Refer to important disclosures at the end of this report ed: JS / sa: BC

HOLDHOLDHOLDHOLD Last Traded PriceLast Traded PriceLast Traded PriceLast Traded Price (((( 23 Feb 201723 Feb 201723 Feb 201723 Feb 2017)))): : : : RM20.58 (KLCIKLCIKLCIKLCI : : : : 1,704.48) Price Target Price Target Price Target Price Target 12121212----mthmthmthmth:::: RM21.00 (2% upside) (Prev RM21.50) Shariah Compliant:Shariah Compliant:Shariah Compliant:Shariah Compliant: Yes

Where we differWhere we differWhere we differWhere we differ:::: Slightly lower earnings growth Analyst QUAH He Wei, CFA +603 2604 3966 hewei@alliancedbs.com

What’s New • 4Q16 results met expectations

• Declared 4th interim DPS of 19 sen

• Cut FY17-18F earnings by 4%/3% on weaker

margins

• Maintain HOLD but revise TP to RM21.00

Price Relative

Forecasts and Valuation FY FY FY FY DecDecDecDec ((((RMRMRMRM m) m) m) m) 2015201520152015AAAA 2016201620162016AAAA 2017201720172017FFFF 2018201820182018FFFF

Revenue 4,456 4,561 4,673 5,411 EBITDA 2,662 3,086 3,166 3,651 Pre-tax Profit 2,002 2,107 2,197 2,550 Net Profit 1,987 1,739 1,715 1,905 Net Pft (Pre Ex.) 1,781 1,747 1,715 1,905 Net Pft Gth (Pre-ex) (%) 2.9 (1.9) (1.8) 11.1 EPS (sen) 100 87.9 86.7 96.3 EPS Pre Ex. (sen) 90.0 88.3 86.7 96.3 EPS Gth Pre Ex (%) 3 (2) (2) 11 Diluted EPS (sen) 100 87.9 86.7 96.3 Net DPS (sen) 60.0 62.0 60.0 70.0 BV Per Share (sen) 578 605 637 664 PE (X) 20.5 23.4 23.7 21.4 PE Pre Ex. (X) 22.9 23.3 23.7 21.4 P/Cash Flow (X) 14.3 14.7 14.2 13.7 EV/EBITDA (X) 15.3 13.4 13.1 11.5 Net Div Yield (%) 2.9 3.0 2.9 3.4 P/Book Value (X) 3.6 3.4 3.2 3.1 Net Debt/Equity (X) CASH 0.0 0.0 0.1 ROAE (%) 18.1 14.9 14.0 14.8 Earnings Rev (%):Earnings Rev (%):Earnings Rev (%):Earnings Rev (%): (4) (3) Consensus EPS Consensus EPS Consensus EPS Consensus EPS (sensensensen):::: 88.3 90.5 97.9 Other Broker Recs:Other Broker Recs:Other Broker Recs:Other Broker Recs: B: 1 S: 4 H: 8

Source of all data on this page: Company, AllianceDBS, Bloomberg Finance L.P

No catalysts in sight Subdued growth outlook, maintain HOLDSubdued growth outlook, maintain HOLDSubdued growth outlook, maintain HOLDSubdued growth outlook, maintain HOLD. Petronas Gas (PTG)’s earnings prospects are likely to remain tepid in view of the potentially weaker gas demand outlook. Given that ~90% of PTG’s earnings is derived from its gas processing, transportation and regasification businesses, potentially weaker gas consumption does not bode well for its earnings growth although its income stream remains resilient, underpinned by long-term agreements with PETRONAS. Lower gas consumption with higher prices?Lower gas consumption with higher prices?Lower gas consumption with higher prices?Lower gas consumption with higher prices? The ongoing gas subsidy rationalisation is set to raise our local piped gas prices by RM1.50/mmbtu every six months to converge with market prices. While PTG does not bear any fuel and pricing risk given its role as an intermediary, a higher gas price may lead to lesser consumption by end users, which will in turn dampen the long-term outlook for PTG. Also, more coal-fired power plants are expected to come onstream progressively over the next few years, suggesting less incremental gas volume to be processed and transported by PTG. Pengerang rePengerang rePengerang rePengerang re----gas terminal commissioning in FY18.gas terminal commissioning in FY18.gas terminal commissioning in FY18.gas terminal commissioning in FY18. The RM2.7bn Pengerang regasification terminal (65% stake) with annual capacity of 3.5m metric tonnes (MT) is expected to be operational by 2018, implying muted earnings growth in the near term.

