Indonesian Energy Companies in Focus: Perusahaan Gas Negara
Shares of Perusahaan Gas Negara, the largest natural gas transportation and distribution company in Indonesia, are showing spectacular growth in 2018. On Tuesday (23/01) the company's shares surged 8.91 percent to IDR 2,690 a piece. So far this year, its shares have grown a whopping 53.71 percent. What is the story behind this spectacular performance?
Indeed Perusahaan Gas Negara (PGN)'s corporate earnings are expected to improve in 2018 on the back of rising gas consumption in Indonesia and climbing crude oil prices (PGN's subsidiary Saka Energi Indonesia is engaged in the upstream oil and gas industry). However, there is something else at play that makes investors currently hunt for PGN shares.
The central government is planning to create a state-owned oil & gas holding company in an effort to improve the management of Indonesia's oil & gas industry, and particularly strengthening the role of the government in this industry. Currently the government has stakes in various companies that are engaged in the nation's energy sector. However, synergy between these companies is not optimal.
The new holding company would be led by fully state-owned energy company Pertamina. But PGN will also become part of the structure. Currently, the Indonesian government owns a 57 percent stake in PGN. This stake will be shifted to Pertamina (hence PGN will become a subsidiary of Pertamina), while PGN will acquire Pertamina Gas (Pertagas), currently a unit of Pertamina, in order to integrate downstream natural gas activities.
On 25 January 2018 extraordinary general meeting of shareholders is scheduled by PGN and one of the key points on the agenda is the adjustment of the company's Articles of Association due to the new structure.
Future Projection Financial Performance Perusahaan Gas Negara:
| 2015 | 2016 | 2017F | 2018F | 2019F | |
| Net Revenues | 3,068.8 | 2,935.0 | 2,899.0 | 3,318.0 | 3,201.0 |
| EBITDA | 862.0 | 757.0 | 637.0 | 730.0 | 785.0 |
| Net Income | 401.2 | 304.0 | 157.0 | 287.0 | 322.0 |
| P/E Ratio (x) | 10.3 | 14.0 | 27.0 | 14.8 | 13.1 |
| P/BV (x) | 1.4 | 1.3 | 1.3 | 1.2 | 1.2 |
in million US dollar unless otherwise stated
¹ in US dollar
Source: BCA Sekuritas (22/01/2018)
News about the progress with the establishment of the new holding company led to great investor appetite for PGN shares as prospects for PGN turn become more upbeat.
Up to the third quarter of 2017, PGN reported USD $2.16 billion in sales, only marginally higher than USD $2.15 billion recorded in the same period one year earlier. In 2018 the company's sales are expected to rise more significantly (around 6 - 9 percent), partly on the back of rising sales of compressed natural gas products and additional sales stemming from its new unit Pertagas.
Stock Quote Perusahaan Gas Negara - PGAS: