| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Gas Malaysia Berhad (GMB) has announced the award of Engineering, Procurement, Construction, and Commissioning (EPCC) contracts for two new Biomethane Purification Plants (BPPs) in Trong and Air Kuning, Perak. These plants, designed to convert raw biogas into cleaner, high-quality biomethane as a low-carbon fossil fuel alternative, are expected to be completed within 13 months.
Strategic Expansion and Environmental Alignment
This development underscores GMB’s ongoing commitment to expanding its green gas portfolio, building on the earlier launch of Malaysia’s first Centralized Biomethane Injection station in the southern region. The initiative aligns closely with Malaysia’s National Energy Transition Roadmap (NETR) targets, aiming to significantly reduce greenhouse gas emissions and achieve net-zero emissions by 2050.
Analyst View and Financial Implications
MBSB Research views this project as a significant milestone in GMB’s green energy expansion and advancement of Malaysia’s renewable energy agenda. The purified biomethane will leverage the group’s existing Natural Gas Distribution System, enhancing its utilization. While initial BPP costs are estimated between RM20 million and RM25 million each, the long-term financial impact on GMB is considered minimal, with a payback period projected at up to 10 years. However, potential downside risks include market volatility, regulatory hurdles, and execution challenges.
Rating and Outlook
Despite the positive strategic implications, MBSB Research maintains a “NEUTRAL” recommendation for GMB, citing the project’s nascent stage and the undisclosed actual project costs. Consequently, the investment bank has made no changes to its earnings estimates and holds its target price at RM4.48.
