RHB give GMB fair value at RM2.45, based on a required net yield target of 5% p.a. for FY12-13. They believe GMB is relatively defensive due to : 1) 100% Gas Malaysia dividend payout ratio for FY12, and minimum 75% for subsequent years; 2)possibility of higher sales volume once they secure more supply; 3) its extensive NGDS network; and 4) GMB is currently the only licensed company under the GSA to supply and sell reticulated natural gas in Peninsular Malaysia, implying lack of competition. Nonetheless, they highlight that the longer-term earnings outlook could be affected by changes in the regulated pricing of natural gas, and disruptions to gas supply.
Kenanga research paper give Gas Malaysia target price at RM2.42/share, based on required 5% net yield. This implies 20.5x of Gas Malaysia PE ratio PER of CY13 earnings, which is also fairly in line with the valuation of Petronas Gas. Netting off its net cash, it could potentially be valued at RM2.60/share, assuming the targeted PER of 20.5x remains unchanged. They said Gas Malaysia is more a dividend play given its earnings certainty with a low yearly capex requirement. At the offer price of RM2.20, it offers net Gas Malaysia Dividend yield of 5.5%.
Hong Leong Investment Bank Gas Malaysia research paper gives Gasmsia fair value at 22x FY13 P/E ratio at RM2.55 (3.4x FY13 P/B), given its net cash position (debt free) with underlying strong and stable cash flow and dividend yield.
More information on Gas Malaysia IPO here, PE ratio and Target Price.