This article first appeared in The Edge Financial Daily on February 19, 2019

KUALA LUMPUR: Petronas Gas Bhd’s (PetGas) net profit fell 34.7% to RM317.9 million or 16.07 sen per share in the fourth quarter ended Dec 31, 2018 (4QFY18), from RM486.7 million or 24.6 sen per share a year ago, due to share of losses from a joint-venture company, Kimanis Power Sdn Bhd (KPSB).

The losses arose due to de-recognition of deferred tax assets amounting to RM124.3 million (being 60% share of the group) in relation to certain tax benefits which now have a seven-year utilisation limit under the new Finance Act 2018, PetGas said in a filing to Bursa Malaysia.

Excluding the deferred tax assets impact from KPSB, profit for the quarter would still be lower by 8.6% or RM43.7 million due to a one-off impairment loss on assets, following the business change at one of PetGas’ customers, and higher finance costs, PetGas said.

Quarterly revenue, however, was up 5% to RM1.39 billion, versus RM1.32 billion in 4QFY17.

The group also declared a fourth interim dividend of 22 sen per share, payable on March 15.

For the full year of FY18, PetGas’ net profit grew by a marginal 1% to RM1.81 billion or 91.49 sen a share, against RM1.79 billion or 90.6 sen a share in the previous year, while revenue rose 12.3% year-on-year to RM5.5 billion from RM4.9 billion.

On prospects, while the tariffs for gas transportation and regasification services for 2019, which were approved by the Energy Commission, are expected to affect the group’s transportation and regasification business revenues in 2019, both segments are anticipated to continue contributing positively to PetGas’ earnings.

Shares of PetGas closed unchanged at RM18.12 yesterday, for a market capitalisation of RM35.86 billion.