PSO_4QFY20 unconsolidated LPS clocked in at PkR20.18, (AKD, Off the Analyst's Desk, Sep 01, 2020)
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AKD Research - Off the Analyst's Desk |
Sep 01, 2020 |
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PSO: 4QFY20 unconsolidated LPS clocked in at PkR20.18 (lower than expectation) |
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· Pakistan State Oil (PSO) announced results for FY20 where company posted unconsolidated loss after tax of PkR6.5bn (LPS: PkR13.77) against PAT of PkR10.6bn (EPS: PkR22.55) recorded in FY19. For 4QFY20 a massive loss of PkR9.5bn was recorded against PAT of PkR4.6bn recorded in 4QFY19. Result clocked in lower than our expectation. · The variance was mainly due to inventory loss of PkR15.5bn against our expectation of PkR8.2bn as PSO was one of the few OMCs to sell its product in Jun'20 where local ex-refinery prices were lower than international prices, hence resulting in loss on every liter sold. · For FY20, PSO's topline decreased by 4.0%YoY as decrease in volumes of 10.4%YoY was accompanied by lower prices of MS and HSD after oil prices crashed during the year. For 4QFY20, topline declined by 34.2%YoY as volumes declined 11.2%YoY while against 3QFY20, topline declined by 9.8%QoQ despite increase in volumes on the back of decline in oil prices. · Finance cost for FY20 increased by 50.2%YoY on the back of increase in interest rates while PSO also increased local component in its short term borrowing which had a high interest rate. However, for 4QFY20, finance cost decreased by 26.4%QoQ mainly due to decline in interest rates. · We have a Buy stance on the stock with a TP of PkR214.6/sh, 11.8% upside where we believe despite a disappointing result, government's MoU with IPPs stating circular debt clearance as a pre-requisite is a good omen for the company. |
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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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