PSO_Retail fuel growth to lead the way! (AKD Daily, May 31, 2021)
AKD Daily
PSO: Retail fuel growth to lead the way!
- We update our estimates for PSO incorporating i) increased market share (44.4% in retail fuel segment for 10MFY21 vs. 40.9% for 10MFY20), ii) clarity on mechanism of circular debt clearance (payment expected by this weekend), and iii) increasing LNG receivables (increasing by PkR28.8bn during 10MFY21).
- PSO has posted a phenomenal growth in volumes, outperforming the overall sector with an increase in volumes of 27%YoY for 10MFY21 against 19% of the industry while retail fuel volumes has increased by 27.5%YoY against 17.3% of the industry
- Government has provided final clearance to first tranche of circular debt clearance under which we expect PSO to receive PkR3.1bn in cash while PkR6.2bn in shape of Sukuk/PIBs, however expectations of significant cash payout depend on company receiving late payment surcharge, in our opinion.
- We have a TP of PkR305.6/sh (31.9% upside) on the stock where near term triggers include circular debt clearance (second tranche expected in six months after first clearance) while improving storage infrastructure will aid in safeguarding the increase market share going forward.
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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