Petronas Gas Bhd ('Petgas') Petgas is involved in the gas business value chain, providing gas processing and transmission services to PETRONAS through two of its divisions. The Plant Operations Division (POD) handles all activities pertaining to the processing of feed gas whilst the Transmission Operations Division (TOD) is responsible for the transmission and delivery of sales gas to end customers throughout the peninsula. It also delivers sales gas to customers in East Malaysia through a 45km pipeline in Sarawak. In addition to the throughput services business, it has also diversified into manufacturing, supplying and marketing of industrial utility products to the Kertih Integrated Petrochemical Complex and Gebeng Industrial Area through our Centralized Utility Facilities (CUF) Division.
Recent Development
Petgas appears to be benefiting from a new Gas Processing & Transmission Agreement ('GATP') starting from 1 April 2010 to 31 March 2014. To be frank, I can't see the difference between the previous agreement (here) and the new one (here). However, I believe it has a very positive effect on Petgas's last quarter results where the turnover was marginally higher but the profit margin spiked up substantially. See Chart 1 below.
Chart 1: Patgas's profit margin for the last 16 quarterly results
Recent Financial Results
For QE30/6/2010, Petgas's net profit increased by 90% q-o-q or 42% y-o-y to RM383 million while turnover increased by 9% q-o-q or 11% y-o-y to RM873 million.
Table: Petgas's 8 quarterly results
Chart 2: Petgas's last 16 quarterly results
Valuation
Petgas (closed at RM10.40 last Friday) is now trading at a current PER of 13.4 times (based on annualized EPS of 77.4 sen). Assuming a PER of 15 times, Petgas should have a fair value of RM11.61. It dividend yield is reasonable at 4.8%.
Technical Outlook
Petgas is in an uptrend line with support at RM9.70-9.80. Its next horizontal resistance is RM10.50 & then RM12.00.
Chart 3: Petgas's monthly chart as at Aug 22, 2010_log scale (Source: Tradesignum)
Conclusion
Based on improved financial performance, attractive valuation & positive technical outlook, Petgas could be a good stock for long-term investment.
16 comments:
Recently we saw CCB's share price shoot up because of expectation of a high dividend payout. However, things did not happened and its share price dwindled. Is it safe to go in now since its price has gone below RM5/=. What is its fair value, support and resistance?
Thanks Alex.
hi Alex,
how do you see scomimr? is the support at 0.47 solid? it is still in sideway rite?
Alex,
Although i had read your blogs for few times, due to the recommendation of a friend, i found your comments is too technically, mean u describe most of the counters based on technical point of view.
When u raise a particular counter attention, i am afraid most of the times, it is too late. You only state the counter that had fly high after some announcements.
Honestly, i dont think your blogs or comments makes much differences to many other investors like me which hope to get first class news and tips.
thanks
Hello,
After reading the comment post by nmb, I must say it is just impossible to get first class news and tips unless there is insider. There is also no point to introduce those good counters with little trading volume and they barely move. Nevertheless if one is looking for good dividend yield on those counters that is another story.
As far as I am concern, I would like to use both technical reading and fundamental information to form the basis of stock selection. If there are people out there like MR. Alex to do some filter and study for us, why not?
Jimmy
Hi,
nmb said no one should say a word unless it is a first class news and tips which is not wrong to him.
"should we not just go on leading a life of letting others decide what really matter to us" ? Friends, No excuses.
nmb : Don't worry, don't be afraid of Mr.Alex and Readers joining this blog. They are absolutely alright. It is a room not only Q&A, it is more than that.
Thanks for your concern.
AL
Dear All,
Just want to verify that, i am still supporting every fact, analysis, and comment from Mr. Alex. I DID NOT againts Mr. Alex at all mean.
My experiences all these years with few remisers is, they just care about their commission, and giving their customers low grade services such as advices etc.
When i said, Mr. Alex raised a particular counter attention, it is always too late, as the counter had just shoot up, or it had been high few days back. so, why should we chase high ?
I just wish that from the convenience of Internet, we can share some good news, analysis, or even insider tips (if we lucky), prior to the surge of a particular counters.
Finally, the conclusion is very simple, we want every traders to make profit from KLSE.
By the way, good job to Mr. Alex, and i hope improvements will be achieved.
Thanks all.
Hi Ahmad Rozian
CCB rose steadily on thin volume & made a top on July 20 (with high recorded of RM7.93). On July 23, the share gap down and it has been drifting lower ever since. That's a V-shape reversal- an uncommon form of reversal where all & sundry are caught off-guard.
This however may become a more common recurrence in the market going forward. There are many stocks that are rising on extremely thin volume. They managed to do that because of complacency in the market. People asked why sell now when these stocks can go even higher tomorrow. This reminds me of the Second Board rally of 1996. The main difference is the rally today is much more selective.
Coming back to CCB. At RM4.95, it is trading at a PER of 20 times (based on 1H2010 EPS of 12.54 sen). Some may say that CCB has many properties & these assets are undervalued. This may be true in the past but not today. All companies are now required to comply with fair value accounting standard, whereby all assets have to be stated at market value. Based on the above PER multiple of 20 times, I think CCB is fully valued.
Hi Bond
Scomimr is now testing the support at 0.47. The stronger support is at RM0.44.
Hopefully, it would put in a rebound soon. Its immediate resistance is at RM0.50.
Hi Alex,
As I see it,you have done a very professional and investment educating work.keep that up.
I really look forward to seeing your write-ups everyday.In fact,I have been checking for your comments every morning,afternoon and at night for your updates.I personally find your research,technical analysis and charts most investment research-friendly.
Your recent alert comments on the Hindenburg Omen and the technical analysis of various stocks and their break-out patterns have been eye-opener of impending global outlook/risks and stock movements.
Can you comment the Genting HK share ? Would like to buy when it drop.
Dear Alex,
Current market's "index up up everyday but losers overtakes gainers in big times" situation really makes me uncomfortable. I'd like to hear what do you think. Do you think index will continue to move up as what OSK predicts? Will other smaller cap counters have a chance to follow the rally at all?
Thank you!
Hi David Chan
Based on the chart of Genting HK (as per its price data from the HKEX), the stock broke above its long-term downtrend line at HK$1.50 in mid-August. It rose & tested its horizontal resistance at HK$2.20 before consolidating. If you want to buy, you may try to get in at the horizontal & psychological support of HK$2.00.
The above comment is based on technical analysis only. Genting HK is also listed on SGX, where it trades at a slightly higher price than the same stock on HKEX. For example, the stock closed yesterday at USD0.29 on SGX but at HK$2.20 (equivalent to USD0.2829) on HKEX.
Hi steve
I understand how you feel. The extremely narrow market- with blue chips making new high and second & third-liners going lower- is not a good sign. Some of these stocks are moving with volume but the majority are going higher or lower without any volume. At times, their buy & sell quotes are quite far apart. If one takes the view that bulls & bears are combatants, then the current market is a battlefield where some of the combatants have retreated. When they come back & rejoin the battle, the outcome will be determined. After a long successful rally, can the bulls continue to take the offense? After a long hibernation, can the bears seize the initiative? This is truly the mother of all battle!
For Alex, for me your comment and analysis are very benefits especially for newbies like me. I had read this blogs almost every day contributes to my knowledge.
Keep it up Alex, may good bless u and your family.
Thanks for the advise, Alex....
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