Riset Saham, Rabu 12 Juni 2013

1.Perusahaan Gas Negara   | More than a pipe dream
PGAS IJ / PGAS.JK | OUTPERFORM - Maintained | Rp5,350.00 - Tgt. Rp6,100.00
Mkt.Cap: US$12,857.00m | Avg.Daily Vol: US$14.69m | Free Float: 43.00%
Gas Transmission & Dist | Author(s): Erindra KRISNAWAN, Erisca WIRAATMADJA

Despite the potential disappointment in short-term distribution volume growth, we believe that PGAS’s outlook remains positive. More aggressive investment in capex for its existing business, LNG and upstream assets is justified to support long-term growth potential. We trim our FY13-15 EPS estimates for higher capex assumptions. But we raise our SOP-based target price from Rp5,500 to Rp6,100, mainly to reflect a more optimistic LT growth assumption of 6% instead of 5% given the more aggressive expansion. We maintain our Outperform rating in view of the favourable outlook and reasonable valuation.

Short-term risk
Despite the positive volume trend over recent quarters, management indicated that additional volume from the new potential supplies in 2Q13 has yet to flow into PGAS’’s network. In particular, we now anticipate slower-than-expected additional supply from ConocoPhillips, which we originally expected to start flowing in during 2Q13. Assuming flat 2Q13 volume, 2H13 volume will need to average close to 900mmsfcd to meet our full-year forecast. This spells volume risks as we also see downside from the East Java unit given the unexpected oversupply situation in the region.

Positive LT growth pipeline
PGAS is embarking on a strategy to expand its existing business, tap into the potential growth of LNG supply and venture into upstream oil and gas. We think that sustaining its core piped gas distribution business by maintaining a profitable gas margin and expanding gas supply will remain a key part of the company’s strategy.