Valuation:

We cut our DCF-derived TP to RM21.00 (7% WACC, 2%

terminal growth) after incorporating our earnings revision.

Given PTG’s subdued growth prospects, there is limited share

price upside potential, though we continue to like the

company for its defensive earnings, solid balance sheet and

strong parentage.

Key Risks to Our View:

Asset breakdownsAsset breakdownsAsset breakdownsAsset breakdowns. Operational disruptions of its asset will

negatively affect its earnings.

At A Glance Issued Capital (m shrs) 1,979

Mkt. Cap (RMm/US$m) 40,722 / 9,144

Major Shareholders (%)

Petroliam Nasional Berhad 60.7

Employees Provident Fund 13.4

Kumpulan Wang Persaraan 11.9

Free Float (%) 14.0

3m Avg. Daily Val (US$m) 6.9

ICB IndustryICB IndustryICB IndustryICB Industry : Oil & Gas / Oil & Gas Producers

Malaysia Equity ResearchMalaysia Equity ResearchMalaysia Equity ResearchMalaysia Equity Research 24 Feb 2017

Company Guide

Petronas Gas Version 6 | Bloomberg: PTG MK | Reuters: PGAS.KL Refer to important disclosures at the end of this report

Page 2

Company Guide

Petronas Gas

WHAT’S NEW

Weak margins

4Q16 met e4Q16 met e4Q16 met e4Q16 met expectations:xpectations:xpectations:xpectations: Excluding RM9.1m unrealised forex

loss, 4Q16 core profit came in at RM474m (+12% q-o-q,

+24% y-o-y). . . . This takes FY16 core earnings to RM1.75bn (-

2% y-o-y) which comprises 101% of our FY16 full-year

forecast.

However, 4Q16 earnings was largely boosted by low tax

expense arising from over provision in prior years. On a pretax

profit basis, 4Q16 pretax profit would have dipped 11% q-o-

q and 1% y-o-y. PTG’s business continues to be affected by

high operating costs (repair, maintenance and depreciation)

across its key business divisions.

Steady businessSteady businessSteady businessSteady business: : : : Nevertheless, 4Q16 revenue was steady at

RM1.15bn (flat q-o-q, +2% y-o-y), underpinned by its long-

term agreements with PETRONAS for its gas processing, gas

transportation and regasification businesses which collectively

contributed 75% of 4Q16 revenue.

Higher Higher Higher Higher operating costoperating costoperating costoperating cost. . . . Despite the resilient nature of its

business, PTG’s 4Q16 results experienced higher operating

costs due to higher repair and maintenance expenses as well

as higher depreciation cost. Therefore, 4Q16 gross margin

came in at 42%, compared to 45% in 3Q16.

Consistent dividend payout.Consistent dividend payout.Consistent dividend payout.Consistent dividend payout. PTG declared a fourth interim

DPS of 19 sen in 4Q16, taking FY16 DPS to 62 sen. This

implies 71% payout. Its balance sheet remains healthy with

RM1.76bn cash pile, representing 89 sen cash/share. This

compares against its borrowings of RM2.25bn, of which 52%

is due to finance lease liabilities for its two floating storage

units in Melaka.

Cut FY1Cut FY1Cut FY1Cut FY17777----18F earnings by 18F earnings by 18F earnings by 18F earnings by 4444%/%/%/%/3333%.%.%.%. We nudge down our

FY17-18F earnings forecasts after imputing higher operating

expenses which resulted in weaker margins. Consequently,

our DCF-derived TP is revised to RM21.00. We reiterate our

HOLD recommendation in view of the lack of catalysts in the

near to medium term.

