KUALA LUMPUR: AmInvestment Researchupgraded Petronas Gas (PGas) to a Buy from Hold with a higher sum-of -parts-based (SOP) fair value of RM21.30 a share from RM17.80 earlier.
It said on Friday at the new TP, this implies an FY20F PE of 20 times. This stems from lowering the group’s gas processing and transportation WACC to 7% from 8%, with the market return lowered from 10% to 8% and risk-free rate from 3% to 2.6%.
“We maintain our earnings forecasts as the group’s 1HFY20 core net profit of RM1.047bil (excluding unrealised forex loss of RM131mil mainly from the Sungai Udang regasification terminal’s (RGT) which was US$ debt) was in line with our expectations, accounting for 50% of our FY20F earnings.
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