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PGAS

Contact our analyst Eka
BUY
12 May 2020
Price Rp 895
Target price Rp1,240
2020 Target Revised
  • As many of PGAS’ customers such as restaurants, shopping malls, hotels, and steel manufactures, have shut down business due to the Covid-19 outbreak and there is lower demand from regional and domestic industrial and commercial electricity costumers, PGAS lowered their distribution volume target for 2020 to 900-925 BBTUD from 950-980 BBTUD.
  • PGAS also lowered their operating expenses and capital expenditure for 2020 and will implement efficiency programs to cut operating expenses to US $ 460 million - 530 million or 25%-35% from the 2020 budget. PGAS will also cut capital expenditure to US$ 350 million - 500 million from US$ 500 million – 700 million.
  • As the company target has been revised and based on the 1Q2020 results we lower our PGAS revenue target to US$ 3.6 billion down 4% from 2019FY.

Lower 1Q2020 Volume
  • PGAS’s consolidated distribution volume was stable +0.2% YoY to 882 BBTUD in 1Q2020. The impact of Covid-19 is starting to show up QoQ, with power industry  consumption down to 342 BBTUD from 423 BBTUD in 4Q2019 and a decline in the retail segment from 571 BBTUD in 4Q2019 to 534 BBTUD.
  • Gas transportation consolidated volume in March was 1,328 MMSCFD, -3,34% MoM.  Lower gas transportation volume MoM is inline with lower gas demand from major customers.
  • Upstream lifting also decreased, with oil gas lifting down-28% QoQ to 20,798 BOEPD. Crude oil decreased by -43% QoQ to 3,124 BOEPD, gas decreased by -26% QoQ, LPG decreased by -53% QoQ, and LNG decreased by -19% QoQ. Lower lifting volume was also impacted by the crash in oil prices.


1Q2020 Result: Lower than expected
  • Lower gas demand from  covid-19 meant PGAS’s revenue decreased slightly -0.28% YoY to US$ 874 million (mn).
  • Gross profit slightly increased by 0.7% YoY to US$ 287 mn from a slight decrease in cost of revenue by 0.7%. Operating income increased 6% YoY to US$ 172 mn.
  • Profit before tax decreased by -21.8% YoY, because of the foreign exchange loss of USD 63 mn.
  • PGAS net income of US$47.8 mn was down -26.6% YoY from US$ 65.1 mn in 1Q2019.


Valuation:  Maintain BUY with TP 1,240
  • Our DCF valuation with WACC at 7.95%, gives a target price of IDR 1,240 or 38.5% upside which is a 10x PE valuation within one year. Maintain BUY
Read the full report

Previously

​PGAS May2020
​PGAS Apr2020
​PGAS Feb2020
​PGAS Oct2019
PGAS, Feb2019
​PGAS, JUL2018
​PGAS, Mar2018
PT. Binaartha Sekuritas

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