UBS Investment Research Perusahaan Gas Negara Tbk - 9m09 results is a mixed bag

􀂄 PGAS just published its 9m09 results
PGAS’ 9m09 revenue is 67% of UBS full year estimate (slightly weaker) but 75% of consensus (slightly above). PGAS’ 9m09 EBITDA is 68% of UBS full year estimate slightly weaker) but 77% of consensus (slightly above). Core profit is inline with UBS estimate and slightly above consensus.

􀂄 No receivables problem surfacing
Our analysis of PGAS 9m09 shows no sign of troubles with its receivables. PGAS posted 29 days of receivables in 9m09, lower than 32 days of receivables in 6m09 and also lower than 56 days of receivables in 9m08. This should alleviate concerns of PLN (Perusahaan Listrik Negara) delaying payments to PGAS.

􀂄 Will review forecasts after conference call
PGAS management will hold its customer post-result conference call on October 27th at 5pm Singapore/HK time. We will review our forecasts after conference call. We believe the main focus during the conference call is likely to be on potential distribution or transmission gas price increase in 2010, future gas supply signing, potential projects, further clarification of account receivables with PLN, and management guidance for 2010 volumes.

􀂄 Valuation: DCF-based price target of Rp4,300 (16% upside)
Our price target is based on a WACC assumption of 13% and a long-term growth of 5.0%.