PSO 2QFY24 Review: Inventory losses and higher finance costs mar bottom-line, (AKD Off the Analyst's Desk Feb 15, 2024)
PSO 2QFY24 Review: Inventory losses and higher finance costs mar bottom-line
Pakistan State Oil Ltd (PSO) announced its 2QFY24A financial result, reporting an unconsolidated LAT of PkR14.14bn (LPS: PkR30.12), representing a significant decline from PAT of PkR21.8bn (EPS: PkR46.62) witnessed in the quarter before.
- The result came in below our expectations of LPS of PkR14.35, where-in major deviations occurred due to lower gross profits (possibly attributable to higher inventory losses) alongside higher finance costs. Inventory losses are estimated to have clocked in at ~PkR27.2bn (PkR58/sh), as ex-refinery prices for MS/HSD fell by 25%/26%QoQ from their respective 1QFY24 closings, subsequently resulting in gross margins for the quarter to turn negative (-ve 0.4% vs. 6.4% in 1QFY24A).
- Topline of the company stood at PkR907.2bn, changing by –1%/+8% on a QoQ/YoY basis during the period, as total POL offtakes for the quarter stood at 1.93mn tons, up 1%QoQ.
- On the non-operating front, finance costs came in higher than expectations, amounting to PkR15.09bn (up 47%/97% QoQ/YoY). The rise may be attributed to higher markup expenses on short-term financing, as well as elevated late payment surcharges on payables during the period.
- On the taxation front, effective taxes turned negative, resulting in tax reversal of PkR2.1/bn, possibly due to utilization of previously owed deferred tax assets (PkR22.3bn as per 1QFY24 financials).
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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