PETRONAS Gas Bhd (PGB) saw its shares drop by 1.3% in early trading today following a devastating gas pipeline fire in Putra Heights, Selangor, which caused significant damage and led to the evacuation of affected residents.
Bernama cited that the damaged pipeline is part of the Peninsular Gas Utilisation (PGU) system, which falls under the authority of PGB.
By 10:13 AM, PGB shares had decreased by 22 sen to RM16.66, with 68,100 shares traded. Trading of PGB shares had been suspended for an hour, beginning at 9:00 AM.
MIDF Amanah Investment Bank Bhd has predicted that the fire will likely cause PGB’s share price to fall by approximately 1.8% to 2.1% in the short term, with the financial impact estimated to be around 1.0-1.5% of PGB’s total revenue.
“We expect Petronas Gas’ stock price (and potentially its insurers) to react to yesterday’s tragedy. Given that Petronas Gas is a constituent of the FBM KLCI index, this may affect the benchmark today,” the bank said in a research note.
Nevertheless, MIDF Amanah maintained its 2025 FBM KLCI target at 1,670 points and a target price for PGB at RM18.67.
In operational terms, MIDF Amanah noted that the disruption in gas transportation is expected to have minimal impact on PGB, as gas flows should be redirected away from the damaged pipeline.
“Financially, we estimate a one-time impairment of between RM18-25 million for PGB. This includes lost revenue from the damaged pipeline (10-15%), repair costs (25-30%), compensation for victims (25-35%), and reputational damage to management,” the bank said.
However, the bank emphasised that these are conservative estimates, depending on the extent of the damage, including medical and property costs, as well as the recovery period.
MIDF Amanah further projected additional costs over the next two to three months, amounting to at least RM5 million, or compensation to industrial customers whose operations may be directly affected by the damaged pipeline, given that repairs could take several months.
“If customers are not directly affected, compensation could be limited to a few hours or days,” it added.
For now, MIDF Amanah has maintained its “Buy” recommendation for PGB with a target price of RM18.67, confident that the company has taken the necessary actions by shutting down the damaged pipeline. – April 2, 2025
