Petgas: Top-line & bottom-line dropped q-o-q

Results Update

For QE31/3/2015, Petgas's net profit increased by 8% y-o-y to RM450 million on the back of a 4%-increase in revenue. However, net profit dropped 21% q-o-q on the back of a 1%-decline in revenue.

Revenue dropped q-o-q due to lower gas transportation revenue as a result of lower capacity booking number of calender days. Bottom-line dropped q-o-q due to lower share of profits from JVs as a result of recognition of deferred tax assets by Kimanis Power SBarising from investment tax allowance granted by the Min. of Finance in the preceding quarter.


Table: Petgas's last 8 quarterly results

Looking at Chart 1, we can see that Petgas's top-line & bottom-line has been rising steadily over the past 8-9 years. At the same time, its profit margin has also been on a gradual uptrend.


Chart 1: Petgas's last 35 quarterly results

Valuation

Petgas (closed at RM22.20 yesterday) is now trading at a PE of 23x (based on last 4 quarters' EPS of 95 sen). Its dividend yield is fair attractive at 3.1%. At this PE multiple, Petgas is deemed fairly valued.

Technical Outlook

Petgas broke its intermediate uptrend line, SS at RM22.50 in August. Its found support at the horizontal line of RM21.00.


Chart 2: Petgas's monthly chart as at May 12, 2015 (Source: ShareInvestor.com)   


Chart 3: Petgas's monthly chart as at May 12, 2015 (Source: ShareInvestor.com) 

Conclusion

Based on satisfactory financial performance & reasonable valuation, I would maintain my rating for Petgas a HOLD.

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.