Indonesian Companies: Upstream Oil & Gas Services Provider Elnusa
Elnusa is an Indonesian company that provides services in the upstream oil & gas sector. Although the oil & gas sector has been plagued by low prices, thus curtailing corporate earnings, there is something that makes Elnusa's position strong. Recently, Elnusa purchased a seismic vessel that can be used for marine seismic surveys for oil & gas exploration. In Indonesia only a few companies have the skills and equipment for marine seismic activities (and only a few companies have a seismic vessel). Moreover, Elnusa's new vessel is a modern one that is equipped to conduct high quality surveys in deep sea.
The rate to rent this vessel can go up as high as USD $200,000 per day (implying it could raise a total of USD $73 million provided the vessel is rented out each day of the year, although the vessel's maintenance costs should be much higher than those of normal vessels). The new vessel, bought by Elnusa's subsidiary Elnusa Trans Samudera, is expected to be delivered in May 2016. Although the body of this vessel was made in 1992, the vessel was completely rebuilt in 2013. For Indonesia this vessel is unique as it can carry 12 streamers (each having a length up to ten kilometers) to carry out seismic survey in Indonesia's deep sea waters. It can also produce high quality 3D seismic images. As the remaining oil & gas reserves of Indonesia are more and more located in deep sea water, such a vessel is required to discover new reserves.
Shares of Elnusa have been experiencing a volatile performance in line with commodity prices (especially crude oil). Starting from mid-2015 the company's shares plunged significantly along crude oil. However, when oil prices started to rebound in February 2016, shares of Elnusa rose accordingly. So far this year Elnusa's shares have soared a whopping 73.3 percent. On Friday (15/04) its shares rose 1.90 percent to IDR 428 a piece. Trimegah Securities set its target for Elnusa's shares at IDR 455 a piece.
Elnusa is also planning to enter the power generation sector (electricity generation using flare gas). This move would diversify its business activities (hence reducing the company's dependence on the oil & gas sector). This move would also be in line with the view of the Indonesian government that wants to enhance the role of gas as a source for the nation's power plants. Elnusa's major shareholder (controlling a 41 percent stake) is state-owned energy company Pertamina and therefore Elnusa has a close relation with the government. Regarding its move to expand into the power generation sector Elnusa will first communicate further with Indonesia's upstream oil & gas regulator SKK Migas. Elnusa's key business segment remains oil & gas services (logistics, drilling and seismic activities).
Future Projection Financial Performance Elnusa:
| 2014 | 2015 | 2016F | 2017F | |
| Net Revenue | 4,221.2 | 3,775.3 | 3,851.0 | 4,125.0 |
| Net Profit | 425.8 | 375.6 | 366.0 | 397.0 |
| P/E Ratio (x) | 8.3 | 7.7 | 7.1 | 6.5 |
| PBV (x) | 1.0 | 1.0 | 0.9 | 0.8 |
in billion of IDR rupiah, unless stated otherwise
Source: Trimegah Securities (15/04/2016)