KUALA LUMPUR, Sept 14 — Kenanga Investment Bank started coverage on Gas Malaysia Bhd with an “outperform”, saying the company is a “growing cash cow” thanks to future earnings growth and generous dividend payout.

Kenanga set a target price of RM2.94 on Gas Malaysia shares. The stock rose 0.4 per cent to RM2.62 today.

Kenanga said an expected fall in Gas Malaysia’s earning in FY 2012 is expected to be limited as the firm has signed additional gas supply deal with state oil firm Petronas , potentially boosting 2013-15 earnings.

Gas Malaysia is the only firm licensed to supply and sell natural gas in mainland Malaysia where demand has been steadily growing.

“The company has committed to a 100 per cent payout of its FY12 earnings and 75 per cent for each year for FY13-FY14,” Kenanga said in a note to clients.

“We see little problem for Gas Malaysia not to pay such a generous dividend given its relatively low capex requirement and sustainable earnings quality.” — Reuters