Company Coverage
Gas Malaysia (GMB MK): Near-Term Earnings Weakness Due To Timing Of NG Prices
HOLD (Maintained)
Current price:
Target price:
Upside:
RM5.25
RM6.00
14.3%
Analyst
Highlights
- We expect 1H26 net profit to fall 10% yoy against potentially weak 2Q26 results. This is due to: a) lower NG prices in 2Q26, b) higher staff and administrative costs, and c) marginally lower returns on regulated assets.
- The sharp spike in global oil prices due to the Middle East tension will lead to higher NG prices from 4Q26 onwards. This suggests a strong finish for 2026
and spillover of higher NG prices into 2027.
- We trim 2026 net profit by 7% to pencil in higher staff and administrative costs. Earnings growth will resume in 2027 amid high NG prices. Maintain HOLD with a fair value of RM6.00. In arriving at our fair value, we have factored in a blue-sky scenario of RM0.58/share equity enhancement for GMB’s RGT
project in Yan.
Analysis
- A weaker 1H26 vs 1H25, due to higher expenses and lower returns. We expect 1H26 earnings to decline 10% yoy, reflecting a weak 2Q26 net profit of RM85m-87m (-6% qoq; -12% yoy). This is against a backdrop of: a) lower natural gas (NG) prices in 2Q26, b) higher staff and administrative costs, and c) marginally lower returns on regulated assets. 1H26 NG volume continued to expand 2-4% yoy; likely on the back of higher utilisation in the glove segment.
- High NG prices to be captured from 4Q26 onwards. We estimate that 4Q26 NG prices will jump to RM45-50/mmbtu vs the estimated 9M26 NG prices of RM34/mmbtu. To recap, there is a six-month time lag between oil prices and NG prices to be realised by Gas Malaysia (GMB). Assuming the conflict leads to prolonged high oil prices (>6 months), GMB stands to benefit as higher NG prices could translate into growing profitability in 2027. The high Brent prices (Mar-Jul 26) will translate into higher NG prices for GMB from Sep 26
onwards. GMES shipper to see higher profitability in 2027. GMB derives 50-60% of group net profit from Gas Malaysia Energy and Services (GMES) – a division in GMB that supplies NG to 1,013 industrial customers. Higher NG prices therefore translate into higher profitability for GMES, as NG is sold at cost plus a profit margin (% of NG prices). A 1% change in NG prices can swing GMB’s net profit by 4%, we estimate.
Highlights
- We expect 1H26 net profit to fall 10% yoy against potentially weak 2Q26 results. This is due to: a) lower NG prices in 2Q26, b) higher staff and administrative costs, and c) marginally lower returns on regulated assets.
- The sharp spike in global oil prices due to the Middle East tension will lead to higher NG prices from 4Q26 onwards. This suggests a strong finish for 2026
and spillover of higher NG prices into 2027.
- We trim 2026 net profit by 7% to pencil in higher staff and administrative costs. Earnings growth will resume in 2027 amid high NG prices. Maintain HOLD with a fair value of RM6.00. In arriving at our fair value, we have factored in a blue-sky scenario of RM0.58/share equity enhancement for GMB’s RGT
project in Yan.
Analysis
- A weaker 1H26 vs 1H25, due to higher expenses and lower returns. We expect 1H26 earnings to decline 10% yoy, reflecting a weak 2Q26 net profit of RM85m-87m (-6% qoq; -12% yoy). This is against a backdrop of: a) lower natural gas (NG) prices in 2Q26, b) higher staff and administrative costs, and c) marginally lower returns on regulated assets. 1H26 NG volume continued to expand 2-4% yoy; likely on the back of higher utilisation in the glove segment.
- High NG prices to be captured from 4Q26 onwards. We estimate that 4Q26 NG prices will jump to RM45-50/mmbtu vs the estimated 9M26 NG prices of RM34/mmbtu. To recap, there is a six-month time lag between oil prices and NG prices to be realised by Gas Malaysia (GMB). Assuming the conflict leads to prolonged high oil prices (>6 months), GMB stands to benefit as higher NG prices could translate into growing profitability in 2027. The high Brent prices (Mar-Jul 26) will translate into higher NG prices for GMB from Sep 26
onwards. GMES shipper to see higher profitability in 2027. GMB derives 50-60% of group net profit from Gas Malaysia Energy and Services (GMES) – a division in GMB that supplies NG to 1,013 industrial customers. Higher NG prices therefore translate into higher profitability for GMES, as NG is sold at cost plus a profit margin (% of NG prices). A 1% change in NG prices can swing GMB’s net profit by 4%, we estimate.
HOLD (Maintained)
Current price:
Target price:
Upside:
RM5.25
RM6.00
14.3%
Analyst
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