PGAS Mar2022

PGAS

Contact our analyst Eka

BUY
24th March 2022
Price Rp 1425
Target price Rp 2070

Upstream continue to grow

With higher crude oil and gas prices and increased demand, PGAS’ upstream business continued to grow in 2021. PGAS booked a revenue increase of +5.16% YoY to US$ 3.03 billion. The revenue achievement is in line with our estimate of US$ 3.04 billion.
For 4Q2021, PGAS booked slightly lower revenue -1% QoQ of US$ 782 million.
The Oil & gas business increased significantly +62.2% to US$ 331 million with a 10.9% total revenue contribution.
Gas trading and distribution had the highest contribution at 77.1% of total sales with 1.8% YoY growth to US$ 2.34 billion. Industrial gas consumption demand was strong. The gas distribution margin or spread in 2021 was higher at US$ 1.92/MMBTU compared to US$ 1.88/ MMBTU in 2020. QoQ the distribution margin also increased from US$ 1.64 / MMBTU in 3Q2021 to 2.21/MMBTU in 4Q2021.
As the demand for gas continues to recover with higher crude oil and gas prices, we are expecting a better 2022F with revenue reaching US$ 3.33 billion or 10% growth.

Triple-digit Profit growth

PGAS booked triple-digit net profit growth in 2021 of 214.5% YoY to US$ 303.28 million from a net loss in 2020 of US$ 264.7 million. The growth came mainly from higher revenue, a gain in forex, plus the reversal of provisions from tax disputes of US$ 27.4 million as well as a higher profit from joint ventures of more than US$ 90.3 million. The net profit margin increased to 10% from -9% in 2020.
PGAS also booked higher operating profit +38.4% YoY to US$ 420 million from a higher gross profit of US$586.9 million up +24.8% YoY with a higher GPM of 19% in 2021 from 16% in 2020.
We expect PGAS’s net profit in 2022F will reach US$ 349 million or +15% growth as we are expecting more reversals of tax provisions plus we expect the upstream segment to continue to grow.

Valuation: BUY, with TP 2,070

We maintain our recommendation to buy as we expect the upward trend will continue. Our DCF valuation with WACC at 15.9%, gives a target price of IDR 2,070 or 45% upside which is a 9.2x PE valuation within one year.