PSO - Analyst Briefing Takeaways, (AKD Off the Analyst's Desk Jun 22, 2023)
AKD, Off the Analyst's Desk
PSO: 9MFY23 Analyst Briefing Takeaways
Pakistan State Oil Ltd (PSO) held its analyst briefing earlier today, wherein the management discussed the following
- Company has 3,500 retail outlets across the country, with a cumulative storage capacity of 1,140k MTs (19 depots). Company also owns two lubricant manufacturing plants, capable of blending/producing 70k MTs annually. Company rehabilitated 76k tons of storage and added 32 new retail outlets during FY23.
- With regards to the RFO sales being criminally low during past three months (compared to industry), management claims that Govt. is highly reluctant on purchasing power from fuel oil generators. Since PSO’s majority of RFO sales are towards the power sector, leading to volume shrinkage.
- Total white oil volumes (down 19.6%YoY during 9MFY23) have shrunk significantly during the fiscal year, although PSO’s portion of the pie has increased, resulting in market share in the segment to end at 51.1% (vs. 48.2% in SPLY).
- With regards to foreign exchange borrowings, interest on these loans are lower compared to the conventional rates. Gov’t takes cares of the FX differential’s which normally arises when the PKR depreciates sharply during a short period, hence the exchange loss risk towards PSO remains minimal.
- Management stated that CAPEX for one storage terminal per MT stands at PkR30k. However, the company realizes economies of scale if the size of the terminal is larger.
- Regarding the issue of the gas circular debt, there is currently no effective mechanism in place to recuperate the price differential when the Gov’t diverts RLNG towards the domestic sector. For this reason, RLNG receivables are expected to remain elevated in the near term.
- Management commented that PRL’s field study is in advance stages, and the capex is estimated to be between US$1.2-1.7bn. The investment will not only upgrade the refinery facility but also double the production capacity.
- With regards to windfall tax introduced in Federal Budget’24, management claims there is no clarity on its implementation yet.
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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