Indonesian Companies in Focus: Perusahaan Gas Negara (PGN)
Net profit of Perusahaan Gas Negara (PGN), Indonesia's largest natural gas transportation and distribution company, fell nearly 44 percent in 2015 as gas demand from the industry sector collapsed amid slowing economic growth. Weak demand caused sharply falling gas prices. Shares of PGN, a government-controlled company that is listed on the Indonesia Stock Exchange, plunged nearly 50 percent over the past two years amid the global commodity slump. So far this year shares of the company have fallen 4.74 percent.
Despite the weak financial performance of Perusahaan Gas Negara (PGN) in 2015 there are signs that a rebound is on the way. If we go back to the fourth quarter of 2015 - when Indonesia's economic growth accelerated to a pace of 5.04 percent (y/y) - demand for gas from the industrial sector and from state electricity firm Perusahaan Listrik Negara (PLN) increased. As a result PGN's revenue rose 7.8 percent (quarter-on-quarter) to USD $779 million in Q4-2015, particularly supported by a 7 percent (q/q) rise in distribution volume to 841 mmscfd in Q4-2015. Meanwhile, PGN's EBIT and EBITDA rose 68 percent (q/q) and 26 percent (q/q), respectively in Q4-2015.
Meanwhile, transmission volume of PGN in Q4-2015 stood at 855 mmscfd, up 10 percent (q/q) supported by the start of operations of the Kalimantan-Java transmission pipeline that accounted for 75 mmscfd of the company's total transmission volume in the last quarter of 2015. The company's cash margin rose to USD $3.05 per mmbtu in Q4-2015 from USD $2.92 per mmbtu in the preceding quarter. In line with the higher cash margin, the cost of gas fell 3.2 percent (q/q), while the average selling price remained flat at USD $9.1 per mmbtu.
The performance of PGN in the fourth quarter of 2015 provides optimism about the company's performance in 2016, particularly given global oil prices have shown a rising trend in Q1-2016 (after touching 12-year lows in January 2016). Therefore it will be interesting to learn the company's Q1-2016 corporate earnings report.
Securities and investment company Samuel Sekuritas Indonesia has put its target price for PGN's shares at IDR 3,400 each. On Thursday (14/03) the company's shares fell 1.32 percent to IDR 2,615.
Future Projection Financial Performance Perusahaan Gas Negara:
| 2014 | 2015 | 2016F | 2017F | |
| Net Revenue | 3,253.4 | 3,068.8 | 3,174.0 | 3,585.0 |
| Revenue Growth (%) | 8.4 | (5.7) | 3.4 | 13.0 |
| EBITDA | 1,023.0 | 800.0 | 817.0 | 868.0 |
| EBITDA Margin (%) | 35.2 | 30.6 | 29.4 | 28.3 |
| Net Income | 711.2 | 401.2 | 370.0 | 399.0 |
| Net Income Margin (%) | 24.4 | 15.4 | 13.3 | 13.0 |
| P/E Ratio (x) | 6.3 | 11.2 | 12.1 | 11.3 |
| EV/EBITDA | 4.2 | 5.4 | 5.3 | 5.0 |
| P/BV (x) | 1.6 | 1.6 | 1.5 | 1.4 |
| Net Gearing (x) | 0.3 | 0.5 | 0.4 | 0.3 |
| ROE (%) | 26.3 | 15.1 | 13.2 | 13.4 |
| ROA (%) | 11.5 | 6.3 | 5.8 | 6.0 |
in million US dollar unless otherwise stated
Source: Samuel Sekuritas Indonesia (24/03/2016)