KUALA LUMPUR (July 29): Gas Malaysia Bhd (KL:GASMSIA) may report a weaker second quarter as the boost from the Middle East geopolitical conflict will only come in later, said an analyst.

January-June earnings may decline 10% when compared to the first half of 2025 due to the potentially weak second quarter, due to lower natural gas prices, higher overheads, and marginally lower returns on regulated assets, according to an earnings preview by UOB Kay Hian.

Higher natural gas prices will only be captured in the fourth quarter onwards, suggesting “a strong finish for 2026 and spillover of higher prices into 2027”, UOB Kay Hian said.

Gas Malaysia is due to report its second quarter results in August.

Natural gas sold domestically is set based on the Malaysia Reference Price that benchmarks against the value of exports. There is a lag of about six months between the quarterly reference price and Brent.

Brent, the global benchmark for crude oil, has surged nearly 20% in the first six months of 2026 amid the US-Iran war that has choked off a key global supply flowing through the Strait of Hormuz. Prices of liquefied natural gas in Asia, meanwhile, have surged 67% over the same period.

For now, the house is keeping its ‘hold’ call on Gas Malaysia with a target price of RM6.00. Shares of Gas Malaysia are off its all-time high in April at the height of the Iran war fears, but are still up nearly 25% year to date.

Natural gas prices, per metric million British thermal unit, will jump to as high as RM50 in the fourth quarter from RM34 in the first nine months of 2026, according to UOB Kay Hian’s estimates.

High Brent prices between March and July will translate into higher natural gas prices for Gas Malaysia from September onwards, the research house said. However, if high oil prices stretch longer than six months, the company could see a boost in 2027 as well, UOB Kay Hian noted.