Report
EUR 8.83 For Business Accounts Only

Pakistan OMCs: Tough time to grow (AKD Daily, May 19, 2020)

  • Depressed volumes directly softened throughput levels, with 1QCY20 retail volumes at 3.SHEL/APL/PSO delivered throughput levels of 574/490k/523k/0mn tons, down 21%QoQ largely due to a 32%QoQ decrease in HSD, owing to players limiting product in storage to mitigate against fluctuating oil prices and COVID-19 containment restrictions put in place during the period
  • Company-wise, HASCOL/402k ltrs/outlet, moving -17.7%/-12.6%/-17.6%/-26.0%QoQ and -39.8%/-20.9%/-17.7%/-11.7%YoY taking total average industry throughput -22.5%QoQ/-19.4%YoY to 463K lts/outlet.
  • Sectoral demand figures indicate the hastening of an FO-lite downstream demand re-orientation (furthered by slowing retail outlet expansions), as transport-linked demand formed 99.6/90.2% of the total volumes of MS/HSD for Feb’20, while unlisted players continued to make inroads in share of listed players.
  • With volumes facing a downturn and outlet additions depleting mean throughput, slowing retail outlet additions are expected to prevail over the medium term, with OMCs focusing on pulling customers (through discounts, forecourt retail upgrades), in our view.
  • In this backdrop, PSO (TP: PkR203.5/sh, 26.2% upside) remains our top pick where company has already gained retail market share (40.9% in 10MFY20 against 37.6% in 10MFY19) while Sukuk II is expected to ease liquidity concerns of the company, allowing it the financial muscle to support its footprint.
Underlying
Hascol Petroleum

Hascol Petroleum Ltd. 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.

Provider
AKD Securities Limited
AKD Securities Limited

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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