Credis Suisse PERUSAHAAN GAS (PGAS): Minimal impact leakage in Transmission– Buy

This leakage is minimal impact to its Transmission earnings. At Rp3,875- PGAS is trading on 14.0x-12.7x 2010F-11F PER, 4.3% 2011F Dividend Yield, and implying 37% upside to DCF Rp5,300. We reiterate Buy PGAS as laggard with Catalyst mainly from volume growth as Distribution Tariff increase is expected in 2012F after April-2010 +15% Distribution Tariff increase

· PGAS IR (Press Release attached): The leakage was under control hence the status was lowered from emergency to recovery status. Repair procedure is expected to take a few days. PGN is currently assessing any financial impact but does not expect material impact. Grissik – Duri transmission pipeline has started its operation since 1998 to deliver natural gas from ConocoPhillips’ gas field in Grissik, South Sumatera to Chevron Pacific Indonesia (CPI) station facilities in Duri. The 536 km transmission pipeline is owned and operated by Transgasindo, a joint venture of PT Perusahaan Gas Negara (Persero) Tbk 59.87%, Transasia Pipeline Pvt. Ltd (Transasia) 40% and Yayasan Kesejahteraan Pegawai dan Pensiunan Gas Negara 0.13%. Further, Transasia is a consortium of leading oil and gas enterprises consisting of Conoco Indonesia Holding Ltd., Petronas International Corporation Ltd., Talisman Transgasindo Ltd. dan SPC Indo-Pipeline Co. Ltd.

· Fonny Surya: This pipe is transporting approximately 420 mmscfd of 3rd party's gas and it is currently closed down for further investigation and recovery procedure. In the past, it normally took PGAS only few days to fix the problem. Assuming no more than 2 weeks for the pipe to resume to normal operation, financial impact is minimal (less than 0.5% of earnings). We thus reiterate our outperform rating on PGAS. Share price has underperformed while fundamental remains strong given strong demand and potential additional volume secured through LNG, M&A and various other gas suppliers.