PPL_High Exploration Expense Drain Earnings,(AKD Off the Analyst's Desk Sep 20, 2022)
AKD, Off the Analyst's Desk
PPL: High Exploration Expense Drain Earnings
Pakistan Petroleum Limited (PPL) reported its FY22 earnings earlier today, clocking in at PkR54.4bn for the full year (EPS: PkR20), higher by a mere 4%YoY. For 4QFY22, PPL reported earnings of PkR2.82bn (EPS: PkR1.04), lower by 80%YoY/86%QoQ. Alongside the earnings, the company announced a cash dividend of PkR0.50/sh, taking the full year payout to PkR2.00/sh, corresponding to a payout ratio of 10% for FY22.
- The lackluster quarterly earnings were largely driven by higher-than-expected exploration expenses, which amounted to PkR14.13bn in the final quarter, compared to PkR1.64bn in the earlier quarter and PkR6.76bn reported in SPLY.
- Further pressure to the company’s bottomline came in the form of high taxation, with Effective Tax Rate during the quarter coming in at 88%, in lieu of super tax. The company’s FY22 ETR stood at 45%.The company charged PkR20.6bn in taxes during the final quarter, doubling YoY and 599%QoQ.
- Revenues grew at a healthy 22%QoQ/70%YoY to PkR62.3bn for 4QFY22, driven by higher crude oil prices and a favorable exchange rate. This was further aided by the resumption of gas supply from Kandhkot, with PPIS data suggesting 157MMCFD of average supply from the field in 4QFY22, as compared to 77MMCFD in the earlier quarter.
- Other Income for the quarter came in at PkR3.78bn, slightly lower than our expectations, likely driven by lower-than-expected exchange gains during the period. Other income increased by 21%QoQ/105%YoY.
- We have a Buy rating on the stock, with a Jun’23 Target Price of PkR113/sh, which represents a 74% upside to the last close.
AKD Research
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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