Mari Petroleum Co. (MARI): 4QFY18 EPS Rs42, +62% YoY (+16% QoQ); DPS Rs 2.5/share; Bonus issue 10% (In line with expectations)
- MARI Petroleum Company (MARI) announced its 4QFY18 earnings, where company posted earnings of Rs4.6bn (EPS Rs42/share) up 62% YoY. Earnings were broadly in line with our expectations. Higher earnings could be attributed to higher well head gas prices of Mari Field at Rs141.15/mmbtu during 2Q2018, vs.~Rs106.05/mmbtu in 2Q2017 amidst higher international oil prices. Further, rupee devaluation and unwinding of entitlement factor of Mari field gas price are key reasons behind higher earnings.
- Exploration cost of the company increased by 56% YoY due to occurrence of one dry well (Sufi 1) coupled with higher prospecting expenditures. Similarly, opex of the company grew by 29% YoY, in line with sales activity of the company.
- Finance income of the company went up by 204% YoY due to higher short term investment and increase in income on bank deposits amidst higher interest rates, we believe.
- Other income (expense) of the company clocked in at -Rs246mn for 4QFY18 due to distressed performance of seismic and drilling unit.
- Full year (FY18) earnings of the company clocked in at Rs139.45, up by 68% YoY due to increase in average international Arab Light oil prices by 31% YoY to US$63.28/bbl coupled with rupee devaluation.
- Risk: We flag 1) inability to meet set benchmark of incremental production to avail higher pricing, 2) slowdown in demand from customers and 3) lower than anticipated international oil prices as a key risk to company’s earnings and valuation.
Mari Petroleum Company Limited is a Pakistan-based exploration and production company. The Company is engaged in managing and operating Pakistan's gas reservoir at Mari Field, District Ghotki, Sindh. Its segments include Exploration and Production; Mari Seismic Unit, and Mari Drilling Unit. The Exploration and Production segment includes various upstream business activities. The Mari Seismic Unit segment includes two-dimensional (2D)/three-dimensional (3D) seismic data acquisition. The Mari Drilling Unit segment includes onshore drilling services. In addition to Mari Gas Field, it holds development and production leases over Zarghun South and Sujawal Gas Fields, and has operatorship of eight exploration blocks (Ziarat, Harnai, Sukkur, Sujawal, Karak, Ghauri, Peshawar East and Khetwaro). Its other products include crude oil, condensate and liquefied petroleum gas (LPG). Its exploration and production assets are spread across Pakistan in all four provinces.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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