Gas Malaysia Bhd (Gas Malaysia) can expect domestic gas prices to be higher for the first half of 2024, given the trajectory if crude oil price in the second half of 2023, according to Maybank Investment Bank (Maybank IB).
“The group also offers a relatively sustainable dividend yield of 6%,” it said in its research note today (Jan 2).
However, Maybank IB maintains its HOLD call, earnings forecasts and RM3.20 TP, which is DCF-based assuming 8.1% WACC and 2% long-term growth.
In terms of its sustainability score, the research house said its environmental, social and governance (ESG) score is below average.
“(It scores) 28 (out of 100), which makes its ESG rating below the 50 average under our proprietary ESG scoring methodology.
“Gas Malaysia has an established framework and internal policies on sustainability, but no tangible mid or long-term targets,” it said.
Additionally, Maybank IB is in the view that the group’s ESG’s adoption remains relatively nascent at the moment, as the group gas yet to declare its net-zero target or aspiration.
“The company has forayed into carbon mitigation measures such as exploring waste-to-energy solutions such as extracting methane released from Palm Oil Mill Effluent to augment its natural gas supply and generating electricity through more efficient gas-powered combined heat and power systems,” it said.
It added Gas Malaysia can improved in the aspect of governance.
“Despite being tycoon-backed (MMC Corporation Bhd is its largest shareholder with a 31% stake), Gas Malaysia has not engaged in any questionable related-party transactions since relisting.
“While Gas Malaysia sources its gas entirely from Petroliam Nasional Bhd (Petronas), which is the the parent of strategic shareholder Petronas Gas Bhd, there is no preferential treatment of note.
“(Besides that), two independent directors have had tenures of over 10 years, and that there is only one female director on the board,” it said.
