Pakistan State Oil (PSO): 1QFY19 EPS Rs10.7, -17% YoY (+87% QoQ); (Above Expectations)
- Pakistan State Oil (PSO) recorded Profit after Tax (PAT) of Rs4.2bn (EPS: Rs10.7), down 17% YoY, higher than street consensus amidst likely inventory gains of around Rs2bn. Other than this, the company also earned substantial margins on inventory of Furnace Oil (FO) and Lubricant oil, as per our channel checks.
- Sales of the company recorded rise of 8% YoY despite the decline in FO, HSD and MS sales volume by 84%, 32% and 13% YoY respectively. Rise in sales could be attributed to increase in FO, HSD, and MS prices by 75%, 44%, and 34% respectively.
- Other income of PSO witnessed fall of 56% YoY, likely due to 1) absence of PIBs income that were matured last year on July 19, 2017 and 2) lower markup on delayed payments. We await for further clarity on this account from management.
- Effective tax rate during the quarter was at 37% vs. 32% in corresponding period of last year.
- 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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