State Gas Company’s Share Price Offered Too Low
Friday, 15 December, 2006 | 14:43 WIB

TEMPO Interactive, Jakarta: Some analysts considered that selling shares of 5.31 percent of PT Perusahaan Gas Negara (PGN) at Rp11,300 was too inexpensive.

"It should reach Rp14 thousand per share,” said Ben Santoso, analyst of PT Nawalatu Cakrawala Securities yesterday (12/14) in Jakarta.

The price estimation can be achieved, said Ben, by assuming that the transmission pipelining project of Duri-Dumai-Medan , 500 kilometers in length will be implemented soon and that there will be a sufficient gas supply before 2010. In addition, the impact of the Lapindo mudflow on the company was insignificant. “However, it was up to the government as regards the price,” he said.

Mining analyst Sebastian Tobing of PT Trimegah Securities stated a similar opinion. According to him, the proper value of PGN shares was around Rp16,900 per share. “This is based on a discounted cash flow calculation.”

Sebastian added, it means that should the government sell at Rp11 thousand, the discount will be 53.64 percent. If it was compared to the PGN share price on Wednesday (12/13) the transaction of Rp11,300 per share, the price was discounted at 2.7 percent.

During the year, the highest shares of PGN were Rp13,850 per share on trade as of 8 May 2006. Therefore, Sebastian estimated that the share price will rise after divestment process is over. “It is best that investors buy the gas company's shares.”

Yuliawati | Wahyudin Fahmi | MUCHTAR WIJAYA (PDAT)