3 Investing Things To Know About Petronas Gas Berhad

There’s something many of us take for granted each time we switch on the lights, the television, our computers, or any electronic gadget for the matter: The electricity we get. We do not think much about how our electricity is generated.

Some common sources of electricity generation are fossil fuels such as crude oil, natural gas, and coal. In Singapore, most of the electricity produced comes from burning natural gas. Companies and trusts such as SembCorp Industries Limited (SGX: U96) and Keppel Infrastructure Trust (SGX: A7RU) run the power plants that fuel our daily activities.

In Singapore’s neighbour Malaysia, the country also generates most of its domestic electricity from natural gas. And, the main company that dominates the natural gas industry in the country is none other than Petronas Gas Berhad (KLSE:6033.KL), the listed subsidiary of Petroliam Nasional Berhad (PETRONAS), the national oil and gas company of Malaysia.

Main supplier of gas

Petronas Gas is also the main gas processor and transporter in Malaysia as it has a 20-year contract agreement with its parent company. Petronas Gas owns six gas processing plants which have the capacity to process more than 2 billion standard cubic feet per day (mmscfd) of gas for the country.

The company is also the key distributor of gas throughout Malaysia with its total network of 2,500 km worth of pipelines. Although Petronas Gas also operates a handful of power plants that supply power, steam, and industrial gases for customers directly, it is not a key power plant operator in the country.

Revenue machine

Petronas Gas can be considered as a major player in Malaysia’s energy sector with its domination of the supply of the main feedstock – natural gas – for the country’s power plants.

That can be seen from the RM4.4 billion in revenue the company generated in 2015, which is close to three times the revenue generated by Keppel Infrastructure Trust over the same period. The company also recorded a profit attributable to its shareholders of RM1.99 billion (S$670 million), which is more than the profit SembCorp Industries produced.


Moreover, the company currently has a market value of RM44 billion (S$14.7 billion), which is more than the value of SembCorp Industries and Keppel Infrastructure Trust combined! Petronas Gas is a key constituent of the Kuala Lumpur Composite Index (Malaysia’s stock market benchmark) and offers a decent dividend yield of 3.0%. It currently trades at 22 times trailing earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares  in any companies mentioned above.