POL: Dividend yield it is!
We re-initiate coverage on Pakistan OilFields Limited (POL) with a TP of PkR437/sh. POL is currently trading at an implied oil price of US$67/bbl against our assumption of US$55/bbl. On the flip side, the scrip offers attractive div. yields of 10.74%/12.4% for FY18F/19F. While the company forms an integral part of the Attock group, supplementing it in its downstream operations, we flag that: 1) over-reliance on TAL block (60.16% of revenues as of FY17E), 2) lack of growth in exploration expenses (down from PkR1.6bn in FY13 to ~PkR580mn in FY17E) and 3) a relatively shorter reserve life of 8.6 years leads to our conviction on the stock being fundamentally over-valued. Although the company (along with its JV partners) has signed supplemental agreements with GoP for conversion of PCAs to the petroleum policy 2012, the potential impact in our view is PkR3.5/5.0/sh for FY18F/19F as the top-line remains oil-heavy (~44% of revenues), as against its peers which have a more balanced revenue stream. At current levels, we have a REDUCE stance on the stock.
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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