Pakistan OMCs: Demand stuck in limbo,(AKD Daily, Feb 06, 2020)
Pakistan OMCs: Demand stuck in limbo
- Jan'20 volumetric offtake clocked in at 1.3mn tons, moving -1.8%MoM/-13.4%YoY with MS being the only silver lining (increasing by 1.1%YoY) while FO/HSD sales declined by 39.9/11.0%YoY continuing MoM descent into a third consecutive month.
- For 7MFY20, volumes of 10.1mn tons fell 5.8%YoY exhausted by weak power demand (cumulative FO sales dip 22.8%YoY), where monthly average sales dropped to 199k tons vs. 257k tons during 7MFY19 as five of seven months suffered from lower YoY offtake
- In terms of market shares, PSO/APL/HASCOL account for market shares of 39/10/9% during Jan'20 where a comparison with Jan'19 reveals decreasing share of HASCOL/PSO/SHEL by 5.0/1.1/0.1ppt while APL's market share was sustained at 10.2%
- Faltering macros particularly weak industrial, transport and power demand can be seen constraining volumes, where leading indicators of Consumer Confidence, Sentiment surveys indicate a continuation of paltry discretionary demand over the medium term
- With the down cycle persisting, we advocate for building positions in PSO (TP: PkR250, 22% upside) as issuance of Sukuk enters it final stages where we expect PSO to receive PkR45bn, easing the liquidity crunch being faced by the company while also allowing it to incur much needed capex for storage expansion
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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