BERNAMA – The share price of Petronas Gas Bhd (PGB) fell by 1.30 per cent in early trade yesterday after the massive gas pipeline fire in Putra Heights, Selangor, which caused widespread damage and prompted an emergency evacuation of residents in the affected area.
The affected gas pipeline is the Peninsular Gas Utilisation (PGU) pipeline, which is under the jurisdiction of PGB.
As of 10.13am, PGB slid 22 cents to MYR16.66, with 68,100 shares traded. Trading in PGB securities was halted earlier for an hour from 9am.
MIDF Amanah Investment Bank Bhd reckons that the event would drag PGB’s share price down by about 1.8 per cent to 2.1 per cent in the short term, while the financial impact from the incident was estimated to be about 1.0-1.5 per cent of PGB’s total earnings.
“We expect that Petronas Gas’ (and possibly insurers’) share price will suffer a knee-jerk reaction to the tragedy. Given that Petronas Gas is a constituent of the FBM KLCI, it may weigh on the benchmark. Nonetheless, at this juncture, we maintain our FBM KLCI 2025 target at 1,670 points and maintain our PGB target price of RM18.67,” it said in a research note yesterday.
The investment bank said operations-wise, disruptions in gas transportation “sans the exploded 500-metre gas pipe” could be minimal for PGB, “as the gas flow should be diverted away from the damaged pipe”.
“Financially, we estimate that there will be a one-off impairment of roughly MYR18-25 million minimum from PGB. This includes revenue loss for the affected pipeline (10-15 per cent), damage repairs (25-30 per cent), public compensation (25-35 per cent) and management reputation.
However, it should be noted that this is our minimum estimate and is highly dependable on the type of damage caused such as medical and property as well as recovery time,” it added.
The investment bank estimated “potentially at least two to three months” worth of additional costs amounting to a minimum of MYR5 million or compensation to industrial customers if their operations are directly impacted by the damaged pipeline as it would take months for the repairs. “If the customers are not directly impacted, compensation may only be hours or days’ worth,” it added.
At this juncture, the investment bank has maintained its “buy” call for PGB with a target price of MYR18.67, as it believes PGB has responded well to the initial shutdown of the damaged pipe.
