Pakistan OMCs_Lubricants; New front on the battle for margins
- As domestic OMCs have their “backs against the wall” on the operational front (sagging POL volumes, tepid macro backdrop), we assess the relatively high margin lubricants segments, underscoring the competitive forces prevalent in the space.
- FY18 lubricants offtake shows SHEL holding pole position, where recently launched premium segment motor oils seem to aid the OMC in cementing market share, while HASCOL made inroads into the segment growing volumes by 27%YoY vs. 7%YoY for total industry sales.
- Transport linked offtake remains the foundation of total lubricant sales, inextricably linking them with retail fuel dynamics, where higher prices and the dampened outlook for commercial transporters could weaken the shift to high-spec, fully synthetic oils with higher margins.
- Updated industry sales data from OCAC shows a slowing of overall lubricant sales (11MFY19 sales down 11%YoY), matched by data points showcased in PSO’s briefings (9MFY19 sales down 12%YoY) making for a terse outlook for growth (expected at 2-3%YoY for FY20).
- Amongst listed players, SHEL receives the highest contribution to its GP from lubricant sales hence standing as the most exposed due to slowdown while the uncertainty extends to HASCOL with its blending plant recently commissioned, as management intends to focus more on high margin segments to support profitability.
AKD Research
Hascol Petroleum Limited is a Pakistan-based company, which is engaged in procurement, storage and marketing of petroleum and related products. The Company is involved in the sale of petroleum products, such as fuel oil, high speed diesel, gasoline, Jet A-1, liquefied petroleum gas (LPG) and lubricants. The Company offers products, such as Tiger Super, Rocket Diesel and Furnace Oil. The Company offers Fuchs Lubricants products, which include corrosion preventives, quenching oils, industrial lubricants, open gear lubricants, greases, automotive oil and metal working fluids. The Company also markets LPG as an automotive fuel through its retail network. The Company is engaged in owning, leasing and renting oil storage facilities, as well as importing petroleum products. The Company has storage facilities at Machike, Shikarpur and Daulatpur. The Company sells its product to dealers, government agencies and autonomous bodies, independent power project and other corporate customers.
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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