Quarterly / Interim Income Statement (RMm)

FY FY FY FY DecDecDecDec 4Q4Q4Q4Q2015201520152015 3Q3Q3Q3Q2016201620162016 4Q4Q4Q4Q2016201620162016 % chg yoy % chg yoy % chg yoy % chg yoy % chg qoq% chg qoq% chg qoq% chg qoq

Revenue 1,137 1,158 1,154 1.5 (0.3)

Cost of Goods Sold (706) (635) (672) (4.8) 5.9

Gross ProfitGross ProfitGross ProfitGross Profit 431431431431 523523523523 482482482482 11.811.811.811.8 (7.9)(7.9)(7.9)(7.9)

Other Oper. (Exp)/Inc 25.8 20.6 27.3 5.8 32.6

Operating ProfitOperating ProfitOperating ProfitOperating Profit 457457457457 544544544544 509509509509 11.411.411.411.4 (6.4)(6.4)(6.4)(6.4)

Other Non Opg (Exp)/Inc 0.0 0.0 0.0 nm nm

Associates & JV Inc 24.6 26.4 9.35 (62.0) (64.6)

Net Interest (Exp)/Inc (24.3) (22.3) (25.6) (5.5) (15.0)

Exceptional Gain/(Loss) 31.0 (1.7) (9.1) nm (451.9)

PrePrePrePre----tax Profittax Profittax Profittax Profit 488488488488 546546546546 484484484484 (0.9)(0.9)(0.9)(0.9) (11.4)(11.4)(11.4)(11.4)

Tax (77.3) (124) (20.5) (73.4) (83.5)

Minority Interest 3.55 0.59 1.80 (49.5) 203.4

Net ProfitNet ProfitNet ProfitNet Profit 415415415415 423423423423 465465465465 12.212.212.212.2 10.010.010.010.0

Net profit bef Except. 384 424 474 23.6 11.7

EBITDA 685 802 748 9.1 (6.7)

Margins (%)

Gross Margins 37.9 45.2 41.8

Opg Profit Margins 40.2 47.0 44.1

Net Profit Margins 36.5 36.5 40.3

Source of all data: Company, AllianceDBS

Page 3

Company Guide

Petronas Gas

CRITICAL DATA POINTS TO WATCH

Earnings Drivers:

LongLongLongLong----term earnings visibilityterm earnings visibilityterm earnings visibilityterm earnings visibility. PTG’s 20-year agreement with

PETRONAS for the Gas Processing Agreement and Gas

Transportation Agreement will last until 2033. There will be a

revision every five years on the terms and this usually results in

an upward revision. There is also a 20-year regasification

agreement with PETRONAS regarding its regas terminal in

Sungai Udang. Essentially, PTG is a gas infrastructure company

which is remunerated based on its availability and operational

efficiency. The fee structure provides a relatively stable recurring

income base to the group, thanks to its enviable monopoly in

gas processing and gas transportation.

Higher gas consumption is critical for earnings growth.Higher gas consumption is critical for earnings growth.Higher gas consumption is critical for earnings growth.Higher gas consumption is critical for earnings growth. While

the rates have been fixed, PTG could benefit from higher gas

consumption. However, the relatively weaker economic outlook

in Malaysia may translate into poorer gas volume for its

processing and transportation arm. While PTG does not bear

any fuel and pricing risk given its role as an intermediary, higher

gas price due to the government’s subsidy rationalisation may

lead to lesser consumption by end users, which will in turn

dampen the long-term outlook for PTG. Also, more coal-fired

power plants are expected to come onstream over the next few

years, suggesting less incremental gas volume to be processed

and transported by PTG.

All eyes on Pengerang regasification terminalAll eyes on Pengerang regasification terminalAll eyes on Pengerang regasification terminalAll eyes on Pengerang regasification terminal. The RM2.7bn

Pengerang regasification terminal (65% stake) with 3.5m MT

annual capacity is expected to be operational by 2018. It will

mainly supply to PETRONAS’s Pengerang Integrated Complex,

though 10% of the gas will be supplied to the PGU pipeline.

Therefore, there may be limited earnings growth prospects in

the near term.

