Today PGAS rallied again after opened low below the support, but as I told you that this stock is still in top picks the indicators still indicate the upward motion/force to this stock. Today, market is a little bit reducing their buying in this stock due to the weekend.
Well, back to analysis.....
Fundamentally:
Plans to build two LNG floating terminals
PGAS plans to build two LNG floating terminals - one in West Java and the other in North Sumatra. The West Java floating terminal will be built by a consortium comprising PGAS, PLN and Pertamina, while the North Sumatra Terminal shall be fully owned by PGAS. It will take an estimated 24 months to build the floating terminals. As for the LNG ships, they are very likely to be leased by PGAS since they are available at a reasonable price. This means PGAS will need to invest in a floating storage and regasification unit (FSRU) plus other infrastructure such as off/onshore pipelines and an onshore receiving terminal. The estimated investment cost for each terminal is put at US$100-300mn, depending on the technology used.
Proposed transmission fee increases in the hands of BPH Migas
PGAS has improved the Grissik – Singapore gas transmission pipeline with buckling and an additional compressor that will increase the capacity. Due to this additional investment, PGAS intends to increase the toll fee from US$6.9cents/mmbtu to US$13.0cents/mmbtu However, the planned hike in toll fees is subject to approval from BPH Migas due to upstream cost recovery issues. In this regard, BPH Migas has yet to make a decision. Yet if the planned hike in toll fees is approved, then PGAS’s average toll fee could increase to US$8.8cents/mmbtu from US$6.4cents/mmbtu presently. But considering that transmission revenues account for less than 10% of total revenues, the higher toll fee would only boost revenues by 3.7%, if approved.
Recalling US$275mn of bonds
PGAS is recalling US$275mn of bonds as a result of the abolishment of the tax treaty with Mauritius (tax call). Although this issue has been around since FY05, it was only recently that PGAS has been able to exercise its right to call its bonds due to its strong financial position. PGAS will refinance its bonds with loans from Standard Chartered. The bank will provide a loan with a tenor of 3 years (1 year grace period) with 8 quarterly installments and an interest cost of LIBOR + 310bps. Note that since the interest cost is lower than the original cost of 7.5%, there are interest cost savings.
Source: OD
Technically:
This stock is still moving upward as the fundamental still good, yet it is re-buying their bonds. Well, technically I predicted that it will create a 3-white-soldiers pattern, which is a strong Bullish signal after a long time of sideways. Well, the MACD still shows the upward force as this is the 2nd day of rally, Stochastic is moving to Oversold Area, but not confirmed by RSI which is still at the middle point. In conclusion, PGAS is still gassing upward while markets are slowing down their purchases. See the Chart!!!
Rating: Buy On Strength, TP 4150-4225 (Fibo 150%-161.8%)
