PGEO Don't Be Able To Set The Cash Flow Well

JAKARTA - The management of PT Pertamina Geothermal Energy Tbk (PGEO) is considered unable to manage cash flow properly, causing working capital to dry up until it is in a negative condition.

Head of Research Samuel Sekuritas Indonesia Suria Dharma analyzes conditions like this usually occur due to poor financial governance, one of which is in regulating excessive operational expenses without careful calculations.

"It is possible that the company has purchased a number of inventorys for project development, for example, but it turns out that the project has not run optimally or has not been able to produce income, now this is a dead money term," he told reporters, Tuesday, May 30.

Through its prospectus, PGEO said that funding all of the company's operational activities received financial support from its parent company, Pertamina. However, Suria argues that this condition is also not entirely ideal.

"Yes, if it is claimed to be borne or subsidized by the holding, this is also not the ideal position because it can erode Pertamina too," he explained.

Suria further emphasized that this negative working capital condition has a big risk if it lasts for a long period of time.

"If this happens continuously, the company will finally have to close the hole and hole through various kinds of funding instruments," he said.

Even Suria is worried that this condition can be a bad signal for the company's stock performance, especially for the plan for the initial public offering (IPO) of another Pertamina subsidiary in the near future.

Because, continued Suria, PGEO's current performance cannot be optimal considering the share price which is still below the IPO price. In fact, the company's market capitalization is currently far below the upstream subholding.

"If you look at the current condition of PGEO's shares, it can provide negative sentiment for PHE's shares when you want an IPO. In other words, the smaller size is lower, especially with a larger size. Selling only one chicken is down, moreover, you want to sell chicken in one cage? It's more difficult to sell," he concluded.