APL: Rising tide raises all ships, (AKD Daily, Oct 06, 2017)
Catching on to catalysts for OMC's, APL has undergone significant upswing in profitability between FY13-17, backed by: 1) 3YR MS/HSD total sales growth CAGR 20%/7%, 2) 32.6/25.6%% reduction in retail price of MS/HSD since June'14 and 3) reduced usage of CNG as low availability and lower cost differential prompting the switch to liquid fuels. However, not completely on the coattails of external factors, the OMC has gone far in extending its retail network with a tilt to long term contracts and business retention (Pakistan Army for HOBC, Government for Jet fuel). Despite APL tightening its grip on the POL product pie (5YR historical average market share of 9.5%), increasing M&A activity in the Pakistan's downstream oil landscape (Puma energy's acquisition of Admore) presents heightening competitive headwinds. Moreover, a leaner balance sheet (current ratio of 1.47x vs. 1.30x for PSO), manageable receivables (19 days vs. 88/60 days for PSO/HASCOL) and better liquidity (CFO/Sh of PkR10.4) as of June'17 make for a value driven investment thesis. Following an 11% slide CYTD, at current levels the scrip offers healthy FY18/19F D/Y of 10.7/11.6%, making for a compelling BUY, to our FCFE based June'18 TP of PkR745/sh.
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.
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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