PGAS
Contact our analyst Eka
BUY
27 May 2025
Price Rp 1,825
Target price Rp 2,040
27 May 2025
Price Rp 1,825
Target price Rp 2,040
New gas supply Secured Amid Natural Decline
- In Q1 2025, PGAS reported revenue of USD 966.5 million, growing +1.8% YoY and +1.1% QoQ, supported by higher contributions from gas distribution and transmission.
- Gas transmission revenue rose +6.5% YoY to USD 58 million, with volumes transported reaching 1,602 MMSCFD (+12% YoY).
- Gas distribution revenue increased +7.8% YoY and +2.9% QoQ to USD 668.8 million, driven by higher power demand in East Java.
- Gas trading volume inched up +0.3% YoY to 861 BBTUD.
- However, oil and gas revenue fell -38.0% YoY and -21.5% QoQ to USD 69 million, due to declining output from the Pangkah, Muara Bakau, and Bangkanai blocks, impacted by natural depletion and drilling delays.
- LNG trading contributed USD 58 million, down -2.9% QoQ, but still accounted for 6% of total revenue.
- To address domestic supply deficits caused by declining reserves, PGAS secured over 71.83 BBTUD of new gas supply in May 2025 through six new agreements. This additional supply is expected to drive higher sales volumes going forward.
- For full-year 2025, PGAS targets:
- Gas trading volume: 873–958 BBTUD
- Upstream output: 17.2 thousand BOEPD
- Oil transport volume: 178,347 BOEPD
- Transmission volume: 1,438 MMSCFD
- LPG processing: 100.0 TPD
- PGAS posted a net profit of USD 62 million, down -48.8% YoY and -18.9% QoQ, with a lower net profit margin of 6.4%. This was primarily due to a reduced gas distribution spread and higher distribution costs.
- Cost of revenue rose +11.9% YoY to USD 826 million, as gas distribution costs surged +25.6% YoY.
- As a result, distribution spread fell -34.6% YoY (-29.5% QoQ) to USD 1.5/mmbtu.
- Additionally, foreign exchange losses of USD 21.6 million weighed on results, compared to a gain of just USD 446k in the prior year.
- On the legal front, PGAS remains in arbitration with Gunvor Singapore Pte Ltd. in the London Court of International Arbitration regarding a force majeure LNG contract. A USD 72.02 million provision was recorded for this in Q1 2025.
- We maintain our BUY recommendation on PGAS, supported by the government’s certainty on natural gas pricing (HGBT) and the company’s success in securing new supply to meet rising domestic demand.
- Our Discounted Cash Flow (DCF) valuation, using a WACC of 10.1%, yields a target price of IDR 2,040/share, implying a 12% upside and a forward PE of 8.9x.
