Medco Energi International (MEDC IJ)

Higher Corridor Ownership and AMMN Normalization to Support FY26 Earnings

 

  • We expect AMMN to drive 4Q25F and FY26 earnings rebound despite oil price pressure, supported by copper export approval.
  • We expect the Corridor PSC ownership increase to drive FY26F production uplift, contributing ~30% of estimated total production vol.
  • We upgraded FY26F-27F earnings and raise our TP to Rp2,000, reflecting higher output assumptions and rerating supported by AMMN recovery.

 

4Q25F earnings expected to be anchored by AMMN contribution.

While oil prices remain subdued, we expect MEDC’s 4Q25F earnings to be supported by resilient operational delivery and improving non-O&G contributions (see. Exh 1). Despite potential revenue pressure from weaker Brent prices, earnings downside is increasingly mitigated by normalization of AMMN’s copper exports following regulatory approval. Initial export shipments (based on BPS data) signal the start of monetization, underpinning our estimate of +43.3% qoq in 4Q25F net profit, although FY25F earnings may remain -10.3% below consensus est.

 

Corridor upgrade lifts FY26F outlook

Mgmt. guides for higher FY26F O&G production of 165-170 mboepd, reflecting a 24% increase in participating interest in Corridor PSC to 70%. We estimate this could add ~US$145mn in EBITDA at mid-cyle-prices, including ~US$90mn from fixed gas contracts. We expect Corridor PSC to be fully reflected in FY26F, contributing ~30% of MEDC’s total production and serving as the backbone of its O&G portfolio. On the power side, Mgmt. targets electricity sales of ~4,550 GWh in FY26F, supported by initiation of Ijen and Sumbawa Phase2 projects and additional capacity from Batam IPP (~95 MW). Meanwhile, the acquisition of a 45% participating interest in Sakakemang PSC provides further growth optionality, with early production expected in FY27F bringing potential incremental volumes of ~15-20 mboepd to MEDC.

 

Upgrading FY26-27F estimates; TP raised to Rp2,000

We raise our FY26–27F net profit forecasts by +12–37%, driven by a higher oil and gas output assumption of 165 mboepd (vs. 146 mboepd previously), which provides a buffer against our more conservative oil price assumption of US$65/bbl (vs. US$70/bbl previously). We reiterate our Buy rating with a higher TP of Rp2,000 based on our SOTP valuation, which reflects the structural rerating of MEDC’s core O&G business following the Corridor PSC ownership upgrade, as well as improving earnings visibility from the expected recovery in AMMN’s performance. Key risks include weaker-than-expected oil prices and delays in the normalization of AMMN’s operations.

 

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