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PSO & APL 4QFY23 Result Previews, (AKD Daily Aug 08 2023)

PSO – LAT to clock in at PkR5.8bn (LPS: PkR12.5) in 4QFY23: Pakistan State Oil (PSO) is expected to announce its 4QFY23 financial result sometime in August, where we expect the company to post LAT of PkR5.8bn (LPS: PkR12.5). Like most players in the sectors, PSO is also expected to deal with substantial losses on the back of falling ex-refinery prices, majorly due to declining international gasoline/ gasoil prices, resulting in local MS/HSD price being down by 10%/16% from their respective peaks during the quarter. We expect the company to record inventory losses of ~PkR7.9bn (PkR17/sh) for 4QFY23, subsequently resulting in gross margins for the period to end at 1.40%. On the topline front, company’s revenue is expected to clock in at PkR858bn, changing by +6%QoQ/-5%YoY, as total POL offtakes for the quarter stood at 1.8mn tons (down by 1%/47% QoQ/YoY). Declining sales volumes for the company are correlated with an overall economic slowdown, as depicted by falling LSM (11MFY23 LSM index: ↓9.9%YoY), auto-sales (FY23: ↓53%YoY), power generation (FY23: ↓9.5%YoY) and the ever rising inflation (Avg. 7MCY23 CPI: 32.27%YoY). On the RLNG front, PSO’s average DES price for the quarter stood at US$10.67/mmbtu vs. US$12.26/mmbtu in the quarter before, taking topline from the RLNG segment to clock in at PkR250bn (changing by -0.6%/+18% QoQ/YoY). Alongside the earnings, we expect the company to announce a cash dividend of PkR5.0/sh, (vs. PkR10/sh SPLY). We have a Buy rating on the stock, with a June’24 TP of PkR170/sh, representing an upside potential of 36% from last close.

 

APL – PAT to clock in at PkR775mn (EPS: PkR6.2) in 4QFY23: Attock Petroleum Limited (APL) is expected to announce its 4QFY23 financial results sometime in August, where we expect the company to post PAT of PkR775mn (EPS: PkR6.2), down by 82%YoY/89%YoY. The said decline is majorly attributable to falling ex-refinery prices over the last quarter alongside retrospective implementation of super tax charge introduced in Federal Budget’24. We expect the company to record inventory losses of ~PkR750mn (PkR6.1/sh) for the period, subsequently resulting in gross margins for the quarter to end at 1.8%. On the topline front, company’s revenue is expected to clock in at PkR130.8bn, up by 16%QoQ/1%YoY, as offtakes for the quarter recovered by 6.90%QoQ, however still down by 33% YoY. On the taxation front, we expect effective tax to clock in at ~72% for the period (vs 3QFY23: 34% ET), as retrospective super tax implementation hampers the already beat down bottom-line. At a normalized tax rate of 33%, the earnings per share would have clocked in at PkR15.1/sh. Alongside the earnings, we expect the company to announce a cash dividend of PkR20/sh, taking total payout for the full year to PkR32.5/sh (vs. 36/sh SPLY). We have a Buy rating on the stock, with a June’24 TP of PkR370/sh, representing total upside potential of 30% from last close.