PGAS Jun2021

PGAS

Contact our analyst Eka

BUY
9th June 2021
Price Rp 1125
Target price Rp 1465

Expecting higher volumes

In 1Q2021, PGAS revenue declined by -16% YoY to US$ 733 million, driven primarily by a lower contribution from distribution as well as the impact of Covid-19 on lower energy demand.
Gas distribution increased +4% YoY to 916 BBTUD, as domestic demand recovered further in 1Q2021 and the number of costumers increased with industries and commercial remaining the biggest gas consumers.
In April 2021, distribution volume decreased -7.56% MoM to 843 BBTUD with the start of the fasting month in Indonesia.
Gas transmission in 1Q2021 declined -10% on weaker consumption, while gas transmission volume in April increased +2.67% MoM to 1,235 MMSCFD.
The trend of industrial consumption has been on an upward trend starting in the 3Q2020 and we are expecting more growth in the coming quarters.

1Q2021 Results: Double digit growth

Despite lower revenue in 1Q2021, PGAS net profit increased by a double-digit +29% YoY to US$ 62 million. Higher net profit was driven by higher profits from joint ventures, lower operating expenses, and a forex gain.
PGAS recorded lower cost of revenue -9.4% YoY to US$ 532 million, lower gross profit -30% to US$ 201 million and a lower GPM of 27.5% from 32.8% in 1Q2021.
Operating expenses decreased -8.1% to US$ 105 million, so operating income declined -44% YoY to US$ 96 million. The operating profit margin also declined from 19.7% to 13.1%.
PGAS recorded a forex gain of US$ 8.9 from a loss in 1Q2020. Finance income and joint venture income significantly increased +129% to US$ 30.3 million.
We are expecting a positive net profit in 2021F of US$ 78.4 million after a loss in 2020.

Valuation: BUY, with TP 1,465

We upgrading our recommendation to buy as we expect the upward trend to continue and as we are expecting a positive net profit in 2021F.
Our DCF valuation with WACC at 8.9%, gives a target price of IDR 1,465 or 30% upside which is a 26x PE valuation within one year.