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Operational leg up from M&A. ENRG has been busy this past semester, with various deals and contracts on its table. There are four M&A deals that we’d like to highlight: 1) Acquisition of PT Sulawesi Regas Satu; the acquired company has a contract to lease an FSRU facility to PLN Gas & Geothermal, and the facility can supply up to 24 mmcfd, 2) PSC agreement to operate the Bireun Sigli block in Aceh with a planned capex of USD 36 million for the next three years and estimated resources of 2.1 tcfd of gas and 359 mboe of oil, 3) Acquisition of a 90% stake and operatorship in Siak PSC block and a 90% stake and operatorship in Kampar PSC block, with a combined production rate of 2,200 – 2,600 mbopd of oil, and 4) planned Capex of USD 10.07 million for South CPP and Tonga block exploration. All these corporate actions might be strong growth catalysts for ENRG, as we believe ENRG can take advantage of oil and gas price hikes, which should help bolster its earnings. We project ENRG to produce 157 MMSCFD of gas in FY23F and 173 MMSCFD in FY24F, as well as 6.6 mbopd of oil in FY23F and 8.7 mbopd in FY24F, with an ASP of USD 85.26/bbl.
Favorable earnings outlook. With several projects completed or scheduled for completion in 2023 and some others in 2024, we strongly believe that ENRG will post better earnings in the future. Although we might see some decline in FY23F (due to the high base effect), we are positive that ENRG will bounce back in FY24F, thanks to strong commodity prices and the completion of its projects. We forecast ENRG to book FY23F revenue of USD 427 million (-5% yoy) and FY24F revenue of USD 482 million (+13% yoy). However, due to the size of its projects, ENRG might book a rather significant cash cost of USD 16.37/boe, though this figure should gradually decline over time. We then project ENRG to book FY23F/FY24F EBITDA of USD 267 million/USD 299 million and net profit of USD 60 million/USD 73 million, reflecting EPS growth of -9.4%/+20.6%.
Maintain BUY, TP at IDR 340. As we rollover our valuation to FY24F, we reiterate our BUY rating on ENRG albeit with a lower TP to IDR 340, reflecting 4.0x EV/EBITDA FY24F (+1.5 5-Year ST. Deviation, 16% discount to global and regional peers). Risks: Commodity slump, disruptions in project delivery.
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