Pakistan State Oil (PSO): 3QFY18 EPS of Rs14.4, up 14% YoY (In-line with expectations)
- PSO announced 3QFY18 earnings of Rs14.4/share, up 14% YoY and in line with market expectations. Net sales of the company improved by 4% to Rs226bn primarily on account of higher oil prices. Gross profits of the company also increased by 7% to Rs10bn as gross margins improved to 4.5% (+20bps) led by higher sales and inventory gains on MOGAS and FO sales.
- Volumetric sales of the company clocked in at 2.1mn tons in 3QFY18, down 32% YoY due to lower FO sales during the quarter.
- Other income of PSO surged by 24% YoY to Rs2.1bn due to higher income from late payment surcharge, we believe. On the other hand, other expenses were up 6% to Rs3bn.
- Finance cost continue to grow increasing by 28% to Rs1.9bn likely due to higher short term borrowing amid cash flow constraints.
- On QoQ basis, earnings were up 35% primarily on the back of strong growth in other income on QoQ basis.
- Key risks to the stock includes: 1) volatility in oil prices and inventory losses, 2) rupee depreciation & exchange losses and 3) sharp pile up in circular debt.
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.
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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