Indonesia aims to be a net-zero carbon country by 2060. To support the plan, the government released Perpres No. 112/2022 to accelerate renewable energy.

Indonesia is the second largest installed geothermal in the world, producing 2,356MW, consisting of 14.6% of global production.

PGEO using IPO’s fund for 85% as CAPEX to reach 1GW of its production by 2025

PGEO has a policy to pay dividends below 50% of its net income.

PGEO has a pricing policy anchoring CPI and PPI USA for the price.

Using the Discounted Cash Flow method with a Required Return of 8.24% and Terminal Growth of 4.78%, we estimate PGEO’s fair value at 1,657 (25x expected P/E). Based on PGEO’s fair price and potential upside of 24.57%, we recommend a buy rating for PGEO.