For PGAS, we amend our estimation for 2008 due to potential loss on foreign exchange transaction which we expect to be at a net loss of Rp1.4tn. This figures would erode our pretax profit estimates to Rp3.02tn, down 28% from our previous forecast. Meanwhile, we maintain our estimated top line figures to arrive at EBITDA growth of 41% for 2008. Apart from huge foreign debt, we consider PGAS as a strategic counter for its share in gas distribution business in Indonesia (market share of 93% as at end of 2007). We change our WACC to 12.5% (previously 12.9%) to account for decreasing macro risk and equity premium and arrive at target price of Rp2.477 per share for PGAS. BUY
Recommendation
Put into our DCF model, with WACC 12.5% and LTG3%, our current estimates resulted in target price for PGAS at Rp2.477 per share, still giving potential gain of 17% from yesterday’s closing at Rp2.125 per share. We maintain our BUY recommendation.
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