PGAS
Contact our analyst Eka
BUY
17th November 2021
Price Rp 1500
Target price Rp 2170
17th November 2021
Price Rp 1500
Target price Rp 2170
Upstream business Jump
3Q2021 Margin Increase
Valuation: BUY, with TP 2,170
- In 3Q2021, PGAS revenue increased +16% YoY or +9% QoQ to US$ 789 million, driven by a higher contribution from upstream which increased 140% YoY or +170% QoQ to US$132 million. Upstream growth comes from higher crude oil prices.
- For 9M2021 revenue grew +4.8% YoY to US$ 2.25 billion driven by higher upstream revenues, +65% YoY.
- Distribution increased slightly +2.2%YoY or +14% QoQ to US$ 573 million in 3Q2021 due to a domestic demand recovery and and an increase in the number of costumers which led to higher sales volume.
- Transmission also grew +20% YoY to US$ 132 million.
- We are expecting better 4Q2021 revenue growth as mobility has started to increase due to the easing of PPKM to level 1 and the continued upward trend of industrial consumption.
3Q2021 Margin Increase
- PGAS booked net profit in 3Q2021 of US$ 89.5 million which is a jump of 92% YoY but still lower by -34% QoQ,. The net profit margin increased to 11.3% from 6.85% in 3Q2020. For 9M2021, PGAS net profit reached US$286.1 million which is a jump of 436% YoY with a strong NPM of 12.7%.
- PGAS still recorded higher cost of revenue +16% YoY or 9% QoQ to US$ 528 million, while gross profit grew 16% YoY to US$ 261 million with a stable GPM of 33% in 3Q2021.
- Share of profit from JVs increased significantly, +121% YoY to US$ 75.1 million in 9M2021 and US$ 25 million in 3Q2021, up 108% YoY. Profit before tax grew +53% YoY to US$ 131.7 million in 3Q2021.
- We are expecting a positive net profit in 2021F of US$ 375 million after a loss in 2020 as we are expecting more reversals of provisions for tax disputes in 2021 plus the upstream segment continues to grow.
Valuation: BUY, with TP 2,170
- We maintain our recommendation to buy as we expect the upward trend to continue and as we are expecting a positive net profit in 2021F.
- Our DCF valuation with WACC at 13%, gives a target price of IDR 2,170 or 45% upside which is a 9.5x PE valuation within one year.