APL & PSO_1QFY21 Result Previews, (AKD Daily, Oct 15, 2020)
APL to post an EPS of PkR14.5 for 1QFY21: Attock Petroleum Ltd. (APL) is expected to announce results on 20th Oct'20 for 1QFY21 where we expect the company to post PAT of PkR1.5bn (EPS: PkR14.5), up 17.9%YoY, majorly on the back of significant inventory gains. Rebound in oil prices towards end of 4QFY20 resulted in local ex-refinery prices increasing by 91.2/60.7% for MS/HSD on 25th Jun’20 and consequently company is expected to book inventory gains of PkR950mn for the quarter. We have incorporated a conservative other income of PkR175mn for the quarter however high short term investment (PkR4.8bn as of Jun’20; mainly grounded in treasury bills of upto 3 months) can provide additional lift to earnings. Volumes for 1QFY20 remained flat for APL where highest growth was witnessed in FO (+47%YoY) while retail fuels disappointed with a decline of 19.6%YoY resulting in retail market share of 7.2% (MS/HSD: 7/7%). Moving forward, APL has set its eyes on recovering the lost market share (7.2% in 1QFY21 against 9.8% in 1QFY20) while long term plan involves improving storage infrastructure to meet requirements set by OGRA. We have Jun’21 TP of PkR400.4/sh, implying an upside of 17.8% - Buy.
PSO to post an EPS of PkR15.1/sh for 1QFY21: We expect Pakistan State Oil (PSO) to post PAT of PkR7.1bn (EPS: PkR15.1) for 1QFY21, up 100.9%YoY largely on the back of inventory gains. Company recorded a loss of PkR9.5bn (LPS: PkR20.2) for 4QFY20 as oil price crash resulted in significant inventory write down. Alternatively, a reversal in oil prices is expected to churn out gains of PkR6.2bn for the company in 1QFY21, according to our estimates. However, company hasn’t fully come out of the impact of low oil prices as contribution from LNG is expected to decline significantly for 1QFY21 (gross profit contribution estimated at PkR1.1bn against average contribution of PkR1.7bn for last 4 quarters) on the back of decline in PSO’s margins. Liquidity improved significantly in 4QFY20 after company received PkR27bn of FE-25 receivables and LNG receivables decreased by PkR14bn, bringing down short term borrowings to PkR66bn as of Jun’20 against PkR149bn in Mar’20. Consequently, finance cost is also expected to decline by 52.8/57.3% YoY/QoQ. PSO’s volumes increased by 10%YoY for 1QFY21 where FO was the star with an increase of 28%YoY on the back of increased FO-based power generation while retail fuels also performed well, with an increase of 14%YoY taking PSO’s retail fuels’ market share to 45.5% for 1QFY21 against 43.4% in 1QFY20. Along with the result, on the back of improved liquidity, we expect company to announce a dividend of PkR4/sh.
AKD Research
Attock Petroleum Limited is engaged in the procurement, storage and marketing of petroleum and related products. The Company offers a range of lubricants blended with base oils and additives at its Automatic Batch Blending facility. Its products include diesel engine grades, such as GOLD TURBO PLUS, GOLD TURBO, GOLD XTRA and GOLD-50; gasoline engine grades, such as HIDRIVE SUPREME, HIDRIVE SUPER and ATTOCK T-2; industrial grades, such as ATTOCK Hydraulic Oil AW Series, ATTOCK Gear Oil EX Series and ATTOCK TURBINE Oil, and gear oils, which include various specifications, such as EP 140, EP 90, 85W/90 and 85W/140. It has a multi-fuel retail network of approximately 540 retail outlets. The Company's retail outlets also offer compressed natural gas, as well as non-fuel retailing options, such as tuck shops, car services and lubricants. It supplies various types of fuels to various businesses, including manufacturing industry, armed forces, agricultural customers and power producers.
Pakistan State Oil is a petroleum group based in Pakistan. Co.'s principal activities are the procurement, storage and marketing of petroleum and related products. Co. also blends and markets various kinds of lubricating oils.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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