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PGAS

Contact our analyst Eka
Buy
3 December 2020
Price Rp 1,470
Target price Rp 2,050
3Q2020 Demand Recovery
  • 3Q2020 demand showed an improvement with industrial retail consumption from distribution increasing +15.4% QoQ to 486 BBTUD as consumption from PGAS’s customers recovered. But 9M2020 distribution volume has still decreased -13% to 812 BBTUD impacted by weaker gas consumption due to the covid-19 outbreak in 2Q2020. In October, the distribution volume recovery continues with slight growth of +2% MoM.
  • The higher distribution volume resulted in higher 3Q2020 distribution revenue of US$ 560 million, up +14% QoQ but still down -32% YoY.
  • Gas transportation volume in 9M2020 decreased -7% YoY to 1,276 MMSCFD. In October transmission also slightly decreased -0.72% to 1,227 MMSCFD. The transmission revenue saw a -10% YoY decrease to US$ 162 million and both 2Q2020 and 3Q202 transmission is still below 1Q2020 levels.
  • Oil transportation is flat, with a downward trend in regasification and LPG processing due to weakening demand.
  • PGAS’s ASP and APP decreased  to US$ 7.85 and US$ 5.59 respectively from the impact of the lower gas selling price policy starting in April 2020.
  • After the demand recovery in 3Q2020, we expect conditions will continue to improve as the PSBB transition continues.

Recovery in 3Q2020
  • PGAS recorded a net profit of US$ 46.7 million in 3Q2020, after a loss in 2Q2020 of US$ 41.2 million. The net profit margin was higher compared to previous quarters at 6.8%. For 9M2020, PGAS net profit still decreased -59% YoY to US$ 53 million.
  • PGAS’s revenue in 3Q2020 increased +15% QoQ to US$ 682.1 million, and for 9M2020 decreased -23% YoY to US$ 2.15 billion because of the lower revenue in 2Q2020.
  • Cost of revenue decreased -36% YoY in 3Q2020, but gross profit still decreased -27% YoY (+29% QoQ) to US$ 225.7 million. The gross profit margin in 3Q2020 improved to 33.1% from 29.5% in 2Q2020.
  • Operating income declined -23.4% YoY to US$ 193 mn. The operating margin improvement to 18% in 3Q2020 from 3.5% in 2Q2020.
  • We expect PGAS profit will reach US$ 73 million in 2020F as a result of the weaker performance in 2Q2020 due to the covid-19 outbreak.

Valuation:  Upgrade to BUY, with TP 2,050
  • Our DCF valuation with WACC at 8.56%, gives a target price of IDR 2,050 or 40% upside which is a 33x PE valuation within one year. We upgrade our recommendation from hold to Buy.
Read the full report

Previously

​PGAS Sep2020
​PGAS Apr2020
​PGAS Feb2020
​PGAS Oct2019
PGAS, Feb2019
​PGAS, JUL2018
​PGAS, Mar2018
PT. Binaartha Sekuritas

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