Topline Securities Limited - Oil Gas Development (OGDC): 2QFY19 EPS Rs7.0, +53% YoY (+12% QoQ); DPS Rs3/share (In-line with expectations)

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Topline Securities Limited

EUR 4.25 For Business Accounts Only

Oil & Gas Development (OGDC): 2QFY19 EPS Rs7.0, +53% YoY (+12% QoQ); DPS Rs3/share (In-line with expectations)

OGDC posted 2QFY19 earnings growth of 53% YoY, mainly on the back of 25% increase in revenues and 2.2x increase in other income thanks to higher oil prices, PKR devaluation against US$ and uptick in policy rate. The result was broadly in line with estimates.
The company also announced cash dividend of Rs3, taking 1HFY19 dividend to Rs5.75/share.
The company’s net sales were up thanks to 1) 16% YoY higher Arab Light oil prices (average US$69/bbl) and 26% YoY gain in dollar against PKR.
The company’s other income grew by 2.2x YoY to Rs7.8bn during the outgoing quarter. This was due to higher interest income of Rs3.8bn owing to increase in policy rate (+450bps to 10.25% since Jan, 2018 to date) and exchange gain of Rs3.6bn on the back of PKR devaluation against the greenback. To note, the company holds US$230mn in Term Deposit Receipts (TDRs) as of Dec 2018.
Exploration charges were down 57% YoY during the outgoing quarter which also supported bottom-line growth.
OGDC booked profits from associates of Rs1.2bn, up 20% YoY due to strong earnings growth posted by its associate Mari Petroleum (MARI), up 85% YoY to Rs48.8 in 2QFY19.
We flag 1) volatility in international oil prices, 2) lower than expected hydrocarbon production and 3) significant exploration and development cost as key risks for OGDC.

22/02/2019 5 EN

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Topline Securities Limited

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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Oil & Gas Development (OGDC): 2QFY19 EPS Rs7.0, +53% YoY (+12% QoQ); DPS Rs3/share (In-line with expectations)

Pakistan Strategy: Foreign selling at PSX; Will this trend continue in 2021?

Pakistan Strategy: Pakistan Outlook 2021 based on Topline Poll

Pakistan Automobiles: Car sales (including KIA) up ~63% YoY in Nov-2020

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