Elnusa (ELSA)

1H26 Earnings In-Line; Revenue Timing Gap Points to a Potentially Stronger 2H26F

 

  • ELSA booked 1H26 net profit of Rp435bn (+28.8% yoy), 45.7% of our FY26F, driven by Energy Distribution & Logistics growth.
  • Accounting timing delayed upstream revenue recognition; Rp18.8tr contract book supports 2H26F revenue recovery.
  • We maintain Buy rating with unchanged TP of Rp1,110; KSO/LCO field-management expansion remains the key non-priced catalyst.

 

In-line 1H26 Result, Driven by Distribution Logistics Growth

ELSA delivered a solid 1H26 result, with net profit reaching Rp435bn (+28.8% y-y), representing 45.7% of our FY26F and 50% of consensus, broadly in line. 2Q26 net profit increased 29.3% q-q (+62.0% y-y), aided by FX gains and lower finance costs following the sukuk repayment. Stripping out these non-operating items, core profit still rose to Rp190bn (+12.4% q-q; +25.0% y-y) in 2Q26 and Rp359bn (+5.6% y-y) in 1H26, highlighting resilient underlying earnings. 1H26 revenue grew 8.9% y-y to Rp7.58tr, while 2Q26 EBITDA increased 14.2% y-y, supported by continued opex discipline.

 

Revenue Recognition to Accelerate in 2H26F

On the earnings call, mgmt. attributed subdued upstream revenue growth to accounting timing, not weaker execution. Costs for ongoing projects (Seismic Tedong, TBBM Palaran, TLPG Kolaka) are recognized upfront, while revenue is booked only upon milestone completion via 10% progress increments; Palaran and Kolaka stood at 3% and 15% completion as of June. This is corroborated by unbilled receivables from related parties, up 25.4% y-y to Rp3.09tr (27.0% of assets vs 23.3% in 1H25). Mgmt. expects a stronger 2H26F, backed by an Rp18.8tr contract book and seismic backlog exceeding Rp1tr into 2027F. Downstream margin pressure reflected fuel costs and Inmar trading mix.

 

Maintain Buy, TP Rp1,110; Thesis Intact, KSO/LCO Still the Wildcard

We maintain our Buy rating with an unchanged TP of Rp1,110. While we trim FY27F/FY28F earnings by 3.8%/0.1% to reflect more conservative revenue phasing, we believe FY26F remains on track. ELSA currently trades at 6.2x FY26F P/E, vs. our target multiple of 8.4x FY26F P/E, still well below peers' ~14.2x average. We continue to view KSO/LCO field-management expansion as the key non-priced catalyst, with management reaffirming its role in supporting the government's 1mn BOPD lifting target. Key risks include slower backlog conversion, margin pressure from competitive tenders, execution risk, and project delays.

 

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