Gas Malaysia Bhd (GMB)’s quarter one financial year 2023 revenue rose 36.7% year-on-year and 9.7% quarter-on-quarter to RM2.4 billion. This was in line with higher average natural gas selling price in line with global market price, offset by lower volume of natural gas sold in quarter one calendar year 2023, said MIDF Research (MIDF) in a recent report.
Earnings for GMB is up 4% year-on-year. Despite the gain in earnings compared to quarter one financial year 2022, it dropped marginally by 0.1% quarter-on-quarter to RM95.1 million. The major offset to the higher earnings were higher administrative expenses and higher finance cost.
“We maintain a positive view on GMB, as its operations are concentrated on the local front, our economy projection, as well as its leverage on the currently favourable fuel price, will be the main indicator to its future performance,” said MIDF.
With the expectation of Malaysia’s economy to grow 4-5% in calendar year 2023, as well as the increase in domestic demand and improved resiliency in the labour market, MIDF maintains a positive outlook on GMB’s near-term prospects.
Despite the positive view on the domestic midstream segment, in part of the local gas transportation system, inflationary pressures and projected slowdown in the global economy remain a challenge for the average natural gas selling price, which in turn will impact its financial performance in the coming quarters.
Nevertheless, MIDF believes GMB is on the right track, more so with its recently approved capital expenditure for RP2 (2023-2025) project of up to RM800 million.
“We are making no changes to our earnings estimates as we believe GMB performance is on par with our projections,” said MIDF.