Leveraging expertise in utilitiesLeveraging expertise in utilitiesLeveraging expertise in utilitiesLeveraging expertise in utilities. PTG’s utility plants in Kertih and

Gebeng have been supplying power, steam and industrial gases

to various petrochemical plants in the two areas since 1998. Its

60%-owned 300-MW Kimanis power plant has been fully

operational since 4Q14. Given its track record, PTG could have a

more active role in the Pengerang petrochemical hub, apart

from the regasification terminal which is under construction.

Feedgas processed (mmscfd)

Sales gas transported (mmscfd)

Gas processing margin (%)

Gas transportation margin (%)

Source: Company, AllianceDBS

Page 4

Company Guide

Petronas Gas

Balance Sheet:

Cash flow generation has always been strong, given its business

model, resulting in a net cash position. While capex

requirements may stay high over the next two years due to the

construction of the Pengerang regas terminal, PTG is expected

to maintain its net cash position.

Share Price Drivers:

Earnings growthEarnings growthEarnings growthEarnings growth. We believe gradual but steady earnings

growth will drive PTG’s share price performance. As PTG's

earnings will not be affected by gas price volatility as it charges

a fixed fee based on the volume that passes through its PGU

pipeline and regas terminals, strong gas demand is critical for its

earnings growth.

HigherHigherHigherHigher----thanthanthanthan----expected dividend payoutexpected dividend payoutexpected dividend payoutexpected dividend payout. While PTG has been

paying regular dividends, its yield of ~2.9% is not attractive.

Nevertheless, PTG has the capacity to raise its dividend payout

given the strong cash flow generation. We have assumed ~70%

payout, though it used to pay above 75% in the past.

Key Risks:

Changes to subsidised gas cost in Malaysia Changes to subsidised gas cost in Malaysia Changes to subsidised gas cost in Malaysia Changes to subsidised gas cost in Malaysia

PTG's earnings will not be affected by changes to gas pricing,

but an increase in subsidised gas price may dampen gas

consumption growth.

Delays in construction of new regas and power plants Delays in construction of new regas and power plants Delays in construction of new regas and power plants Delays in construction of new regas and power plants

Later-than-expected commissioning of new plants will affect

PTG’s growth prospects.

Company Background

The gas-processing and transmission arm of PETRONAS which

processes PETRONAS’ natural gas piped from offshore fields via

six gas processing plants in Terengganu and then transports

the processed gas via Peninsular Gas Utilisation (PGU) pipeline

network to PETRONAS’ customers in Malaysia and Singapore.

It also has a regasification terminal in Sungai Udang, Melaka

which was commissioned in 2013.

Leverage & Asset Turnover (x)

Capital Expenditure

ROE (%)

Forward PE Band (x)

PB Band (x)

Source: Company, AllianceDBS

Page 5

Company Guide

Petronas Gas

Key Assumptions

FY FY FY FY DecDecDecDec 2014201420142014AAAA 2015201520152015AAAA 2016201620162016AAAA 2017201720172017FFFF 2018201820182018FFFF

Feedgas processed (mmscfd) 2,011 2,046 2,087 2,129 2,172

Sales gas transported (mmscfd) 2,322 2,425 2,476 2,527 2,580

Gas processing margin (%) 47.4 45.8 41.6 42.0 42.8

Gas transportation margin (%) 78.2 76.8 74.8 75.0 75.2

Segmental Breakdown

FY FY FY FY DecDecDecDec 2014201420142014AAAA 2015201520152015AAAA 2016201620162016AAAA 2017201720172017FFFF 2018201820182018FFFF Revenues (RMm)

Gas processing 1,480 1,534 1,557 1,523 1,527

Gas transportation 1,287 1,312 1,304 1,384 1,418

Utilities 1,009 974 1,069 1,123 1,179

Regasification 616 637 631 644 1,288

TotalTotalTotalTotal 4,3924,3924,3924,392 4,4564,4564,4564,456 4,5614,5614,5614,561 4,6734,6734,6734,673 5,4115,4115,4115,411

Gross Profit (RMm) Gas processing 702 702 648 640 654

Gas transportation 1,007 1,007 975 1,038 1,065

Utilities 196 196 156 193 204

Regasification 308 308 286 309 618

TotalTotalTotalTotal 2,2122,2122,2122,212 2,2122,2122,2122,212 2,0662,0662,0662,066 2,1792,1792,1792,179 2,5422,5422,5422,542

