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Pertamina Persero PT
- Bond: PERTIJ 3.1 30
- Indicative Yield-to-Maturity (YTM): 4.782%
- Credit Rating (Moody’s/Standard & Poor’s/Fitch): ( Baa3 / - / BBB)
Detailed Information
Fundamental View
AS OF 27 Jun 2024- Pertamina enjoys very strong linkages with the Government of Indonesia (GoI) and is assured of extraordinary support in times of distress.
- Slightly higher YoY FY24E Brent crude prices could lift upstream margins and overall EBITDA (given the upstream business accounts for >65% of consolidated EBITDA).
- Although leverage typically remains low, Pertamina incurs large capex spending that could pressure its free cash flow generation.
- High persisting dividend outflows could restrain free cash flow improvements.
Business Description
AS OF 27 Jun 2024
Pertamina is involved in a broad range of upstream and downstream oil, gas, geothermal and petrochemical operations. We remain comfortable with Pertamina’s credit profile aided by its strong government backing and expectations of slightly higher YoY FY24 average Brent crude prices that could support upstream margins (FY23 credit metrics: 1.9x/0.4x).
Risk & Catalysts
AS OF 27 Jun 2024- Pertamina’s profitability is materially affected by volatility in oil & gas prices. Prolonged periods of low oil prices could hurt upstream earnings that form the bulk of overall EBITDA (>65%).
- As retail prices of certain fuel products are regulated, realized prices may be below its cost of sales.
- Pertamina has to initially absorb the shortfall between the regulated retail price and the cost of producing and distributing certain fuel products. If the price of crude oil exceeds the price ceiling set by the GoI, the company may receive insufficient subsidy reimbursements.
- Capex typically remains elevated and which pressurizes its free cash flow generation.
Key Metric
AS OF 27 Jun 2024| $ mn | FY19 | FY20 | FY21 | FY22 | FY23 |
|---|---|---|---|---|---|
| Debt to Book Cap | 36.2% | 38.5% | 41.2% | 42.1% | 37.6% |
| Net Debt to Book Cap | 22.4% | 18.9% | 21.9% | 12.5% | 8.5% |
| Debt/Total Equity | 56.8% | 62.5% | 70.0% | 72.7% | 60.4% |
| Debt/Total Assets | 26.4% | 28.3% | 29.9% | 30.8% | 27.4% |
| Gross Leverage | 2.2x | 2.4x | 2.5x | 1.9x | 1.9x |
| Net Leverage | 1.3x | 1.2x | 1.3x | 0.6x | 0.4x |
| Interest Coverage | 8.1x | 7.8x | 8.7x | 11.2x | 8.9x |
| EBITDA Margin | 14.9% | 19.9% | 16.0% | 16.7% | 17.7% |
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CreditSight View Comment
AS OF 27 Jun 2024Pertamina is involved in a broad range of upstream and downstream oil, gas, geothermal and petrochemical operations.We remain comfortable with Pertamina’s credit profile aided by its strong government backing and expectations of slightly higher YoY FY24 average Brent crude prices that could support upstream margins.
Recommendation Reviewed: June 27, 2024
Recommendation Changed: May 16, 2023
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