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PGAS

Contact our analyst Eka
Hold
15 September 2020
Price Rp 1,145
Target price Rp1,360
Down on Lower Demand
  • The impact of the Covid-19 outbreak is weakening demand across all of PGAS’ businesses.
  • Despite June increasing by +14% MoM due to reopening, PGAS’s distribution volume still decreased -9% YoY to 811 BBTUD in 1H2020.
  • Gas transportation volume in 1H2020 was 1,290 MMSCFD, -5% YoY.  Lower gas transportation volume is inline with lower gas demand from major customers.
  • Upstream lifting also decreased, with oil gas lifting down -30% YoY to 20,492 BOEPD. Crude oil decreased by -24% YoY to 3,629 BOEPD, gas decreased by -30% YoY, LPG decreased by -56% YoY, and LNG decreased by -30% YoY. Lower lifting volume was also impacted by the crash in oil prices.
  • As Jakarta has once again implemented large-scale social restriction in September, we are expecting lower gas demand will still weigh on PGAS’s sales volume in 2H2020

​ASP Decrease
  • Due to the Ministry of Energy and Mineral Resources Decrees 89 and 91 (2020), PGAS is going to fully implement the gas price of US$6,00/MMBTU on the volume of 646,13 BBTUD to seven industrial sectors and PLN starting from August 2020.
  • Previously,  the new gas price policy was partially implemented starting from 2Q2020 and resulted in a lower ASP and APP in 1H2020.

More Efficiency
  • 2020 has been a challenging business environment for most sectors due to the covid-19 outbreak. PGAS is no exception, pressed by lower demand and a decline in ASP.
  • As of 1H2020, PGAS’s revenue decreased -18% YoY to US$ 1.47 billion from US$ 1.79 billion in 1H2019 driven by lower revenue in most of PGAS’s businesses.
  • Despite a decrease in the cost of revenue of -17% yoy as PGAS started to partially procure its gas from upstream suppliers at lower prices, Gross profit still decreased -20% YoY to US$ 463 mn.
  • As PGAS continues to reduce opex by lowering salaries and depreciation expenses, operating expense decreased -18.4% YoY, but operating income still declined -23.4% YoY  to US$ 193 mn.
  • Profit before tax decreased by -47% YoY to US$ 68 mn.
  • PGAS net income of US$7 mn was down -88% YoY from US$ 54mn in 1H2019.
  • As a result of the weaker 1H2020 results, we lower our 2020F PGAS revenue and profitability to US$ 2.86 billion and US$ 43 mn respectively.

Valuation:  HOLD with TP 1,360
  • Our DCF valuation with WACC at 7.8%, gives a target price of IDR 1,360 or 19% upside which is a 26x PE valuation within one year. We recommend Hold.
Read the full report

Previously

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

Setiabudi Atrium, Jl. HR Rasuna Said No.62, RT.18/RW.2, Karet Kuningan, Setia Budi, Jakarta Selatan, DKI Jakarta 12920
+62215206678 | email: kyc.online@binaartha.com

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