Mandiri Sekuritas Medco Energi: FY09 net profit fell 48.0% yoy, lower than consensus estimates (MEDC, Rp2,600, Neutral, TP: Rp2,650)

􀂄 MEDC’s FY09 revenue drop 48.0% yoy to US$668mn. This is inline with ours yet below consensus estimates, as it only represents 83.6% from consensus’ FY09F estimates. Lower top line is due to significantly lower net oil and gas sales (-
44.1% yoy), chemical and other petroleum products (-77.9% yoy) since there was no more income from drilling operation. The company reported that hydrocarbon lifting falls 16.7% yoy to 52.8 mboepd, as well as average realized selling price of crude oil by 36.6% yoy to US$64/bbl and gas price by 26.1% yoy to US$3.1/mmbtu.

􀂄 Gross margin was slightly down to 34.3% in FY09 compare with FY08 of 38.8%. Down to operating, the company was not able to lower its expenses (+1.6%), thus margin is less half of FY08. The company reported net profit of US$19mn, which is above ours yet below consensus estimates of some US$38mn. It is higher than our estimates as we did not factored in several irregular items in our forecast, namely net gain on disposal of subsidiaries of US$30.6mn, gain on short term investment of US$24.1mn, and gain from derivative transaction of US$6.7mn. MEDC is currently trading at EV/2P of US$3.4/boe, as it transfers some of its contingent reserves to 2P (+45% yoy).