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Result Previews: OGDC 1HFY20 & NBP CY19 , (AKD Daily, Feb 26, 2020)

Result Previews: OGDC 1HFY20 & NBP CY19

OGDC 2QFY20 offers minor respite: OGDCL reports 2QFY20 results today (26th Feb’20) where we expect cumulative NPAT to rest at PkR28.8bn (EPS:PkR6.69/sh) showcasing relatively muted earnings movements (-2%YoY/+8%QoQ), where broad level indexation moves (Arab Light down 6%YoY, PkR/US$ appreciation of 16%YoY) should muffle profitability. Key features of earnings are expected to be: 1) muted oil/gas production performance (-5/-8%YoY, with major old fields Qadirpur and Uch showing natural declines), while retrospective booking of revenue from Uch re-pricing (based on 6th Jan notice, estimated at PkR5.8bn) leads topline growth to 12%YoY/10%QoQ, 2) booking of at least one dry well, while exploration has been at an aggressive clip and seismic activity should raise exploration expenses to PkR5.6bn up 63%QoQ, and 3) muted other income and ~33% effective tax rate keeps profitability in check. Accompanying the results a payout of PkR2.5/sh is expected taking FY20TD payout to PkR5.0/sh and landing the 1HFY20 payout ratio to ~38% slightly lower than the long term average of ~40%. 

NBP 4QCY19 earnings to remain flat QoQ: National Bank of Pakistan (NBP) is set to announce its CY19 results on Feb 28th, 2020 where we expect the bank to post a CY19 NPAT of PkR22.0bn (EPS: PkR10.3) vs. PkR20.0bn (EPS: PkR9.4) in the same period last year. 4QCY19 earnings is likely to clock in at PkR5.4bn (EPS: PkR2.5), +2.4/42.1% QoQ/YoY, where sequentially higher net interest income (+26.2/35.1% QoQ/YoY) is likely to be offset by higher administrative expenses (+55.1/6.3% QoQ/YoY). Net Interest income growth expectation comes at the back of, i) repricing factor kicking in the 4Q, and ii) possible recoveries as usually seen in the last quarter. NFI income is expected to remain flat QoQ where contrary to historical trend we foresee fee income growth to remain curtailed given absence of certain contributions as seen industry wide. Provisioning costs is expected to be contained at PkR800mn in 4QCY19 where provisions as a result downgrading of NPLs would be kept in check through potential recovery income.

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