NISP PGN’s 1H10 distribution volume only down by 1.7% QoQ in 1H10 (PGN, Rp4,000, Buy)

PGN during its public expose cited that its distribution volume in 1H10 reached
827mmscfd or decreased slightly by 1.7% from 841mmscfd in 1Q10. The
company stated that the supply disruption from Conoco Phillips has improved to
320mmscfd from as low as 275mmscfd in March ’10.

In the meantime, the company’s transmission volume is up by 11.9% to reach
848mmscfd from 758mmscfd in 1Q10 as the company booked the converted
supply from Conoco Phillips as transmission revenue.

The company’s distribution average selling price reached US$6.37/mmscfd up
from US$5.5mmscfd in 1Q10 after the company raised its selling price by 15% in
April 2010.

The company’s 1H10 operational figures are relatively in-line within our
expectation as we expect some improvement on Conoco Phillips gas supply.
Overall, we foresee that PGN’s 2Q10 performance could be higher than the 1Q10
considering the selling price hike impact has taken place in 2Q10. The company
will release its 1H10 result by the end of this month. PGN is currently trading at
2010F PER of 14.2x and EV/EBITDA of 9.0x, Buy.