Why Indonesia’s PGN (PGAS) Is Primed to Surge 24% as Gas Volumes Recover

JAKARTA, Investortrust.id — PT Perusahaan Gas Negara Tbk (PGAS), the gas distribution unit of state energy giant PT Pertamina (Persero), is rebounding strongly as gas trading volumes rebound and valuation multiples remain deeply discounted.

BRI Danareksa Sekuritas, a leading state-owned brokerage firm in Indonesia, reinitiated coverage on PGAS on Tuesday, July 28, 2026, assigning a "Buy" rating with a target price of Rp 1,900 ($0.12) per share. The bullish target implies a lucrative 24.2% upside from the stock’s recent closing price of Rp 1,530 ($0.10) per share.

Indonesia's transition toward cleaner energy sources places natural gas infrastructure at the forefront of the country's industrial expansion. As Southeast Asia’s largest economy accelerates its industrialization, PGN’s expanding pipeline network and recovering distribution volumes position the utility as an essential cash-generative asset for global emerging market portfolios.

Operational Rebound Drives Earnings Surge

PGN’s core operational metrics showed strong momentum in the second quarter of 2026 following a soft start to the year. Gas trading volumes jumped to approximately 865 Billion British Thermal Units per Day (BBTUD) in the second quarter, rising sharply from 777 BBTUD recorded in the previous quarter.

Analysts Taufan Fadhillah and Andhika Audrey at BRI Danareksa Sekuritas forecast net income to expand 15% to $247 million in 2026, up from $215 million in 2025. Bottom-line profit is projected to climb further to $251 million in 2027, representing an additional 2% increase.

The profit expansion is propelled by higher utilization of liquefied natural gas (LNG) regasification facilities, expanding industrial customer connections, and fee-based revenue contributions from the Cikamplung oil pipeline.

Navigating Government Policy Headwinds

The market is keeping a close watch on proposed government plans to cap industrial LNG prices at $13 per Million British Thermal Units (MMBtu). PGN views the initiative as a cost-redistribution measure across the LNG value chain rather than a direct price cut absorbed entirely by the company, maintaining its target trading margin at $1.65 to $1.85 per MMBtu.

Under a downside scenario where PGN bears a 30% cost-sharing burden over six months in 2026, gross profit would contract by approximately $17.6 million, trimming net profit by 3.9%. In a research note issued on Tuesday, July 28, 2026, analysts Taufan Fadhillah and Andhika Audrey stated, "That impact is estimated to reduce the target price by only about 3%. However, if PGAS absorbs the entire burden for 12 months, net profit could drop by roughly 26%, making the outcome of burden-sharing negotiations a decisive factor for future performance."

BRI Danareksa noted that its baseline 2026 projections currently exclude burden-sharing assumptions, as market participants await detailed ministerial guidance on implementation mechanisms.

Deep Discount Signals Opportunity

From a valuation standpoint, PGAS shares trade at an enticing 1.8 times enterprise value-to-EBITDA (EV/EBITDA) for projected 2026 earnings, representing an 18% discount to the stock's long-term historical average.

The brokerage’s Rp 1,900 price target reflects a conservative target multiple of 2.2 times 2026 EV/EBITDA. PGN’s total revenue is projected to hit $3.839 billion in 2026 with EBITDA reaching $869 million, expanding to $4.010 billion in revenue and $891 million in EBITDA by 2027.