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OGDC PPL MARI POL - 4QFY23 Previews, (AKD Daily, Aug 07, 2023)

AKD Daily

OGDC PPL MARI POL -  4QFY23 Previews

 

 

OGDC to report earnings of PkR7.14/sh for 4QFY23: Oil & Gas Development Company Limited (OGDC) is scheduled to release its 4QFY23 earnings sometime in August, where we expect the company to post NPAT of PkR30.7bn (EPS PkR7.14), changing by -53%/+41% on a QoQ/YoY basis. The said decline in PAT on a quarterly basis is majorly due to lower FX gains and implementation of retrospective super tax. However, rising PkR/US$ parity (up 10%QoQ) and a slight increase in hydrocarbon production (up 4%QoQ) served as a face saving grace amidst the burgeoning tax charge applied during the quarter (ET: 61% vs. 35%/65% during 3QFY23/4QFY22). On the hydrocarbon production front, oil and gas production changed by -5.6%/+4.6%QoQ during the period, as major fields such as Nashpa (↓15%/13%QoQ), Chanda (↓10%/6%QoQ), Pasakhi (↓7.4%/30%QoQ) and TAL Block (↓6%/1%YoY) remained down either due to natural depletion or demand constraints (turnarounds) on SNGPL/WAPDA’s end. In summary, we expect FY23 earnings to end at PkR44.3/sh (up 42%QoQ) vs. PkR31.1/sh in FY22, resulting from higher PkR/US$ parity and increasing oil prices during the past year (inducing positive adjustments in well head prices). Alongside the earnings, we expect the company to announce a cash dividend of PkR1.25/sh, taking total dividends for the year to PkR7.05/sh (vs. 7.25/sh SPLY). We have a Buy rating on the stock, with a June’24 TP of PkR130/sh, representing an upside potential of 30% from last close.

 

PPL – Earnings expected at PkR6.75/sh for 4QFY23: Pakistan Petroleum Limited (PPL) is scheduled to hold its board meeting sometime in August, where we expect the company to post NPAT of PkR18.37bn (EPS: PkR6.75) for 4QFY23, down 44%QoQ although up 5.5xYoY, taking full year earnings to PkR36.6/sh (up 83%YoY) vs. PkR20/sh SPLY. Overall, the company is set to post its highest ever quarterly topline, which is expected to clock in at PkR79.6bn (up 3%/28% QoQ/ YoY), majorly driven by an appreciating US$ (↑10%QoQ/47%YoY) and revised well-head gas prices, resulting in higher revenues despite consistently falling hydrocarbon production (Total Production in BOE: -0.5%QoQ/-4.7%YoY). To note, oil production from company’s major operated field i.e. Adhi fell by 5%QoQ, alongside oil production declines in Tal block to the tune of 6%QoQ due to annual maintenance works. On the taxation front, we expect effective tax to clock in at 58% during the quarter vs. 35%/88% during last quarter/SPLY, resulting from retrospective implementation of super tax during the period. Adjacent the earnings, we expect the company to announce a final cash dividend of PkR0.50/sh, taking total dividends for the year to PkR1.5/sh (vs. 2.0/sh SPLY). We have a Buy rating on the stock, with a June’24 TP of PkR109/sh, representing an upside potential of 43% from last close.

 

MARI – Earnings to clock in at PkR124.3/sh in 4QFY23: Mari Petroleum Company Limited (MARI) is scheduled to post 4QFY23 earnings on Tuesday, wherein we expect the company to report PAT of PkR16.6bn for the quarter (EPS: PkR124.3), up by 1%/196% on QoQ/YoY basis. This takes full year earnings to end at PkR426/sh (up 72%QoQ) vs. PkR248/sh in FY22. The meagre change in the bottom-line even during periods of significant increases in hydrocarbon production is primarily attributed to the absence of FX gains and the retrospective application of supertax. As a consequence, the earnings have remained relatively constant during the final quarter. Overall, company’s topline reported increases of 23%/70% QoQ/YoY, respectively, majorly on the back of i) higher offtakes from the MARI field (up 5%QoQ/16%YoY), ii) Higher avg. PkR/USD parity (up 10%QoQ) alongside higher well-head prices. Said jump in Mari field’s production is majorly due to commissioning of the SGPC project, coming online back in Mar’23, resulting in the country’s biggest gas field peaking at 897mmcfd during June’23 (as per weekly PPIS data). However, gas production still remained on the lower end majorly due to several shut downs/turnarounds of customers during the period i.e. EFERT, FFC and WAPDA. On the taxation front, we expect effective tax to clock in at 42% during the period (vs. 33% last quarter) amidst retrospective application of super tax reintroduced in the Federal Budget’24. Alongside the earnings, we expect the company to announce a final cash dividend of PkR90/sh. Overall, MARI remains our top pick from the sector, with a June’24 target price of PkR2,700/sh, offering upside potential of 65% over the last close.

 

POL – 4QFY23 earnings expected at PkR23.5/sh: Pakistan Oilfields Limited (POL)’s board of directors are scheduled to meet sometime in August, where we expect the company to post earnings of PkR6.66bn (EPS: PkR23.5) during the period, depicting a decline of 59%/21% QoQ/YoY. The said decline in earnings is majorly due to the absence of exchange gains (as compared to last quarter) alongside retrospective implementation of super tax (4QFY23 ET: 50%). Overall, the company is set to post PAT of PkR37.2bn (EPS: PkR131.0) for full year FY23 (up 43%YoY) vs. PAT of PkR25.9bn (EPS: PkR91.4). On the hydrocarbon production front, total oil production during the quarter stood at 4.63k bpd, down 8%QoQ, amidst maintenance halts at Tal block (oil/gas production down 5.8%/0.8%QoQ). Other operated fields that witnessed declines during the period were majorly Pindori (↓23%QoQ) and Jhandial (↓17%QoQ). On the non-operating front, we expect company to incur meagre exploration expenses of PkR741mn, taking total FY23 exploration expenses to PkR7.07bn on account of DGK-1 (DG Khan Block) dry well costs incurred during 1HFY23. Alongside the earnings, we expect the company to announce a final cash dividend of PkR60/sh, taking total dividend for the year to PkR80/sh (vs. 70/sh SPLY). Overall, we have a Buy rating on the stock, with a June’24 TP of PkR510/sh, alongside dividend yields of ~20/21% for the FY24/FY25, respectively.

 

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