Gas Malaysia doesn't rise with the news

From the Edge:

KUALA LUMPUR: The share price of Gas Malaysia Bhd ( Financial Dashboard) fell by 1.06% yesterday, despite analysts expecting the company to get an earnings boost from the latest natural gas tariff hike. The counter closed down three sen at RM2.80 yesterday, giving it a market capitalisation of RM3.6 billion.

Gas Malaysia on Tuesday announced that gas prices supplied to commercial and industrial sectors in Peninsular Malaysia will rise by an average of 10.3% from July 1, citing higher buying price of the fuel that it procured fromPetroliam Nasional Bhd.

Describing the move as a positive surprise, analysts are predicting the hike to boost Gas Malaysia’s earnings per share (EPS) growth by between 25% and 38% in the next three years.

In a report yesterday, Affin Hwang Capital analyst Lim Tee Yang said Gas Malaysia is set to see better profit margins, which is a boost to dividends.

“With the revision in gas tariff, we estimate Gas Malaysia may now be earning a higher spread of RM1.67 per million British thermal units (mmBtu) even after taking into account the usual increase of RM1.50 per mmBtu to Gas Malaysia’s purchasing price,” he said.

“This marks a significant improvement over our previous estimate where Gas Malaysia earned a spread of only slightly over half its historical spread (RM2.02 per mmbtu),” he added.

People are surprised this news doesn't lift the counter.  If we look over the last few weeks, the news is probably a non event as likely it has been baked into the price.  Someone probably knew on the inside that the tariff will probably be favorable and made a ton of money on it.

For investors and big funds, earnings are important and the market is in a "show me the money" mode.  It isn't in the mood for hanky panky, show me good earnings first.  Will the 3rd and 4th quarter be good year over year?  I'm not too sure even with the tariff change.  I don't think anyone is.  Lets wait until the third and fourth quarter to see whether Gas Malaysia will be a buy.  Because as of its latest earnings, it isn't.