PGAS Jun2024

PGAS

Contact our analyst Eka

BUY
10 June 2024
Price Rp 1,590
Target price Rp 2,000

New Revenue contribution

In Q1 2024 PGAS had single-digit revenue growth of +1.68%, reaching USD 949.3 million. Growth was suported by additional revenue from the LNG trading segment. Revenue from gas transmission and regasification segments increased by +1.8% and +10.9% respectively, while other segments declined.
LNG trading contributed USD 61.08 million to total revenues, or 6% of total revenue in Q1 2024.
Gas transmission sales recorded +1.8% YoY growth to USD 54 million in Q1 2024, with gas transported through transmission pipelines reaching 1.427 MMSCFD, a -1% YoY decline, reflecting slightly lower demand from shippers.
Gas distribution revenue declined by -4.7% YoY or -9.5% QoQ to USD 620 million. The decline in gas sales volume was mainly due to a shortage in gas supply, stemming from reduced volumes from suppliers in the Sumatera and West Java regions.
Oil and gas revenue also decreased by -11% YoY to USD 111 million.
In terms of gross profit margin, both trading and transmission margins rose to 12.8% in Q1 2024.
For 2024F, PGAS maintains a modest growth target, with gas trading volume expected to grow by +3%, transmission by +4%, and regasification by +22% due to higher demand.

Q1 2024 Results: Maintain margin improvement

PGAS's net profit increased by +41% YoY or +58% QoQ to USD 121 million in Q1 2024, along with an improved net profit margin of 12.8% due to lower cost of revenue and lower finance costs.
The cost of revenue decreased by -2.56% YoY to USD 737.6 million due to a decline in oil and gas upstream operations by -11.9% YoY and lower purchases of natural gas, down by -13.7%.
PGAS maintained margin improvements, with the operating margin reaching 17.8%, up from 14.9% the previous year, and the gross profit margin improving to 22.3% from 18.9% in Q1 2023.
Regarding the purchase agreement with Gunvor Singapore Ltd, the agreement with Gunvor LNG (2024-2027) is based on a planned eight shipments per year. Meanwhile, PGAS is exploring the possibility of procuring LNG from alternative suppliers to fulfill Gunvor's contract.

Valuation: Maintain BUY, with target price of 2,000

We maintain our recommendation to buy PGAS shares following the performance improvement in Q1 2024. Our discounted cash flow (DCF) valuation, employing a weighted average cost of capital (WACC) of 8.56%, yields a target price of IDR 2,000 per share. This represents 26% upside potential and corresponds to a 7.8x price-to-earnings (PE) ratio within one year.