Petgas: Bottom-line inched up due to higher top-line

Results Update

For QE30/6/2014, Petgas's net profit increased by 4% q-o-q but dropped by 54% y-o-y to RM435 million while its revenue declined by 5% both q-o-q & 18% y-o-y to RM1.102 billion. The sharp drop in net profit y-o-y was due to recognition of deferred tax assets arising from investment tax allowance granted for Regasification Terminal amounting to RM 592 million in QE30/6/2013.

Compared to the immediate preceding quarter (QE31/3/2014), Revenue increased by RM48 million to RM1.102 billion mainly driven by higher gas transportation & gas processing revenue from new Gas Processing Agreement & Gas Transportation Agreement. PBT rose by RM36 million primarily due to higher revenue but partially offset by higher other operating expenses.


Table: Petgas's last 8 quarterly results


Chart 1: Petgas's last 32 quarterly results

Valuation

Petgas (closed at RM22.20 last Friday) is now trading at a PE of 27x (based on last 4 qusrters' EPS of 82 sen). At this PE multiple, Petgas is deemed fully valued.

Technical Outlook

Petgas is still in a steady uptrend (see Chart 2). A closer look at the daily chart (Chart 3) will revealed that the long-term uptrend line has been violated. Petgas did not stage a quick rebound as it did in August 2013. Technically speaking, Petgas's outlook is now mildly bearish.
 

Chart 2: Petgas's weekly chart as at August 8, 2014 (Source: Tradesignum) 


Chart 3: Petgas's daily chart as at August 8, 2014 (Source: Tradesignum) 

Conclusion

Despite the good financial performance, Petgas is rated a HOLD due to its expensive valuation & its mildly negative technical outlook.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Petgas.