PGAS Jun2022

PGAS

Contact our analyst Eka

BUY
17th June 2022
Price Rp 1820
Target price Rp 2320

Upstream revenue jumps

PGAS revenue jumped +14.2% YoY to USD 836.9 million in 1Q2022 due to higher crude oil and gas prices which meant upstream Oil & gas revenue jumped +140% to USD 122 million.
Gas trading and transmission sales also increased +1.7% YoY to USD 667 million as gas sales volume was higher from strong industrial demand.
In term of gross profit margin, trading and transmission margins were lower at 13.8% compared to 15.8% in the 1Q2021 . While the exploration and production of oil and gas jumped to 31.9% from -40% in 1Q2021 due to higher crude and oil prices.
We revise up our 2022F revenue target as the demand for gas continues to recover with higher crude oil and gas prices. We are now expecting a better 2022F with revenue reaching USD 3.5 billion or +15% growth.

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1Q2022: Higher Margin

PGAS booked net profit growth of +92.4% YoY to USD 118.5 million in 1Q2022. The growth came mainly from higher revenue from higher crude oil and gas prices, as well as a forex gain. The net profit margin increased to 14.2% from 2.3% in 4Q2021.
PGAS also booked higher operating profit +60.8% YoY to USD 154.3 million with lower operating expenses. This resulted in a higher OPM of 18.4% in 1Q2022 from 13% in 1Q2021.
Profit before taxes was also higher +61% YoY to USD 168.1 million helped by lower finance costs, down -4% YoY and a larger forex gain, +50.5% YoY.
As we have revised up PGAS’s top line, we expect PGAS’s net profit in 2022F will reach USD 379.5 million or +25% YoY as we expect continued strength from the upstream business.

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Valuation: BUY, with TP 2,320

We maintain our recommendation to buy as we expect the upward trend will continue. Our DCF valuation with WACC at 11.8%, gives a target price of IDR 2,320 or 27% upside which is a 9.4x PE valuation within one year.