Gross Profit Margins (%) Gas processing 47.4 45.8 41.6 42.0 42.8

Gas transportation 78.2 76.8 74.8 75.0 75.2

Utilities 19.4 20.1 14.6 17.2 17.3

Regasification 50.0 48.3 45.4 48.0 48.0

TotalTotalTotalTotal 50.450.450.450.4 49.649.649.649.6 45.345.345.345.3 46.646.646.646.6 47.047.047.047.0

Income Statement (RMm)

FY FY FY FY DecDecDecDec 2014201420142014AAAA 2015201520152015AAAA 2016201620162016AAAA 2017201720172017FFFF 2018201820182018FFFF Revenue 4,392 4,456 4,561 4,673 5,411

Cost of Goods Sold (2,180) (2,317) (2,495) (2,494) (2,869)

Gross ProfitGross ProfitGross ProfitGross Profit 2,2122,2122,2122,212 2,1392,1392,1392,139 2,0662,0662,0662,066 2,1792,1792,1792,179 2,5422,5422,5422,542

Other Opng (Exp)/Inc (28.9) (329) 79.0 75.9 63.2

Operating ProfitOperating ProfitOperating ProfitOperating Profit 2,1832,1832,1832,183 1,8101,8101,8101,810 2,1452,1452,1452,145 2,2552,2552,2552,255 2,6052,6052,6052,605 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0

Associates & JV Inc 134 75.2 63.6 70.0 72.2

Net Interest (Exp)/Inc (76.3) (90.1) (93.9) (128) (128)

Exceptional Gain/(Loss) 113 207 (7.8) 0.0 0.0

PrePrePrePre----tax Profittax Profittax Profittax Profit 2,3542,3542,3542,354 2,0022,0022,0022,002 2,1072,1072,1072,107 2,1972,1972,1972,197 2,5502,5502,5502,550 Tax (512) (16.2) (370) (483) (561)

Minority Interest 1.11 1.58 2.75 1.00 (84.0)

Preference Dividend 0.0 0.0 0.0 0.0 0.0

Net ProfitNet ProfitNet ProfitNet Profit 1,8431,8431,8431,843 1,9871,9871,9871,987 1,7391,7391,7391,739 1,7151,7151,7151,715 1,9051,9051,9051,905 Net Profit before Except. 1,730 1,781 1,747 1,715 1,905

EBITDA 3,105 2,662 3,086 3,166 3,651

Growth

Revenue Gth (%) 12.8 1.5 2.4 2.5 15.8

EBITDA Gth (%) 16.3 (14.3) 15.9 2.6 15.3

Opg Profit Gth (%) 14.7 (17.1) 18.5 5.1 15.5

Net Profit Gth (Pre-ex) (%) 19.1 2.9 (1.9) (1.8) 11.1

Margins & Ratio

Gross Margins (%) 50.4 48.0 45.3 46.6 47.0

Opg Profit Margin (%) 49.7 40.6 47.0 48.3 48.1

Net Profit Margin (%) 42.0 44.6 38.1 36.7 35.2

ROAE (%) 17.7 18.1 14.9 14.0 14.8

ROA (%) 13.9 14.4 11.2 10.1 10.6

ROCE (%) 13.9 13.8 12.1 11.1 12.3

Div Payout Ratio (%) 59.0 59.7 70.5 69.2 72.7

Net Interest Cover (x) 28.6 20.1 22.8 17.6 20.4

Source: Company, AllianceDBS

Assuming steady growth

Assume contribution from Pengerang regas terminal in FY18

Page 6

Company Guide

Petronas Gas

Quarterly / Interim Income Statement (RMm)

FY FY FY FY DecDecDecDec 4Q4Q4Q4Q2015201520152015 1Q1Q1Q1Q2016201620162016 2Q2Q2Q2Q2016201620162016 3Q3Q3Q3Q2016201620162016 4Q4Q4Q4Q2016201620162016 Revenue 1,137 1,131 1,119 1,158 1,154

Cost of Goods Sold (706) (551) (638) (635) (672)

