OMCs: Falling volumes turn the 'heat on'
Crossing the high watermark for (significantly deflated) FO sales to IPPs, and retail led seasonal fuel demand, total industry OMC sales for July'17 receded -14%MoM/-30%YoY to settle at 1.64mn tonnes. Major dampeners remained the secular decline in FO offtake, amounting to 351k tonnes, falling -60%YoY/-46%MoM, followed by tepid HSD sales (-20%YoY/+4%MoM). Cumulative 7MCY18 industry sales stood at 12.89mn tonnes down 14%YoY, while ex-FO (segment sales down 39%YoY) industry sales inched higher by 0.7%YoY. Evident from individual OMC performances, the operating environment has become rather bleak, with growth in volumetric offtake a tough trick to pull-off, which only HASCOL has pulled off successfully. We re-iterate the growth based investment case for the OMC, where resilience to industry pricing pressure (OPEC crude basket price sustaining at US$70-75/bbl) and competition from foreign entrants (completing acquisitions, improving retail footprints) are strengthened by projects reaching completion (lubricant blending plant, storage additions of ~94k tons till CY19F). Where our TP of 318/sh for HASCOL currently implies a Neutral stance, which we intend on upgrading as details of lubricant margins (post launch of blending plant), LPG business size and Hascol terminals crystalize. .
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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