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MARI, PPL, POL, PSO, & APL Result Previews, (AKD Daily, Apr 26, 2023)

MARI – Earnings to clock in at PkR122/sh in 3QFY23: Mari Petroleum Company Limited (MARI) is scheduled to post 3QFY23 earnings on Thursday, wherein we expect the company to report PAT of PkR16.28bn for the quarter (EPS: PkR122), up by 46%/50% on QoQ/YoY basis. The significant increase in bottom line vs. the previous quarter is majorly attributable to i) higher offtakes from the MARI field (up 19%QoQ/11%YoY), ii) surge in well-head gas prices amid higher avg. oil prices (up 28%YoY) alongside sharp PkR deprecation (17%QoQ) during the period. On the hydrocarbon production front, MARI field’s offtakes averaged in at 794mmcfd during the period (vs. 669/714 during last-quarter/SPLY), peaking in at 867mmcfd during the 3rd week in Mar’23 as major fertilizer customers (EFERT/FFC) returned from their ATA’s during the period. Company’s crude production also rose by 31%/24% QoQ/YoY during the period amid significant recoveries from the Bolan East area as opposed to muted production during 1HFY23 due to torrential rainfall/flood damages. On the cost front, we expect exploration expenses to clock in at PkR2.0bn, changing by -53%/+9% QoQ/YoY, amid no significant dry wells during the period. Finally, we expect exchange gains of PkR3.7bn ~(PkR23/sh) to positively impact the bottom line, amidst sharp currency depreciation during the quarter (period-end PkR/USD: 285, up 26%QoQ). Overall, MARI remains our top pick from the sector, with a Dec’23 target price of PkR2,900/sh, offering upside potential of 96% over the last close.

 

PPL – Earnings expected at PkR10.5/sh for 3QFY23: Pakistan Petroleum Limited (PPL) is scheduled to hold its board meeting on 27th April, wherein we expect the company to post NPAT of PkR28.59bn (EPS: PkR10.51) for 3QFY23, up 29%/40% QoQ/YoY. The company’s is set to post its highest ever quarterly topline, which is expected to clock in at PkR75.12bn (up 17%/47% QoQ/YoY), majorly driven by an appreciating US$ (↑17%/47% QoQ/YoY) and revised well-head gas prices (e.g. Sui Field price: ↑14%YoY), resulting in higher revenues despite lower hydrocarbon production. To note, gas production from company’s wholly operated fields i.e. Sui and Kandhkot fell by 6%/7%QoQ, respectively, majorly due to lower offtakes from Guddu Power Station and possible natural decline at Sui. Furthermore, the said growth in the company’s bottom line is majorly attributable to the absence of dry wells alongside significant accretions in Other Income (up 4.1xQoQ) during the period majorly on account of appreciating short-term FX deposits. Overall, total production during the quarter is expected to end at ~8.6mn BOE (down 7%QoQ) amidst lower offtakes at Sui/Kandhkot/Tal during the period.

 

POL – 3QFY23 earnings expected at PkR35.9/sh: Pakistan Oilfields Limited (POL)’s board of directors are scheduled to meet on 27th April to approve 3QFY23 result where we expect the company to post earnings of PkR10.19bn (EPS: PkR35.9) during the period, depicting a growth of 71%/55% QoQ/YoY. The growth in earnings is majorly currency driven (PkR/USD: up 17%/47% QoQ/YoY), resulting in increased revenues (up 11%/17% QoQ/YoY) alongside healthy exchange gains on the non-operating front. Total crude production on the other hand fell by ~2%/7% QoQ/YoY during the period, amid significant declines in major fields including Jhandial (↓10%QoQ), Pindori (↓8%QoQ) and Meyal (↓6%QoQ). On the non-operating front, company is set to post Other Income of Pk10.8bn (up 4.2xQoQ) amidst sharp instances of currency depreciations and higher interests on earning assets during the quarter. To note, company retained significant cash in form of ST investments by opting for lower payout during the half year. Furthermore, we expect company to incur meagre exploration expenses of PkR450mn for the quarter. To recall, the company posted PkR4.35bn in dry well costs during the first half, on account of DGK-1 (DG Khan Block). We have a buy call on the scrip with a TP of PkR560/sh alongside dividend yields of ~20/24% for the FY23/FY24, respectively.

 

PSO – PAT to clock in at PkR16.2bn (EPS: PkR34.4) in 3QFY23: Pakistan State Oil (PSO) is expected to announce its 3QFY23 financial result on 27th April, where we expect the company to post PAT of PkR16.2bn (EPS: PkR34.4), changing by +2.5x/-50% on QoQ/YoY basis. The said QoQ increase is majorly on the back of higher effective gross margins specifically on regulated products (up 48%/30%QoQ on MS/HSD) alongside significant inventory gains amid rising ex-refinery prices during the period. Company’s total volumes on the other hand remained down by 20%/28% QoQ/YoY as muted commercial/industrial activity alongside lower RFO based power generation (FO generation down 51% YoY during 8MFY23) may have borne their effects. Furthermore, we expect the company to record inventory gains of ~PkR15.1bn (PkR32/sh) for 3QFY23, as ex-refinery prices for MS/HSD/FO rose by 17%/4%/2%QoQ during the period, subsequently resulting in gross margins for the quarter to end at 4.3% (vs. 0.6% 2QFY23). On the RLNG front, PSO’s average DES price for the quarter stood at US$10.53/mmbtu vs. US$11.40/mmbtu in the quarter before, taking topline from the RLNG segment to clock in at PkR234bn (up 3.5%/66% QoQ/YoY). Finally, we expect effective tax to clock in at ~32% for the period (vs 2QFY23: -17% ET), taking average ET for 9MFY23 to end at 46.5%.

 

APL – PAT to clock in at PkR3.6bn (EPS: PkR29.2) in 3QFY23: Attock Petroleum Limited (APL) is expected to announce its 3QFY23 financial result on Monday, where we expect the company to post PAT of PkR3.6bn (EPS: PkR29.2), changing by +191%/-23% on a QoQ/YoY basis. The said QoQ incline is majorly attributable to rising retail price/gross margins alongside instances of higher inventory gains vs. the previous quarter, however lower volumetric offtakes (down 6%/22% QoQ/YoY) counterbalanced any significant appreciation in the bottom-line compared to SPLY. Overall, we expect the company to record inventory gains of ~PkR4.9bn (PkR39.5/sh) for 3QFY23 as ex-refinery prices for MS/HSD/FO rose by 17%/4%/2%QoQ during the period as compared to the 2QFY23, subsequently resulting in gross margins for the quarter to end at 6.7% (vs. 1.7% in previous quarter). On the taxation front, we expect effective tax to clock in at ~34% for the period (vs 2QFY23: 30% ET). We have a ‘Buy’ rating on the stock, with a Dec’23 TP of PkR375/sh, representing a total return of 39% from last close.