OMCs: CY17 herald’s supremacy of retail volumes
Altered composition of POL product volumes, with a clear pivot to retail fuels (HSD + MOGAS volumes made up 62% of overall industry volumes vs. 58% for CY16) underpin Dec’17 total volumetric offtake of 1.87mn tons, moving -2%MoM/-10%YoY. FO sales were a blight, receding broadly +7%MoM/-44%YoY, whereas HSD/MOGAS sales grew +9%/+12%YoY. CY17 volumes point to an only +1%YoY growth in total volumes, led by +13%/+7%YoY growth in MOGAS/HSD offtake. Additionally, one year after HOBC’s complete margin deregulation, volumes have propelled higher by +155%YoY selling 125ktons during CY17. As expected, mean reversion played its part, where annual growth in volumes settled below 5/10YR historical total industry volume CAGRs of 6.5/3.8%. HASCOL looks to benefit from this shift, something CAPEX plans for the OMC are to supplement, allowing it to grow earnings at a forecasted 5YR forward earnings CAGR of ~30%. At current price levels the stock trades at CY17E/18F P/E of 19.5/15.2x, where our Dec’18 TP of PkR318/sh offers 19.4% upside.
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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