KUALA LUMPUR (July 6): Kenanga Research has maintained its “outperform” rating on Gas Malaysia Bhd at RM2.91 with a higher target price (TP) of RM3.40 (from RM3.10) on the back of 15%-23% upgrade in FY22-FY23 net profit forecasts on higher total margin spread assumption of RM2.60/mmbtu from RM2.50/mmbtu-RM2.40/mmbtu.

In a note on Wednesday (July 6), the research house said it remains optimistic about Gas Malaysia’s earnings prospects given the expected strong earnings for the next three years supported by favourable retail margins arising from the better deal in contract renegotiation.

“With economic reopening, volume growth is back on track which we projected at 3% annually.

“As such, we maintain our 'outperform' rating for its earnings defensiveness and above average dividend yield of more than 7%.

“We believe our previous assumptions were conservative as the strong 1QFY22 margin is to set a new base for the next three years,” it said.