KUALA LUMPUR (June 10): Shares of Gas Malaysia Bhd declined in early trade today after the company announced yesterday that the government has on June 8 (Monday) revised the natural gas tariff for non-power sector in the Peninsular Malaysia, effective July 1, 2015.

At 9.10am, Gas Malaysia fell 1.06% or 3 sen to RM2.80 with 15,600 shares traded.

The average gas tariff will be increased by 10.27% to RM21.80 per one million British thermal units (mmbtu), from RM19.77 per mmbtu previously.

“This is to take into account the increase in the purchase price of gas that Gas Malaysia procures from PETRONAS,” said the reticulated gas system operator, adding there will be no change to the selling prices for residential customers, which is under category A.

Gas Malaysia (fundamental: 2.1; valuation: 1.1) said it will be financially neutral, with respect to the revised gas tariff.

Kenanga IB Research in a note this morning said that with the cost pass-through mechanism in place, earnings visibility from 2H15 onwards was no longer volatile as in the past two quarters.

“As the new tariff is to kick-start in July, we expect another weak quarter in the upcoming 2Q15,” it said.

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