Pakistan State Oil (PSO): 2QFY19 EPS of Rs0.2, down 98% YoY; 1HFY19 EPS Rs10.9, down 50% (Below expectations)
- Pakistan State Oil (PSO) recorded sharp decline of 98% YoY in its profitability to Rs0.17/share during 2QFY19, much lower than our expectations due to 1) exchange losses amounting to 1.5bn and 2) inventory loss of Rs3bn, as per our channel checks.
- Other than aforementioned reasons, Company witnessed decline of 47% YoY in its volumetric sales, mainly dragged by Furnace Oil (FO) -75% YoY coupled with Hi Speed Diesel (HSD) and Motor Gasoline (Mogas) by 35% and 17% YoY respectively.
- Other income was up by 122% YoY amidst higher penal income of Rs1bn as per our channel checks. While Finance cost doubled to nearly Rs2bn for the 2QFY19 due to higher bank borrowing and rise in interest rates.
- PSO’s associate company contributed losses of Rs185mn for 2QFY19 vs. profit of Rs52mn in corresponding period of last year.
- Key risks to the stock includes: 1) volatility in oil prices and inventory losses, 2) rupee depreciation 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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