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Thursday, August 18, 2011

PETGAS - In line, maintain OUTPERFORM (CIMB)

PGas’s 1Q11 earnings accounted for 27% of our and consensus estimates, which is broadly in line as we expect slightly weaker results in the quarters ahead due to lower utility revenues. As expected, no dividends were declared for 1Q11 (quarter ending Jun 11 due to change in fiscal year-end from Mar to Dec). 1Q EBIT margins surged 17.4% pts qoq to 49% due to higher utility (+7% qoq) and processing (+3% qoq) revenues and better cost management. This led to a 45% qoq qoq jump in net profit. After generating RM552m net operating cash flow in 1Q, PGas now sits on RM2.5bn net cash. We make no changes to our forecasts or our SOP target of RM16.13. We continue to rate PGas an OUTPERFORM as it could be catalysed by its safe-haven status, new revenue streams and higher utilisation rates.

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