JAKARTA. Business performance of PT Pertamina Geothermal Energi Tbk (PGEO) is projected to continue progressing steadily following several expansion strategy designed by the company, according to OCBC Sekuritas Indonesia.

Kevin Jonathan Panjaitan, Analyst of OCBC Sekuritas, mentioned that as of now, PGEO has installed capacity of renewable energy of 672 megawatt (MW), even planning to increase it to 1 GW within the next two years. This target achievement will also be driven through merger and acquisition (M&A) initiatives.

“With this aggressive expansion, PGEO may capitalise on increasing demand for renewable energy, thus experiencing further revenue surge in the future,” added Panjaitan in Equity Research issued on July 10, 2024.

In addition, Panjaitan further said that PGEO has a support from adequate low-cost funding source as the company is still under Pertamina Group. Furthermore, he added that Pertamina Group also focuses on renewable energy development. It could be reflected through the issuance of Pertamina’s green bond listed on Singapore Stock Exchange.

In terms of operation, OCBC also expects PGEO’s stable revenue increase, driven by long-term contracts obtained by the company from PT Perusahaan Listrik Negara (Persero) atau PLN.

“With great growth potential from its plans of future capacity increase, further backed by stable revenue, we recommend to buy PGEO’s stock at approximately IDR 1,400 per share, according to discounted cash flow approach,” Panjaitan said. (KR/ZH)