Gas Malaysia’s dividend yield looking attractive

PETALING JAYA: Gas Malaysia Bhd’s dividend yield of just under 6% appears attractive and is expected to provide some degree of support to its share price as analysts are expecting lower domestic gas prices in tandem with lower crude oil prices this year.

Maybank Investment Bank Research (Maybank IB Research) said the recent gas supply disruption caused by a pipeline accident is unlikely to materially impact the natural gas distributor’s earnings this year.

According to the research house, domestic gas prices lag crude oil prices by six to seven months, and given the year-to-date trajectory of crude oil prices, it expects average domestic gas prices to decline between 7% and 10% year-on-year this year, in line with its assumption of a 9% decline.

“Gas Malaysia’s retail profit is based on an undisclosed percentage of its gas cost and should thus, trend in tandem with domestic gas prices in our view, in the absence of cost adjustments,” the research house noted.

Maybank IB Research added that that Gas Malaysia’s volume recovered last year to register 8.6% growth after two years of decline.