JAKARTA. PT Pertamina (State Owned Oil Company) apparently will be the holding of oil and gas state owned enterprises (SOEs). The holding will supervise PGAS (PT Perusahaan Gas Negara Tbk or State Gas Company), while Pertamina’s subsidiary PT Pertagas will be supervised by PGAS.

The establishment of this holding will bring positive impacts for PGAS. Analyst NH Korindo Securities Raphon Prima said, this consolidation will expand PGAS gas pipe networks from Java and Sumatra to other places.

“Pertamina is a company with a very huge network. PGAS will have a broader scope, thanks to the consolidation of Pertamina’s assets to PGAS,” said Raphon, Monday (9/1).

Raphon continued, in terms of technical aspects, the consolidation will develop PGAS’ infrastructure and distribution volume, since Pertagas and PGAS basically have similar business type.

Likewise, analyst at Erdhika Sekuritas Toufan Yamin said, the consolidation of Pertagas with PGAS will increase the number of customers. “The holding will make the gas distribution more efficient. And this will bring positive impact to PGAS, as the competition will be eliminated,” Toufan said.

Let alone, PGAS recently is encouraging distributions to household and retail sectors. Pertamina’s networks will allow PGAS to reach new regions. To date, the PGAS has three gas distribution areas. The first area covers West Java, Lampung, and Palembang, while the second area covers Central Java and Eastern Java. Another area covers North Sumatera and Riau.

By the third quarter of 2016, PGAS had distributed 787 mmscfd gas. Toufan predicts, by the end of 2016, distribution volume of PGAS might have reached 812 mmscfd.

This year, the distribution volume may increase to 870 mmscfd. “The number has not included yet the results of Pertagas consolidation. The volume may be much higher,” Toufan said.

Toufan predicts that as of 2016 PGAS revenues would have increased only by 6.59% to Rp 39.54 trillion, while the net profits dropped from Rp 5.5 trillion in 2015 to Rp 4.9 trillion.

According to Toufan, the infrastructure enhancement and the increase in the number of customers may increase PGAS’s revenues and net profits by 10.87% to Rp 43.8 trillion and by 8.59% to Rp 5.4 trillion, respectively. These numbers have not included the potentials of additional revenues from Pertagas.

According to Raphon, investors may benefit from the performance improvement in this year. “The valuation also remains attractive,” Raphon added.

Raphon recommends ‘buy’ for PGAS’ shares with the price of Rp 2,900 for every share. Toufan recommends ‘buy’ for PGAS and increases the price target to Rp 3,350 per a share. On Monday (9/1), the price of a PGAS’ share dropped by 2.82% to Rp 2,760. (Muhammad Farid/Translator)

 

Editor: Sanny Cicilia