KUALA LUMPUR (Aug 7): Gas Malaysia Bhd (KL:GASMSIA) is back in the limelight as price volatility for Brent crude oil resurfaces, according to Maybank Investment Bank (Maybank IB).

For context, Gas Malaysia is known for being a direct pricing proxy to Brent crude, which in recent days has grown volatile over back-and-forth conflicts in the Middle East since March. 

The natural gas supplier’s gas costs track Brent prices with a lag of approximately eight months.

“...the earnings uplift to Gas Malaysia from the crude oil price rally in March 2026 (when the Middle East unrest began) would manifest in Gas Malaysia’s 4Q2026 financials,” said Maybank IB in a note on Friday. 

The house accordingly predicts gas costs for the second quarter of 2026 (2Q2026) to fall 17% year-on-year (y-o-y) and 3% quarter-on-quarter.

However, it expects average domestic gas prices for 2026 to also drop by 2% y-o-y, with prices bottoming out around 2Q-3Q of 2026.

Maybank IB maintained its ‘hold’ rating on Gas Malaysia's stock and lowered its discounted cash flow-based target price (TP) to RM5.00 from RM5.50 per share on the assumption of lowered gas prices. 

However, the house noted that “further upside is contingent on domestic gas prices staying higher for longer”.

“By our estimates, every US$10 per barrel increase in crude oil price would raise our FY2027 net profit by 9% and our TP by 50 sen per share,” it said.

Meanwhile, Maybank IB predicts an 80% dividend payout ratio for Gas Malaysia's forecasted financial year ending Dec 31, 2026, implying a yield of an estimated 4.5%. 

The group has traditionally maintained a minimum 75% dividend payout policy since its original listing in 2012.

The nine research houses tracking Gas Malaysia on Bloomberg shifted towards a more cautious stance on the stock, with only two holding ‘buy’ calls and none with ‘sell’ ratings. The 12-month average TP is RM5.42 a share.