PGAS
Contact our analyst Eka
BUY
23rd November 2022
Price Rp 1,880
Target price Rp 2,530
23rd November 2022
Price Rp 1,880
Target price Rp 2,530
Higher Upstream revenue
3Q2022: Lower profit
Valuation: BUY, with TP 2,530
- In 3Q2022, Upstream oil & gas maintained positive growth, +46.5% YoY and +12.6% QoQ to USD 193 million due to higher crude oil and gas prices.
- Gas distribution revenues also increased +9.8% YoY to USD 629 million, while transmission sales decreased by -8.6% YoY to USD 54 million as gas sales volume was higher from strong industrial demand.
- This boosted PGAS total revenue +15.8% YoY, +14.6% QoQ to USD 901.3 million in 3Q2022. For 9M2022, PGAS revenue reached USD 2.64 billion, +17.2% YoY with upstream business growth of +87.9% YoY to USD 488 million.
- In terms of gross profit margin, trading and transmission margins were lower at 11.5% in 3Q2022 compared to 13.4% in the 2Q2022. Exploration and production of oil and gas margins were down to 25.7% from 47.5% in 2Q2022 due to higher crude oil prices.
- We are targeting PGAS revenue in 2022F to reach USD 3.6 billion or +21% growth.
3Q2022: Lower profit
- Despite higher revenue, PGAS net profit decreased -19.7% YoY to USD 71.9 million in 3Q2022, with a lower net profit margin of 8%, because of higher income tax expenses, up 50% YoY.
- For the 9M2022, PGAS net profit still increased +8.5% YoY to USD 310 million after a strong 1H2022.
- PGAS gross profit in 3Q2022 was USD 186 million after a loss in 3Q2021. PGAS operating profit was higher, +21.9% YoY but lower -24.3% QoQ to USD 140.3 million. This resulted in a higher OPM of 15.6% in 3Q2022 from 14.6% in 3Q2021.
- Profit before taxes was lower by -6.2% YoY or -38.6% QoQ to USD 123.6 million.
- As PGAS’s bottom line was lower quarterly and the upstream business is expected to be soft in 2023, we expect PGAS’s net profit in 2022F will be USD 430.7 million or +41.7% YoY.
Valuation: BUY, with TP 2,530
- We maintain our recommendation to buy as we expect softer costs in 2023F while demand will still increase. Our DCF valuation with WACC at 13.3%, gives a target price of IDR 2,530 or 35% upside which is an 8x PE valuation within one year.
