CLSA Perusahaan Gas Negara (PGAS IJ)

Perusahaan Gas Negara (PGAS IJ)

Our analyst Swati has prepared a note on Perusahaan Gas Negara (PGAS IJ) which presented at our Vegas forum yesterday (note attached). We believe that PGAS is poised for significant earnings and cashflow-generation growth over the next few years.

Feedback from the Forum
PGAS said a large part of its growth in 2009 will be from utilities switching from diesel to natural gas.
When asked to forecast volume of sales three years out, PGAS commented that it will depend on how much they can beef up their supply line -- its LNG plan should help.
PGAS doesn't foresee any major capex plans over the next five years. It will focus more on medium to low scale projects, and plan on US$50-60mn per year in maintenance capex.

PGAS has been accumulating cash aggressively since last year. Their dividend payout ratio has historically been 50%, though that may increase.
There has been speculation of the government selling down its stake, PGAS simply commented that similar rumors in the past have gone unfounded.