APL & PSO_FY20 Result Previews, (AKD Daily, Aug 25, 2020)
AKD Daily
APL & PSO: FY20 Result Previews
APL to post an LPS of PkR5.22 for 4QFY20: Attock Petroleum Ltd. (APL) is expected is announce result on 26th Aug'20 for FY20 where we expect the company to post PAT of PkR351mn (EPS: PkR3.53), down 91.1%YoY, as dual impact of decline in volumes and heavy inventory losses impart its effect. Company's market share during FY20 remained at 10.4% against 10.7% in FY19 while market share in retail fuel segment stood at 9.2% against 10.1% in FY19. For 4QFY20, we expect LPS of PkR5.22 where a combination of decline in volumes (down 16.8/0.5% YoY/QoQ) and oil price crash depressed the margins. Even though market share of APL decreased to 9.3% in 4QFY20 against 11.3/10.0% in 3QFY20/4QFY19, we still expect company to post an inventory loss of PkR1.3bn for the quarter as prices in local market remained low compared to international prices. We have a Buy stance on the stock with our TP of PkR400.35/sh providing an upside of 17.5% where our liking for the stock is based on strong balance sheet which can aid the company in protecting and expanding its market share in times of depressed volumes.
PSO to post an LPS of PkR8.47 for FY20: Pakistan State Oil (PSO) is expected to announce it FY20 result on 28th August'20 where we expect the company to post LAT of PkR3.98bn (LPS: PkR8.47) against PAT of PkR10.6bn (EPS: PkR22.55) for FY19. For 4QFY20, LAT is expected to clock in at PkR6.98bn (LPS: PkR14.88) against PAT/LAT of PkR4.66bn (EPS:PkR9.93)/PkR3.43bn (LPS: PkR7.30) for 4QFY19/3QFY20. The loss is majorly attributable to decline in oil prices during the quarter which is expected to result in an inventory loss of PkR8.3bn for 4QFY20. The situation was worsened as PSO was among the few OMCs operating at full strength despite local prices being low compared to international prices, resulting in significant loss on every liter sold. PSO's market share during 4QFY20 stood at 44% against 38/47% in 3QFY20/4QFY19 while market share in the retail fuel segment stood at 47% against 42/38% in 4QFY19/3QFY20. We have a Buy stance on the stock with our TP of PkR214.6/sh providing an upside of 13.6% however we highlight continuous buildup of receivables on PSO's balance sheet as payment from Sukuk-II disappointed though a glimmer of hope has emerged in the form of MoUs being signed with various IPPs where clearance of receivables is a pre-requisite for the agreement
AKD Research
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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