Medco Energi International (MEDC IJ)

Solid FY27F Pipeline and AMMN Ramp-Up, with Growth Optionality from New Assets

 

  • Sambar, Rebonjaro and Sakakemang lift FY27F production outlook from 170 to 178 mboepd (+4.6% y-y).
  • We also raise our estimate on AMMN contribution and oil price assumptions amid tightening supply outlooks.
  • Overall, we revised FY26F-28F net profit est. by 27-62% and TP to Rp2,300; Nawasena and Cendramas PSC offer growth upside.

 

Project pipeline supports stronger operating outlook

Post 1H26 earnings beat, MEDC mgmt. reaffirmed FY26 O&G production guidance of 165-170 mboepd despite 1H26 already reaching 170.1 mboepd, citing planned 2H26 plant maintenance and natural decline. Production growth is guided to be staggered: Sambar is targeted to come onstream partially in 4Q26 (~108 mmscfd in FY27), Rebonjaro in 1Q27 and Sakakemang first gas in 3Q27 (~85 mmscfd), while Senoro Phase 2A sees ~340 mmscfd plateauing to FY31F. Separately, the Cendramas PSC in Malaysia became effective on 23rd Sep26 with MEDC as operator. To fast-track Sakakemang, mgmt. lifted FY26F O&G capex to US$450-475mn (from US$415mn). In line with the latest guidance, we raise our FY26F-28F production by 0.8-4.6% to 170/178/179 mboepd (from 168/174/177).

 

Upward revision on FY26F-28F estimates

We raise our FY26F/27F/28F net profit forecasts by 27%/51%/62% to US$492mn/634mn/672mn, driven by higher AMMN equity income and oil price assumptions. We increase our AMMN contribution estimates to US$273mn/400mn/470mn, reflecting a stronger earnings contribution as AMMN continues to ramp up its copper-gold operations and normalize post-smelter commissioning. We also raise our oil price assumptions to US$86/84/82 per bbl for FY26F-28F, from US$80/76/75 previously as we see tightening supply outlook amid materially depleted SPRs.

 

Reiterate Buy rating, with higher TP of Rp2,300

We maintain our Buy rating with a higher SOTP-based TP of Rp2,300 (from Rp2,200), implying 5.2x FY27F P/E (see Exh 14 & 15). MEDC trades at attractive 5.2x P/E 27F (~28% discount to average 5-year mean), with solid earnings growth outlook, underpinned by a combination of Corridor and Sakakemang developments to support 2027F volume growth, AMMN’s smelter ramp up (expect full capacity operation), and growth optionality from Madura’s 20-year PSC extension, the new Nawasena (East Java) and Cendramas (Malaysia) PSCs. Key risks are lower oil prices, AMMN delays and slower PSC extensions (Lematang, Sampang, Block B).

 

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