PGAS' 1H14 NET PROFIT CAME IN-LINE

PGN (PGAS) has released its 1H14 result with revenue growing by 14.2% yoy to US$1.70 bn while
net profit down by 19.1% yoy to US$370 mn. The lower bottom line in 1H14 still dragged by a
US$18.3 mn of forex loss Vs. US$68.2 mn gain in 1H13 and also from a much lower derivative gain
of only US$4.5 mn Vs. US$41.6 mn in 1H13. Excluding this non-core items, PGAS' core profit grew by
10.4% yoy to US$384 mn Vs. US$348 mn in 1H13. On the operational side, distribution volume in
1H14 reached 866 mmscfd, up by 4.8% yoy, on the back of higher volume from Conoco Phillips.
Meanwhile, transmission volume was down by 1.8% to 860 mmscfd.

(in US$ mn)                            1H14    1H13      YoY      1H/'14F* Revenue                                1,704   1,492     14.2%    51.8% Gross Profit                            736      705       4.5% Operating Profit                      518      487        6.4% Net Income                            370      458       -19.1%   43.8% Core Net-Income                     384     348        10.4%    45.5% Gross Margin                           43.2%  47.3%   -4.0% Operating Margin                     30.4%  32.6%    -2.2% Net Margin                             21.7%   30.7%    -8.9% Operational highlights Distribution Volume (Mmscfd)     866.1   826.0     4.9%      98.9% Transmission Volume (Mmscfd)   859.6   876.4     -1.9%     103.0%

On a quarterly basis, the company booked a strong improvement in 2Q14 with net profit up by 9.5%
qoq while revenue only inched up by 2.4% qoq mostly driven by much higher margin from upstream
business with gross margin of 47.3% Vs. gas distribution business of 38.5%.

Comment: PGAS' 1H14 result came relatively in-line within our estimate as core profit represents
46% of our estimate. We remain optimist that our FY14 numbers could be achieved as upstream
business will provide higher contribution with the full impact from Pangkah Block will occur in 2H14.
PGAS’ is currently trading at PER 2015F of 14.3x.