KUALA LUMPUR (Oct 16): CIMB IB Research has maintained “Hold” on Petronas Gas Bhd at RM18.48 with an unchanged target price of RM18.10 and said it expects a circa 25% earnings downside for Petronas Gas if the regulator adopts book value instead of depreciated replacement cost as the regulated asset base under Third Party Access (TPA).

In a note Oct 15, the research house said despite the potential earnings risk from TPA, the group will likely be able to maintain the absolute dividend amount to reward its shareholders.

CIMB Research said despite the potential earnings risk from TPA, management has guided that the group is looking to maintain the absolute dividend amount to reward its shareholders.

“Assuming that the TPA is implemented in stages, we believe Petronas Gas should be able to maintain the absolute amount of DPS by increasing its dividend payout ratio.

“Maintain Hold with target price unchanged at RM18.10 based on 17.8x CY19F P/E,” it said.