Robust debut to set tone for Felda Global Ventures and IHH Healthcare

KUALA LUMPUR: The robust debut of Gas Malaysia Bhd yesterday is likely to boost sentiment for the IPOs of Felda Global Ventures Holdings Bhd (FGVH) and IHH Healthcare Bhd over the next two months.

Shares in Gas Malaysia closed 10% higher at RM2.42, over its reference price ofRM2.20, at the close of trading yesterday, giving it a market capitalisation of RM2.8 billion. The company raised RM734.5 million from the IPO.

"We are very happy for the strong support given by our investors. I think the price reflects the confidence they have in our business model," said managing director Datuk Muhamad Noor Hamid at Gas Malaysia's listing ceremony.

The company, which is the sole supplier of gas to the nonpower sector, was forced to postpone its IPO several times due to delays in finalising a new gas supply agreement with Petroliam Nasional Bhd.

Gas Malaysia's strong performance came against a backdrop of weaker results which the company announced last week.

It posted a nearly 54% drop in net profit for 1Q ended March 31 to RM34.5 million due to the higher purchase price of gas following the government s upward revision of prices in June last year.

"The subsidies [for gas] will be reduced gradually with this roadmap that the government has. It is very transparent and good for those purchasing gas.

"They can factor [the higher prices] into their forward contracts and pass them onto customers," said Muhamad Noor.

The price of gas was raised by RM3 over six months beginning June last year.

However, Gas Malaysia said it has yet to receive any directive from the government in regard to the second revision that was due in December.

"These past few years, our expansion has been constrained by the unavailability of natural gas although this has been removed.

"Now, we need to invest in building the facilities we will need once the additional gas is made available to us so we are in a ready position to supply the gas to our customers," said Muhamad Noor.

Gas Malaysia will spend a total of RM220 million in capital expenditure for the next three years. The company will rely on internal funds, including its RM327 million cash reserves. It has zero borrowings.

The company's single largest shareholder is MMCShapadu Holdings Sdn Bhd, which holds a 55% stake. Tokyo Gas Mitsui has 25% and Petronas Gas Bhd 20%.

Gas Malaysia is the only company licensed to supply and sell reticulated natural gas in the peninsula. It has built 1,800km in pipeline for 30,700 customers.