Intermarket Pulse: Pakistan OMCs: Exchange losses to offset both volumetric growth & inventory gains
- We expect IMS OMC Universe to post cumulative earnings decline of 44% YoY in 3QFY18, courtesy second consecutive quarter of PKR depreciation and potential application of turnover tax amid thin margins for PSO and HASCOL. Despite 7/8% YoY growth in HSD/Mogas sales, the upcoming quarterly results may turn out to be the worst in last 2yrs for PSO.
- APL remains the only OMC which could post earnings growth with projected 3QFY18 EPS of PRs16.67, up 15% YoY, courtesy lowest exposure to PKR depreciation, and sizeable contribution from deregulated products. PSO could see greatest earnings attrition with EPS of PRs4.58, down 64% YoY, amid potential exchange and inventory losses on MS. HASCOL is expected to post 1Q EPS of PRs2.30, down 11% YoY.
- We believe quantum of exchange losses could be similar to that of 2QFY18 as the currency once again slipped at the end of quarter, with a similar magnitude. Our estimates would have resulted in positive earnings growth, without exchange losses. We continue to like APL (TP: PRs700/sh), where PSO may face some immediate-term pressure on possibility of substantial earnings decline (TP: PRs370/sh).
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.
Hascol Petroleum Limited is a Pakistan-based company, which is engaged in procurement, storage and marketing of petroleum and related products. The Company is involved in the sale of petroleum products, such as fuel oil, high speed diesel, gasoline, Jet A-1, liquefied petroleum gas (LPG) and lubricants. The Company offers products, such as Tiger Super, Rocket Diesel and Furnace Oil. The Company offers Fuchs Lubricants products, which include corrosion preventives, quenching oils, industrial lubricants, open gear lubricants, greases, automotive oil and metal working fluids. The Company also markets LPG as an automotive fuel through its retail network. The Company is engaged in owning, leasing and renting oil storage facilities, as well as importing petroleum products. The Company has storage facilities at Machike, Shikarpur and Daulatpur. The Company sells its product to dealers, government agencies and autonomous bodies, independent power project and other corporate customers.
Pakistan State Oil is a petroleum group based in Pakistan. Co.'s principal activities are the procurement, storage and marketing of petroleum and related products. Co. also blends and markets various kinds of lubricating oils.
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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