OMCs_RFO drags growth signaling an end to smooth sailing
January volumetric offtake clocked in at 1.79mn tonnes, -4%MoM/-13%YoY, while FO sales (at 0.39mn tonnes -9%MoM/-49%YoY) kept a lid on otherwise strong retail offtake (MOGAS/HSD offtake -2/-7%MoM but +8/+10%YoY). Cumulative 7MFY18 volumes amounted to 14.97mn tonnes, remaining flat, where a -19%YoY dip in FO sales (1.10mn tonne fall) was met by retail fuels (MOGAS /HSD +12/+11%YoY, adding 1.01mn tonnes to industry volumes). From a long-term growth perspective, YoY growth for HSD outpaced 5YR CAGR (11%YoY vs. 7%) whereas MOGAS sales fell behind (12%YoY vs. 18%). This lands industry demand in a situation where HSD and MOGAS growth can be flagged as being mid-cycle, while a down-cycle for FO sales makes the operating environment tough, in our view. OMC’s delivered mixed performance over the period, where 7MFY18 growth in volumes was +40%/0%/-4% for HASCOL/APL/PSO allowing them to hold 11%/8%/54%. HASCOl continued its superior sales run adding to its market share and ending the month by moving 13.5% of volumes (vs. 11.4% in Dec’17), signifying the persistence of strong growth credentials. At current levels we believe the growth vs. value proposition favors APL where the stock offers 24% upside to our FCF based TP of PkR725/sh.
Pakistan State Oil is a petroleum group based in Pakistan. Co.'s principal activities are the procurement, storage and marketing of petroleum and related products. Co. also blends and markets various kinds of lubricating oils.
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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