Indonesia's upstream oil and gas sector is regaining momentum following the launch of construction for the US$11.8 billion North Hub floating gas facility (FPSO), one of the country's largest gas developments in recent years. The project reinforces expectations that upstream investment will remain robust as Indonesia accelerates efforts to boost domestic energy production, creating a favorable backdrop for oilfield service providers.

Against this backdrop, our analyst believes Elnusa (ELSA) is well positioned to capture the sector's recovery. As an integrated oilfield services company, ELSA stands to benefit from higher drilling activity, seismic surveys, and production support services. Unlike upstream producers, its earnings are driven more by rising industry spending than by fluctuations in oil prices, providing a more resilient business profile.
 

The constructive industry outlook is supported by solid fundamentals. Our analyst forecasts revenue, EBITDA, and net profit CAGR of 6.6%, 15.3%, and 31.9%, respectively, over 2024–2028F, driven by margin expansion and a healthy net cash position. Potential acquisitions of low-cost marginal oil fields could also provide an additional growth catalyst over the longer term.

Our analyst maintains a BUY rating with a target price of Rp1,280/share, as current valuations have yet to fully reflect ELSA's improving earnings outlook and its long-term growth potential amid Indonesia's ongoing upstream investment cycle.