indicators
Net debt/equity (%)
FCPS (sen)
P/FCPS (x)
ROA (%)
NTA/Share (RM)
Price/ NTA (x)
5-year EPS CAGR (%)

FY15
(10.4)
145.5
15.0
11.4
5.7
3.8
4.0

FY16
(14.7)
174.1
12.5
10.9
5.9
3.7
4.8

Scorecard
vs. TA
vs. Consensus

% of FY
115
111

Above
Above

Impact


No change in earnings forecasts pending an Analysts Briefing later today.

Outlook


We expect the FY15 base profit to benefit from full year contribution from
the full commissioning of the KPP. We estimate the power plant to
contribute approximately 4% to net earnings, before taking into account
any effect of tax allowances.

Shara Performance
Price chg (%)
1 mth
3 mths
6 mths
12 mths

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KLCI
3.8
0.2
(2.9)
(1.0)

(12-Mth) Share Price relative to the FBM KLCI

LNG demand from the power sector is expected to remain low, given the
increase in usage of coal and hydro power plants. That said, the impact on
PGas will be partially offset by capacity reservation by Petronas and
storage fees under the Regasification Service Agreement.

Valuation
Maintain Hold with 23.67 TP, based on DCF methodology. The stock is
currently trading at 25.7x FY15 PER, but significant downside will be
cushioned by the stocks attraction as a dividend play.

PETGAS
4.6
3.6
(1.1)
(2.7)

Source: Bloomberg

TA Securities

18-Feb-15

A Member of the TA Group

Sales & Gross Profit Mix


4Q13
665,452
203,614
159,003
1,028,069

3Q14
708,114
264,598
150,781
1,123,493

4Q14
706,894
252,390
152,320
1,111,604

% QoQ
(0.2)
(4.6)
1.0
(1.1)

% YoY
6.2
24.0
(4.2)
8.1

FY13
2,686,704
867,244
338,191
3,892,139

FY14
2,766,937
1,008,559
616,220
4,391,716

% YoY
3.0
16.3
82.2
12.8

350,302
11,274
73,960
435,536

435,693
45,149
74,680
555,522

417,844
47,139
73,913
538,896

(4.1)
4.4
(1.0)
(3.0)

19.3
318.1
(0.1)
23.7

1,653,662
127,726
163,477
1,944,865

1,708,334
195,905
307,979
2,212,218

3.3
53.4
88.4
13.7

52.6
5.5
46.5
42.4

61.5
17.1
49.5
49.4

59.1
18.7
48.5
48.5

(3.9)
9.5
(2.0)

12.3
237.3
4.3

61.5
14.7
48.3
50.0

61.7
19.4
50.0
50.4

0.3
31.9
3.4

Sales RM'000
Gas processing
Gas Transportation
Total

4Q13
361,809
303,643
665,452

3Q14
377,231
330,883
708,114

4Q14
376,325
330,569
706,894

% QoQ
(0.2)
(0.1)
(0.2)

% YoY
4.0
8.9
6.2

FY13
1,497,435
1,189,269
2,686,704

FY14
1,480,247
1,286,690
2,766,937

% YoY
(1.1)
8.2
3.0

Gross Profit
Gas processing
Gas Transportation
Total

144,434
205,868
350,302

177,812
257,881
435,693

171,512
246,332
417,844

(3.5)
(4.5)
(4.1)

18.7
19.7
19.3

751,309
902,353
1,653,662

701,668
1,006,666
1,708,334

(6.6)
11.6

Gross Margin (%)


Gas processing
Gas Transportation

39.9
67.8

47.1
77.9

45.6
74.5

50.2
75.9

47.4
78.2

Sales RM'000
Throughput services sales
Utilities sales
Regasification
Total
Gross Profit
Throughput sales
Utilities
Regasification
Total
Gross Margin (%)
Throughput services
Utilities
Regasification
Total

Note: Throughput services sales is a combination of gas processing and gas transportation.
Source: PDB, TA Research

Earnings Summary (RMmn)


YE 31 Dec
Revenue
EBIT
EBIT Margin%
Pretax profit
Net profit
Core net profit
Core EPS(sen)
EPS Growth
PER (x)
GDPS (sen)
Div Yield
ROE (%)

2012
3,576.8
1,781.2
49.8
1,859.6
1,404.9
1,295.9
65.5
(5.2)
33.3
50.0
2.3
15.3

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2013
3,892.1
1,903.7
48.9
1,896.4
2,078.9
2,137.5
108.0
64.9
20.2
55.0
2.5
20.3

2014
4,391.7
2,142.1
48.8
2,354.5
1,843.2
1,895.2
95.8
(11.3)
22.8
55.0
2.5
17.1

2015E
4,300.6
2,140.5
49.8
2,211.0
1,680.4
1,680.4
84.9
(11.3)
25.7
56.0
2.6
14.8

2016F
4,333.8
2,141.5
49.4
2,214.2
1,682.8
1,682.8
85.0
0.1
25.7
56.0
2.6
14.1

TA Securities

18-Feb-15

A Member of the TA Group

4Q14 Results Analysis


YE 31 Dec
Turnover
Operating profit
Finance costs
Forex & EI
Associate Profit
Pretax
Taxation
MI
Reported Net Profit
Adjusted net profit
Core EPS (sen)
Operating margin
Pretax margin
Net profit margin
Tax rate

4Q13
1,028.1
479.9
(19.2)
(8.0)
18.7
471.4
(77.7)
(0.0)
393.7
401.7
20.3
46.7
45.9
38.3
16.5

3Q14
1,123.5
568.6
(18.7)
(16.0)
15.2
549.2
(130.5)
0.0
418.6
434.7
22.0

4Q14
1,111.6
495.9
(19.6)
(35.5)
242.3
683.2
(113.0)
1.1
571.3
606.8
30.7

50.6
48.9
37.3
23.8

44.6
61.5
51.4
16.5

QOQ%
(1.1)
(12.8)
nm
nm
> 100
24.4
nm
nm
36.5
39.6

YoY %
8.1
3.3
nm
nm
> 100
44.9
nm
nm
45.1
51.0

FY13
3,892.1
1,962.3
(50.1)
(58.6)
42.8
1,896.4
182.5
(0.0)
2,079.0
2,137.5
108.0

FY14
4,391.7
2,194.0
(76.3)
(52.0)
288.7
2,354.5
(512.4)
1.1
1,843.2
1,895.2
95.8

50.4
48.7
53.4
(9.6)

50.0
53.6
42.0
21.8

YoY %
12.8
11.8
52.3
nm
> 100
24.2
nm
nm
(11.3)
(11.3)

Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and
opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts.
We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may
have an interest in the securities and/or companies mentioned herein.
for TA SECURITIES HOLDINGS BERHAD(14948-M)
(A Participating Organisation of Bursa Malaysia Securities Berhad)

Kaladher Govindan Head of Research


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