by DBS Securities
PGAS is budgeting US$200m capex for the year, which will be financed internally. This capex will be for the construction of LNG Terminal in Jakarta and Belawan. PGAS is also finalizing the agreement to secure LNG supply from Tangguh field. Supply from Belawan will be distributed through PGAS’ pipeline to meet the needs of power plants in Sumatra as well as industry players there. PGAS is also finalizing a new gas field acquisition, which it will be a minority shareholder.
On another note, PGAS’ shareholders have agreed on dividend payout of 60%. PGAS has paid interim dividend of Rp10.2 per share on 4 January 2011, and the final dividend to be paid will be Rp144.24 per share.
PGAS’ capex plans and dividend payment came in within our expectation. We reiterate our Buy call for PGAS for its promising outlook and attractive valuation. At current valuation of 12x FY11PE, the share trades at a discount to regional gas peers of 16x. However, it offers higher yields of 4% against peers’ average of 2%.