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Pakistan Petroleum (PPL): 1QFY21 EPS at Rs5.27, up 1% YoY and 30% QoQ (higher-than-industry-consensus)

  • Pakistan Petroleum Limited (PPL) reported profit after tax of Rs14.4bn (EPS: Rs5.27), significantly higher than industry consensus and our expectation of Rs4.5/ share.
  • Deviation from our expectations stems from higher Net Sales, which recorded a decline of 6% YoY (vs. our expectation of -11%).
  • Hydrocarbon production of the company during 1QFY21 fell by 1.7% QoQ. Similarly, Arab Light crude oil prices declined by 32% YoY to US$43/barrel in 1QFY21.
  • Operating expenses clocked in at US$4.5/barrel, down 17% QoQ. We estimated Opex at US$5.5/barrel.
  • Exploration costs increased by 134% QoQ as company has expensed out Miraj 1 as a dry well, in our view.
  • Other Income declined by 68% QoQ due to absence of heavy exchange gains. Similarly, Other Expenses increased by 118% QoQ due to incurrence of exchange losses as currency appreciated by Rs2.45/US$ during the outgoing quarter.

Effective tax rate clocked in at 25% in 1QFY21 vs. 31% in 4QFY20.

Underlying
Pakistan Petroleum Ltd.

Pakistan Petroleum Limited (PPL) is a supplier of natural gas. The Company is principally engaged in conducting exploration, prospecting, development and production of oil and natural gas resources. The Company operates nine producing fields, which include Sui, Kandhkot, Adhi, Mazarani, Chachar, Adam, Adam West, Shahdadpur and Shahdadpur West. It has working interests in approximately 20 partner-operated producing fields. Its partner-operated fields include Qadirpur Gas Field, Tal Block, Miano Gas Field and Sawan Gas Field. The Company, along with its subsidiaries, has a portfolio of approximately 40 exploration blocks, of which over 20 are operated by the Company, including Block-8 in Iraq, while approximately 20 blocks consisting of three offshore leases in Pakistan and two onshore concessions in Yemen are operated by joint venture partners. Its gas production from its operated and partner-operated fields is approximately one billion cubic feet of gas per day.

Provider
Topline Securities Limited
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).

Analysts
Shankar Talreja

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