Gross ProfitGross ProfitGross ProfitGross Profit 431431431431 580580580580 481481481481 523523523523 482482482482 Other Oper. (Exp)/Inc 25.8 7.34 23.8 20.6 27.3

Operating ProfitOperating ProfitOperating ProfitOperating Profit 457457457457 587587587587 505505505505 544544544544 509509509509 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0

Associates & JV Inc 24.6 10.5 17.3 26.4 9.35

Net Interest (Exp)/Inc (24.3) (23.8) (22.4) (22.3) (25.6)

Exceptional Gain/(Loss) 31.0 5.01 (2.1) (1.7) (9.1)

PrePrePrePre----tax Profittax Profittax Profittax Profit 488488488488 579579579579 498498498498 546546546546 484484484484 Tax (77.3) (131) (94.3) (124) (20.5)

Minority Interest 3.55 (0.1) 0.31 0.59 1.80

Net ProfitNet ProfitNet ProfitNet Profit 415415415415 447447447447 404404404404 423423423423 465465465465 Net profit bef Except. 384 442 406 424 474

EBITDA 685 802 735 802 748

Growth

Revenue Gth (%) 0.2 (0.5) (1.0) 3.5 (0.3)

EBITDA Gth (%) (13.5) 17.0 (8.4) 9.1 (6.7)

Opg Profit Gth (%) (20.8) 28.5 (14.0) 7.7 (6.4)

Net Profit Gth (Pre-ex) (%) (17.7) 15.3 (8.2) 4.6 11.7

Margins

Gross Margins (%) 37.9 51.3 43.0 45.2 41.8

Opg Profit Margins (%) 40.2 51.9 45.1 47.0 44.1

Net Profit Margins (%) 36.5 39.6 36.1 36.5 40.3 Balance Sheet (RMm)

FY FY FY FY DecDecDecDec 2014201420142014AAAA 2015201520152015AAAA 2016201620162016AAAA 2017201720172017FFFF 2018201820182018FFFF Net Fixed Assets 10,858 11,324 12,808 13,921 14,902

Invts in Associates & JVs 601 676 736 806 878

Other LT Assets 511 461 461 461 461

Cash & ST Invts 638 1,231 1,763 1,613 1,253

Inventory 43.4 46.4 68.5 49.8 57.1

Debtors 609 644 712 676 782

Other Current Assets 0.0 0.0 5.87 5.87 5.87

Total AssetsTotal AssetsTotal AssetsTotal Assets 13,26013,26013,26013,260 14,38214,38214,38214,382 16,55416,55416,55416,554 17,53217,53217,53217,532 18,33918,33918,33918,339

ST Debt

21.0 28.7 32.6 32.6 32.6

Creditor 668 797 1,006 855 980

Other Current Liab 99.9 2.83 0.0 483 561

LT Debt 861 1,030 2,217 2,217 2,217

Other LT Liabilities 1,041 929 1,137 1,137 1,137

Shareholder’s Equity 10,534 11,439 11,967 12,614 13,134

Minority Interests 35.1 156 194 193 277

Total Cap. & Liab.Total Cap. & Liab.Total Cap. & Liab.Total Cap. & Liab. 13,26013,26013,26013,260 14,38214,38214,38214,382 16,55416,55416,55416,554 17,53217,53217,53217,532 18,33918,33918,33918,339

Non-Cash Wkg. Capital (116) (109) (220) (607) (696)

Net Cash/(Debt) (245) 173 (486) (637) (997)

Debtors Turn (avg days) 54.9 51.3 54.3 54.2 49.2

Creditors Turn (avg days) 220.5 173.6 203.3 205.5 176.8

Inventory Turn (avg days) 10.7 10.6 12.9 13.1 10.3

Asset Turnover (x) 0.3 0.3 0.3 0.3 0.3

Current Ratio (x) 1.6 2.3 2.5 1.7 1.3

Quick Ratio (x) 1.6 2.3 2.4 1.7 1.3

Net Debt/Equity (X) 0.0 CASH 0.0 0.0 0.1

Net Debt/Equity ex MI (X) 0.0 CASH 0.0 0.1 0.1

Capex to Debt (%) 142.1 110.5 86.9 86.9 86.9

Z-Score (X) 10.8 10.3 9.1 9.1 8.7

Source: Company, AllianceDBS

Steady earnings stream

Solid balance sheet

Page 7

Company Guide

Petronas Gas

Cash Flow Statement (RMm)

