Pakistan Strategy_HSFO cracks remain in the red,
- June'19 rounds out a particularly weak month for international refining margins, with HSD/HSFO crack to Brent for the month averaging US$+9.04/-8.14/bbl below 4QFY19 average of US$+9.54/-US$8.83/bbl in a sign of increased refinery production runs, with Brent prices fluctuating wildly (June'19/FY19 average of US$63.2/68.7/bbl)
- FY19 average cracks underpin a dry picture, with HSD/HSFO refining margins at US$11.3/-6.9/bbl under significant diversions in light vs. heavy crude grade prices (following sanctions). This weakness is likely to translate into weaker FY19 earnings for refineries.
- We wrap up a year of increased volatility in the liquid fuels market where crude benchmark volatility was underpinned by refinery disruptions and widening disparity in sweet vs. light crude benchmarks, with futures for both indicating markets in backwardation.
- The advent of IMO 2020 rules governing bunker fuels rules out the use of HSFO for naval transport globally, where the forwards market for the fuel showcase the continued decline in refining spreads for deliveries extending beyond CY20, where the assumed Brent price of US$65/bbl yields average HSFO cracks of –US$12.27/--11.4/bbl for FY20/21.
- Based on its size and public sector relevance, PSO remains our top pick for capitalizing on income from diversified liquids, LNG (where news reports indicate an expanded role) and undertaking refining upgrades (for PRL) to cushion earnings from rising variability in refining/trading spreads over the long run.
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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