Intermarket Securities Limited - Hascol Petroleum (HASCOL) Intermarket Pulse: HASCOL: Revisiting investment case with a Neutral stance

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Intermarket Securities Limited

Abdul Samad Khanani

EUR 4.36 For Business Accounts Only

Intermarket Pulse: HASCOL: Revisiting investment case with a Neutral stance

We reinstate coverage on HASCOL with Dec’18 TP of PRs268/sh, implying a Neutral stance. The stock is trading at CY18/19F P/E of 23.7x/20.7x, on the back of a 3yr (CY16-19F) projected EPS CAGR of 15%. Our estimates include the lube greasing facility and new capex plans, which majorly underpin the strong earnings growth.
We have assumed HASCOL’s overall market share to grow to 17.4% from 11.4% over the medium term (HSD/MS: 22%/20%), courtesy of sizeable countrywide storage additions, including stake in 200k tons terminal at Port Qasim, and hefty investments in supply chain and retail network.
We believe earnings for next two years would likely be depressed by settlement of Mena Energy dues. Risks to HASCOL’s business model of generating strong sales growth emanate from thin margins, hefty discounts and importing bulk of its sales. This makes the company more vulnerable to exchange losses and turnover tax.

19/03/2018 4 EN

Underlying

Hascol Petroleum

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.

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PK0108001014 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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Intermarket Pulse: HASCOL: Revisiting investment case with a Neutral stance

Pakistan OMCs_OMC volumes rose by 28%YoY for May'22, (AKD Daily, Jun 02, 2022)

Pakistan OMCs_Retail fuels continue to remain strong! (AKD Daily, Jan 10, 2022)

Pakistan OMCs_APL continues to gain market share (AKD Daily, Jan 04, 2021)

Intermarket Pulse: Pakistan Food producers: 1QCY18- Another weak quarter for consumers

Pakistan IPPs: Favor NPL over NCPL in a tougher macro environment

Intermarket Pulse: Pakistan Banks: Valuation anomaly warrants switch to large banks

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