KUALA LUMPUR: Shares in Gas Malaysia Bhd climbed in early trade Tuesday after it reported better-than-expected financial results in the second quarter ended June 30.

       The counter added 1.89%, or five sen to RM2.69 at 9.30am. It is currently trading at a PE ratio of 15.94 times. Year-to-date, it has appreciated 3.4%.

       Gas Malaysia’s net profit in the second quarter ended June 30 (2Q21) surged 40% to RM62.3mil from RM44.6mil a year ago.

       Revenue for the period declined to RM1.38bil from RM1.5bil previously.

       Gas Malaysia has declared an interim dividend of 4.8 sen a share, amounting to RM61.63mil for the financial year ending Dec 31, 2021, payable on Oct 28.

       In the first half to June 30 (1HFY21), Gas Malaysia posted a net profit of RM117.96mil on revenue of RM2.52bil.

       Kenanga Research said Gas Malaysia’s 1HFY21 core profit of RM118.0mil beat expectations on stronger-than-expected margin as opposed to its conservative margin assumption.

       “At 57%/54% of house/street’s FY21 estimates, 1HFY21 core profit of RM118.0mil beat expectations on a 12% sequential hike in 2Q21 core profit to RM62.3mil,” it said.

       It added that the deviation was attributable to its conservative margin spread and retail margin of RM2.10/mmbtu, coupled with lower interest expense.

       “Going forth, we remain optimistic on its earnings resiliency supported by a regulated framework. Outperform reaffirmed at a higher target price of RM3 with attractive yield,” Kenanga said.

       MIDF Research, which has maintained its “buy” call on Gas Malaysia with a target price of RM3.22, said the latter’s robust earnings for 1HFY21 came in above expectation.

       “We made no changes to our earnings estimate at this stage as we are expecting Gas Malaysia to meet our FY21F earnings projection.

       “Higher gas cost would have a positive impact on Gas Malaysia, though volume shortfall could offset it due to the possibility of a slow reopening of borders and lifting of movement restrictions,” it said.

       Nevertheless, MIDF opined that with the current high demand in LNG and tight global supply, gas selling price would continue to grow in the near term, in addition to the gradual liberalisation that will effectively synchronise the local gas market with the international gas market.