Intermarket Securities Limited - Attock Petroleum (APL) Intermarket Pulse: APL: All missing pieces now in place; Buy

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Intermarket Securities Limited

Abdul Samad Khanani

Intermarket Pulse: APL: All missing pieces now in place; Buy

We have rolled forward (Jun’19) our TP for APL to PRs779/sh. We have included 3QFY18 result and raised APL’s medium term Jet Fuel market share to c. 5% from previous estimates of 1% amid commencement of New Islamabad Airport Jet Fuel Farm (50% stake).

The fruits of APL’s recent aggressive approach, in shape of retail expansion, storage additions, and strengthening supply chain with additional imports of HSD/MS, are now visible in monthly sales trend. While APL will likely limit the decline in FO market share through an integrated business model, recovery in retail market share remains the key earnings driver, in our view.

APL’s focus on retail fuel market and portfolio of diverse deregulated products are the key attractions for the stock. APL is currently trading at FY19/20F P/E of 8.5x/7.5x, and offers a healthy D/Y of c. 10% (FY19F). The latter in particular offers downside protection in a weak market.

15/05/2018 4 EN

Underlying

Attock Petroleum

Attock Petroleum Limited is engaged in the procurement, storage and marketing of petroleum and related products. The Company offers a range of lubricants blended with base oils and additives at its Automatic Batch Blending facility. Its products include diesel engine grades, such as GOLD TURBO PLUS, GOLD TURBO, GOLD XTRA and GOLD-50; gasoline engine grades, such as HIDRIVE SUPREME, HIDRIVE SUPER and ATTOCK T-2; industrial grades, such as ATTOCK Hydraulic Oil AW Series, ATTOCK Gear Oil EX Series and ATTOCK TURBINE Oil, and gear oils, which include various specifications, such as EP 140, EP 90, 85W/90 and 85W/140. It has a multi-fuel retail network of approximately 540 retail outlets. The Company's retail outlets also offer compressed natural gas, as well as non-fuel retailing options, such as tuck shops, car services and lubricants. It supplies various types of fuels to various businesses, including manufacturing industry, armed forces, agricultural customers and power producers.

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PK0082901015 Pakistan Stock Exchange Pakistan

Provider

Intermarket Securities Limited

Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.

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Analysts

Abdul Samad Khanani

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