PSO: Undemanding valuation warrants another look!
We revisit our investment case for Pakistan State Oil (PSO), revising Dec’23 target price to
PkR215/sh from previous PkR240/sh, providing a total return of 66% from last close.
The much awaited revision in OMC margin provides significant impetus to our valuation,
subsequently we have incorporated uniform OMC margins of PkR6/liter for both MS & HSD
from January 2023 onwards, up 61%/51% from current levels for MS/HSD, respectively.
With regards to the company’s working capital issues, measures taken by the Govt’ in order to meet with conditions set out by the IMF may be a breath of fresh air for the company.
However, in the near term, the national petroleum company is expected to suffer from
increased circular debt build up during FY23 amidst volatile LNG prices due to current geopolitical scenario, alongside with rapid depreciation of PKR/USD (-14% CYTD).
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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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