PGAS
Contact our analyst Eka
BUY
28th September 2022
Price Rp 1,750
Target price Rp 2,590
28th September 2022
Price Rp 1,750
Target price Rp 2,590
Upstream revenue higher
2Q2022: Higher Operating Profit
Valuation: BUY, with TP 2,590
- Upstream oil & gas maintained strong growth, +125% YoY and +40.4% QoO to USD 172 million due to higher crude oil and gas prices. This boosted PGAS total revenue +23.45% YoY, +8% QoQ to USD 903.2 million in 2Q2022. For 1H2022, PGAS revenue reached USD 1.74 billion, +18.8% YoY with upstream business growth of +131% YoY to USD 294.2 million.
- Gas distribution revenue also increased +6.7% YoY to USD 607.6 million, inline with a transmission sales increase of +26% YoY to USD 59 million as gas sales volume was higher from strong industrial demand.
- In term of gross profit margin, trading and transmission margins were lower at 13.4% compared to 13.8% in the 1Q2022. Exploration and production of oil and gas jumped to 47.5% from 31.9% in 1Q2022 due to higher crude oil prices.
- We are targeting PGAS revenue in 2022F to reach USD 3.6 billion or +21% growth.
2Q2022: Higher Operating Profit
- With higher revenue, PGAS net profit grew +21.3% YoY to USD 238.5 million in 1H2022, with a slightly higher net profit margin of 13.7%. For the 2Q2022, PGAS net profit decreased -11.1% YoY, but was higher by +94.7% QoQ, to USD 120 million because of higher income tax expenses (+931%YoY to USD 62.8 million) due to the higher upstream revenue.
- PGAS operating profit was higher, +93.2% QoQ and +61.5 YoY to USD 185.4 million with operating expenses down -63.2% YoY. This resulted in a higher OPM of 20.5% in 2Q2022 from 13.1% in 1Q2022.
- Profit before taxes was also higher +34% YoY or +93% QoQ to USD 201.3 million, helped by lower finance costs which were down -29.4% YoY, and higher gains in foreign exchange, +150% YoY.
- As the upstream business continues its upward trend, we expect PGAS’s net profit in 2022F will reach USD 490.7 million or +61.5% YoY.
Valuation: BUY, with TP 2,590
- We maintain our recommendation to buy as we expect upstream business to maintain an upward trend. Our DCF valuation with WACC at 15%, gives a target price of IDR 2,590 or 49% upside which is a 7.4x PE valuation within one year.