Medco Energi International (MEDC IJ)

A weaker FY25 on lower O&G output, exacerbated by AMMN’s commissioning delays

 

  • 1Q25 net profit dropped by -81% qoq/ -76% yoy to US$18mn due to AMMN’s -US$29mn loss and seasonally weaker gas sales (-4.2% qoq).
  • Based on mgmt’s FY25 guidance, we see weaker earnings from lower O&G output of 145-150 mboepd (vs. 152 mboepd in FY24).
  • We downgraded our rating to Hold with a lower SOTP-based TP of Rp1,320, mainly caused by lower AMMN earnings.

 

Weaker 1Q25 earnings from AMMN’s loss

MEDC’s 1Q25 net profit dropped to US$18mn, -81% qoq, reaching 9.3%/5.4% of our/cons estimate. The weak result was mainly caused by AMMN's inability to export copper concentrate as it is still in the commissioning phase of its copper cathode smelter, resulting in MEDC recording a -US$20mn loss in JV, with AMMN's net loss of US$29mn. 1Q25 revenue also dropped by -9% qoq to US$560mn, which was in line with our/cons estimate at 26.4%/25.7%. Revenue dropped due to lower O&G sales of US$509mn, -10% qoq, as gas lifting slightly dropped to 532BBTUD (-4.2% qoq), from a seasonally low demand and maintenance in Senoro, though it was offset by stronger oil lifting of 41MBOPD (+4.4% qoq).

 

Potential weakness from lower FY25 O&G output

Mgmt has set a guidance that sees lower O&G output of 145-150 mboepd (vs. 152 mboepd in FY24). Nonetheless, MEDC will continue with its drilling and exploration in its major assets to maintain production from natural decline. In 1Q25, Natuna’s Terubuk and Forel fields have come onstream, producing equivalent

of concentrate export in Mar25. Meanwhile, our FY26F is largely unchanged, with only revenue growth of +3.7% to US$2.1bn, as we expect stronger oil contribution. to c. 30MBOEPD. MEDC has guided higher power sales of 4,500GWh (vs. 4,108GWh in FY24), due to the addition of Ijen Geothermal since late 2024. 1Q25 result saw power sales drop by -24% qoq, where non-renewables power sales dropped by -32% qoq due to maintenance in Riau IPP. However, it was offset by the commencement of Ijen geothermal.

 

Lowering our FY25 estimates

Based on the guidance, we have lowered our FY25F earnings by -28% to US$190mn, as we decreased our O&G output to 146mboepd (from: 150mboepd), oil price assumption to US$70/bbl (from: US$75/bbl), as well as cut AMMN’s earnings contribution by -25% to US$65mn following the delays in the commissioning phase and the rejection

 

Downgrade rating to Hold with a lower TP of Rp1,320

We downgraded our rating to Hold with a lower TP of Rp1,320 based on our SOTP-valuation. The lower TP mainly reflects our estimation of AMMN’s lower contribution in FY25. Key risks are lower oil prices and AMMN’s financial performance.

 

… Read More 20250604 MEDC