This article first appeared in The Edge Malaysia Weekly on March 23, 2026 - March 29, 2026

INVESTORS betting on Gas Malaysia Bhd (KL:GASMSIA) to benefit from Malaysia’s rising gas demand appear to have made the right call after the group announced it had secured a regasification terminal project from the government.

The win is a positive for Gas Malaysia, whose shares have climbed nearly 25% this year, as it would make it the second RGT operator in the country after Petroliam Nasional Bhd (PETRONAS). 

The floating storage and regasification unit (FSRU) project, with a planned capacity of six million tonnes per annum (mtpa) and capital expenditure (capex) of up to RM3 billion, would expand its business beyond gas pipeline distribution and gas sales (also called gas  shipping).

In a filing to Bursa Malaysia, Gas Malaysia says it received a letter to proceed (LTP) from the Energy Commission, which enables it to progress into detailed engineering and other phases of implementation for the project, which has been proposed in Yan, Kedah.

In a reply to queries from The Edge prior to the announcement, Gas Malaysia says it has “initiated preliminary engagements with potential capacity subscribers and is continuously assessing market interest and support for the project’s potential development”.

The development of additional RGTs — which convert liquefied natural gas (LNG) back into gas for end-users — comes as the country is set to see a sharp rise in LNG demand, driven by new gas-fired power plants, growing industrial needs, and the decline of domestic gas fields.

Peninsular Malaysia has two operational RGTs in Sungai Udang, Melaka, and Pengerang, Johor, operated by Petronas Gas Bhd (KL:PETGAS), which is 51%-owned by Petroliam Nasional Bhd (PETRONAS). The government has already given the national oil company the green light to develop a third RGT, likely in Lumut, Perak.

Currently, the two RGTs generate reve­nue via regasification tariffs regulated by the Energy Commission, with base rates set at RM3.142 per gigajoule per day for RGT Pengerang and RM3.542 for RGT Sungai Udang from 2026 to 2028.

As a yardstick, PetGas posted regasification segment profits of RM607.55 million on revenue of RM1.38 billion. It wholly owns the Sungai Udang RGT (3.8 mtpa) and has a 65% stake in the Pengerang RGT (3.5 mtpa).

Gas Malaysia’s RGT forms part of the Pulau Bunting Integrated Development in Kedah, planned back in 2022 by its 30.93%-shareholder MMC Corp Bhd and SKS Group Sdn Bhd.

Apart from Gas Malaysia’s proposal, the government is said to be looking into another proposal by a consortium led by E&H Energy Sdn Bhd to build an RGT in Kemaman, Terengganu. This is on top of another RGT proposed for Port Klang.

The RGT developments could coincide with the planting up of new gas-fired power plants in the country for start-up as early as 2030.

“The government needs to ensure timely execution. Financial close alone can take about a year, followed by another 20 to 24 months for construction. The Energy Commission and Ministry of Economy are well aware of these timelines,” a gas industry veteran says.

“What may ultimately prompt the government to act with urgency is the outlook for electricity demand.”

The government last published the Peninsular Malaysia Generation Development Plan in 2021.

Adding to Gas Malaysia’s share price rally in March is the surge in global natural gas prices as a result of the Iran conflict, which is expected to have a positive impact on the gas shipper’s bottom line in the coming months.

Apart from earning from regasification tariffs, owning an RGT would also pave the way for Gas Malaysia to sell more gas to customers and earn shipping fees.

The next growth frontier for Gas Malaysia would be power plants — provided gas prices for power plants are fully aligned with market rates.

Currently, gas supplied to the power sector is sold at a discount by PETRONAS. The plan is to liberalise prices by 2028 to encourage imports and ensure sufficient supply, although this will require political will, as it could lead to higher electricity tariffs.

Gas Malaysia’s sister company Malakoff Corp Bhd (KL:MALAKOF) operates in the power sector and is a major gas consumer. Gas Malaysia is 30.93%-owned by MMC Corp Bhd, which also owns 38.45% in Malakoff.

Malakoff is said to be involved in the development of a gas-fired power plant of 1,400mw capacity in Port Dickson, Negeri Sembilan, and another in Segari, Perak. The independent power producer has secured turbines for both projects.

Malakoff also operates a 350mw gas-fuelled power plant in Prai, Pulau Pinang, as well as an 880mw power plant in Kapar, Klang, which can run on gas, oil and coal.

An analyst who covers Gas Malaysia estimates that Malakoff’s gas demand could take up half of Gas Malaysia’s proposed RGT capacity.

For now, even without the power sector as its gas customer, Gas Malaysia is still in for a good run due to the expected increase in the Malaysia Reference Price (MRP) for gas — the price at which local gas sales are quoted — amid the Iran conflict.

Gas Malaysia in its reply to The Edge says: “Any spike in crude oil prices could subsequently be reflected in future MRP.  This impact typically occurs with a lag, as many LNG pricing formulas use multi-month averaging mechanisms.”

In 2025, the company sold 159.6 million gigajoules of gas, down slightly from 161.5 million gigajoules in 2024. All sales were to industrial, commercial and residential customers, giving it a market share of nearly 85%, according to its analyst presentation.

According to UOB Kay Hian, about 40% of Gas Malaysia’s net profit comes from the sale of natural gas. Every 1% change in natural gas price can swing the company’s net profit by 4%, according to the research house’s estimates.

In the financial year ended Dec 31, 2025 (FY2025), Gas Malaysia’s revenue for the sale of natural gas and LPG totalled RM7.17 billion, or 97.7% of the group total of RM7.34 billion. The remaining 2.3% comes from regulated tolling fee for the use of its gas distribution pipeline, amounting to RM167.47 million.

Group net profit fell 13.5% year on year to RM381.7 million in FY2025, or 29.73 sen per share, from a record high of RM441.39 million in FY2024, or 34.38 sen per share,  as revenue fell 8.8% from RM8.04 billion.

So far, Gas Malaysia has declared dividends of 14.5 sen per share for FY2025, down from 15.91 sen for FY2024 for the same period. For the entirety of FY2024, it paid out 26.19 sen per share, from 22.76 sen per share in FY2023.

Its trailing 12-month dividend payout ratio stood at 87%,  with a 4.38% yield, based on its share price of RM5.44 at the time of writing — although its dividend payout ratio may change, since it landed the RGT project and could require more capex.

At end-December, Gas Malaysia had cash equivalents of RM496.62 million against RM635.49 million in bank borrowings, with a net gearing of 0.1 times.

 Its share price of RM5.44 on March 18 translates into a market capitalisation of RM6.99 billion.  The company has two “buy” calls and six “hold” calls among eight analysts covering the stock, with target prices between RM3.90 and RM5.70 for an average target price of RM4.57. 

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