FY FY FY FY DecDecDecDec 2014201420142014AAAA 2015201520152015AAAA 2016201620162016AAAA 2017201720172017FFFF 2018201820182018FFFF Pre-Tax Profit 2,354 2,002 2,107 2,197 2,550

Dep. & Amort. 787 777 877 841 974

Tax Paid (376) (169) (122) 0.0 (483)

Assoc. & JV Inc/(loss) (134) (75.2) (63.6) (70.0) (72.2)

Chg in Wkg.Cap. (248) 89.7 114 (96.2) 11.3

Other Operating CF 194 221 (151) 0.0 0.0

Net Operating CFNet Operating CFNet Operating CFNet Operating CF 2,5772,5772,5772,577 2,8462,8462,8462,846 2,7612,7612,7612,761 2,8722,8722,8722,872 2,9792,9792,9792,979 Capital Exp.(net) (1,254) (1,169) (1,955) (1,955) (1,955)

Other Invts.(net) 15.0 0.0 0.0 0.0 0.0

Invts in Assoc. & JV 0.0 0.0 (20.6) 0.0 0.0

Div from Assoc & JV 27.0 0.0 0.0 0.0 0.0

Other Investing CF 2.37 81.6 (14.9) 0.0 0.0

Net Investing CFNet Investing CFNet Investing CFNet Investing CF (1,210)(1,210)(1,210)(1,210) (1,088)(1,088)(1,088)(1,088) (1,990)(1,990)(1,990)(1,990) (1,955)(1,955)(1,955)(1,955) (1,955)(1,955)(1,955)(1,955) Div Paid (1,583) (1,148) (1,187) (1,068) (1,385)

Chg in Gross Debt 0.0 0.0 0.0 0.0 0.0

Capital Issues 0.0 0.0 0.0 0.0 0.0

Other Financing CF (58.4) (9.8) 948 0.0 0.0

Net Financing CFNet Financing CFNet Financing CFNet Financing CF (1,641)(1,641)(1,641)(1,641) (1,158)(1,158)(1,158)(1,158) (239)(239)(239)(239) (1,068)(1,068)(1,068)(1,068) (1,385)(1,385)(1,385)(1,385)

Currency Adjustments 0.0 (7.3) 0.38 0.0 0.0

Chg in Cash (274) 593 532 (150) (360)

Opg CFPS (sen) 143 139 134 150 150

Free CFPS (sen) 66.8 84.7 40.8 46.4 51.8

Source: Company, AllianceDBS

Target Price & Ratings History

Source: AllianceDBS

Analyst: QUAH He Wei, CFA

Strong cash flow generation

Page 8

Company Guide

Petronas Gas

DISCLOSURE

Stock rating definitions STRONG BUY - > 20% total return over the next 3 months, with identifiable share price catalysts within this time frame BUY - > 15% total return over the next 12 months for small caps, >10% for large caps HOLD - -10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps FULLY VALUED - negative total return > -10% over the next 12 months SELL - negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame Commonly used abbreviations Adex = advertising expenditure EPS = earnings per share PBT = profit before tax bn = billion EV = enterprise value P/B = price / book ratio BV = book value FCF = free cash flow P/E = price / earnings ratio CF = cash flow FV = fair value PEG = P/E ratio to growth ratio CAGR = compounded annual growth rate FY = financial year q-o-q = quarter-on-quarter Capex = capital expenditure m = million RM = Ringgit CY = calendar year M-o-m = month-on-month ROA = return on assets Div yld = dividend yield NAV = net assets value ROE = return on equity DCF = discounted cash flow NM = not meaningful TP = target price DDM = dividend discount model NTA = net tangible assets trn = trillion DPS = dividend per share NR = not rated WACC = weighted average cost of capital EBIT = earnings before interest & tax p.a. = per annum y-o-y = year-on-year EBITDA = EBIT before depreciation and amortisation PAT = profit after tax YTD = year-to-date

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Company Guide

Petronas Gas

DISCLAIMER

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