BASML - INDO '08 PGAS FY08 preview

Daisy Suryo expects FY08 net profits to fall 14% YoY to Rp1.36tn. Meanwhile, Min SoE mentioned PGAS net profit in 2008 could reach Rp 2.14tn, +36% YoY. The wide discrepancies could be due to FX loss accounting treatment. We understand PGAS is trying to ask approval to capitalize the FX loss instead of expensing it in one go. In any case Daisy is being conservative and account for the whole Rp 2.6tn FX loss in 4Q08, resulting in 4Q loss of Rp 685bn. But core numbers should be firm, with net profits, EBIT, and revenues up 45%, 41%, and 47% QoQ, respectively thanks to volume ramp-up at PLTU Muara Tawar, where gas flow have risen to 620mmscfd in 4Q08, vs. avg 9M08 of 560mmscfd. Gas purchase cost also fell 14% to US$2.4/MMBTU, vs. 9M08 of US$2.8 as more cheap gas (~48% in 4Q08 from 9M08 of below 30%) came from Conoco Philips and Pertamina. Weak FY08 is behind us now, Daisy advises to focus on strong 1Q09 numbers. She sees 1Q09 net profits, revenues, and EBIT up 156%, 59% and 57% YoY thanks to strengthening IDR, continuation of volume ramp-up at PLTU Muara Tawar, and falling gas costs. BUY, PO Rp 2,852 (23% upside).