MIDF Research is reiterating its buy call on Gas Malaysia Bhd with an unchanged target price of RM2.87, based on earnings clarity, good dividend yield and strong potential upside.
Gas Malaysia will likely adopt the incentive-based regulation (IBR) regime in January 2016, which MIDF believes will provide earnings clarity as the average gas distribution margin would be around RM1.58 per mmbtu.
“Since the IBR is based on a return-on-asset mechanism, Gas Malaysia will be assisted in achieving a certain amount of revenue based on the value of its regulated assets, OPEX (inclusive of gas cost), depreciation and tax incurred for the period. Hence, since its asset base and OPEX will naturally grow in time, it is safe to assume that Gas Malaysia’s revenue will also grow in tandem,” said MIDF on Tuesday.
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Gas Malaysia will likely adopt the incentive-based regulation (IBR) regime in January 2016, which MIDF believes will provide earnings clarity as the average gas distribution margin would be around RM1.58 per mmbtu.
“Since the IBR is based on a return-on-asset mechanism, Gas Malaysia will be assisted in achieving a certain amount of revenue based on the value of its regulated assets, OPEX (inclusive of gas cost), depreciation and tax incurred for the period. Hence, since its asset base and OPEX will naturally grow in time, it is safe to assume that Gas Malaysia’s revenue will also grow in tandem,” said MIDF on Tuesday.
For Free Signals, click here KLSE online OR Give A Missed Call : +60350219047 Follow Us On Twitter : www.twitter.com/epicresearchmy Like Us On Facebook : www.facebook.com/EpicResearchMalaysia Need Any Assistance Feel Free To Mail Us at : info@epicresearch.my
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