PGAS
Contact our analyst Eka
Hold
31 October 2019
Price Rp2,440
Target price Rp2,700
31 October 2019
Price Rp2,440
Target price Rp2,700
9M2019 Results: Margin Fell
- As of September 2019, PGAS booked revenue of USD 2.89 billion, down -2.7% yoy from USD 2.89 billion in 9M2018. Gross profit reached USD 887 million -8.7% yoy compared to 9M2018’s USD 972 million. As a result the gross profit margin decreased to 31.5% from 33% in9M2018.
- The decrease in revenue came from a decrease in transportation volume and lower upstream lifting volume as two producing oil and gas blocks expired in 3Q2018 ( South East Sumatera and Sanga Sanga blocks)
- EBITDA decreased by 20% yoy to USD 725 million, while the EBITDA margin was steady at 26%.
- Net Income declined by 47% yoy to USD 129 million, from USD 244 million in 9M2018. The net profit margin fell to 4.6% from 8.4% in 9M2018.
- Lower net income was the result of higher interest expense, impairment charges on upstream assets, and lower profits from joint ventures.
- We are expecting a better margin next year as PGAS plans to increase the price of gas in November 2019 for Industrial customers.
- PGAS’s consolidated distribution volume was stable at 971 BBTUD in 9M2019, this matches the 2019 distribution volume target which is a range of 970-990 BBTUD.
- Gas transportation volume in 9M2019 was 2,036 MMSCFD down from 9M2018‘s 2,094 MMSCFD and 2% below the 2019 target range of 2,070 – 2,100 MMSCFD.
- In upstream lifting, oil and gas lifting decreased by -27% to 40,552 BOETD, crude oil decreased by 35% to 1.5 MMBBL, gas decreased by -29% to 23,621 BBTU, LNG and LPG decreased by -16% to 13,457 BBTU and 21,095 MT respectively. Lower upstream lifting was due to two producing blocks expiring in 3Q2018.
- A DCF valuation with WACC at 8.94%, gives a upgraded target price of IDR 2,700 or 11% upside which is a 18.8x PE valuation within one year. HOLD
