reports
- Team AKD Research
PSO 1QFY24 & PSMC 3QCY23 Result Previews, (AKD Daily Oct 19, 2023)
PSO – PAT to clock in at PkR18.3bn (EPS: PkR39.0) in 1QFY24: Pakistan State Oil (PSO) is expected to announce its 1QFY24 financial result on 20th October, where we expect the company to post PAT of PkR18.3bn (EPS: PkR39.0), higher by 14.0xYoY compared to LAT of PkR4.63bn (LPS: PkR9.85) in the quarter before. The said QoQ increase is majorly on the back of higher gross margins specifically on regulated products (MS/HSD) alongside significant inventory gains amid rising ex-refinery prices during t...
The Pump, (AKD Monthly Report, August 10' 2023)
FY23 stood as one of the abysmal years in the sector’s history, with total volumes clocking in at 16.6mn tons (down 26.5%YoY), 3 year lows, almost on par with offtakes witnessed back in the pandemic period of 16.3mn tons. Overall, the sector’s market cap has remained up by 6.3% CYTD, with the main board rising by 13% during the same period, resulting in the sector underperforming the broader market by 6.6%. In summary, the fallout witnessed throughout the outgoing fiscal year was majorly due to ...
PSO & APL 4QFY23 Result Previews, (AKD Daily Aug 08 2023)
PSO – LAT to clock in at PkR5.8bn (LPS: PkR12.5) in 4QFY23: Pakistan State Oil (PSO) is expected to announce its 4QFY23 financial result sometime in August, where we expect the company to post LAT of PkR5.8bn (LPS: PkR12.5). Like most players in the sectors, PSO is also expected to deal with substantial losses on the back of falling ex-refinery prices, majorly due to declining international gasoline/ gasoil prices, resulting in local MS/HSD price being down by 10%/16% from their respective peaks...
- Anand Kumar
Pakistan OMCs: Sales update: Jul'23 - Overall volumes remained flat
Petroleum sales declined by 6% YoY to 1.35mn MT in Jul’23 with the decline largely attributable to a plunge in FO volumes by 59% YoY due to lower offtake by power sector. MS and HSD sales rose by 10% and 11% YoY, respectively largely attributable to a lower base in the same period last year. On a MoM basis, overall volumes remained stable with a decline in HSD volumes by 9% MoM, which was offset by increase in MS and FO sales by 2% and 45% MoM, respectively. * HSD volumes in Jul’23 clocked i...
- Shahmir Malik
Pakistan Autos: Rising gross margins to improve sector profitability
* We expect the Japanese Auto OEMs to post NPAT of PKR579mn for the quarter ended June 2023, where the major contribution should come from INDU, while the other two OEMS are expected to post a loss. * Higher car prices are expected to translate into better gross margins for the entire industry. Although prices had been raised earlier during the year, the full realization of gross margins is expected to occur this quarter. * Despite improving margins, low volumes and persistently hi...
- Shahmir Malik
Pakistan Autos - June 2023 - Modest recovery
Auto industry sales volumes displayed a moderate recovery, with a 10% MoM increase to reach 6,034 units. However, there has been a significant decline in sales by 79% YoY basis. The industry faced numerous challenges throughout the year, starting from raw material shortages due to import restrictions, PKR depreciation resulting in cost overruns, and demand destruction caused by rising interest rates and multi-decade high inflation. Consequently, vehicle sales in FY23 witnessed a substantial d...
- Anand Kumar
Pakistan OMCs – Sales update - MS sales lifted demand in Jun’23
Petroleum product sales rose by a mere 4% MoM to arrive at 1.3mn MT in Jun’23, where the MS and FO sales witnessed an increase of 7% and 10% respectively, but HSD volumes remained unchanged. This is despite reduction in local HSD prices by c.7% MoM basis. This takes FY23 total volumetric sales to 16.6mn MT, down 27% YoY led by a major slump in FO and HSD volumes which fell by 49%/28% respectively. Sluggish demand was a function of (i) significant surge in petroleum product prices due to rupee...
- Shahmir Malik
Pakistan Autos - May 2023 - Improved PSMC sales lift industry volumes
Sales volumes in the auto industry have experienced a moderate recovery, with a MoM increase of 19% to 5,290 units. However, sales have decreased by a significant 77% YoY. The overall increase in production and sales volumes by PSMC has contributed to the sector's improvement on a MoM basis. Excluding PSMC, industry volumes have declined by 22% compared to the previous month. INDU: In the month of May'23, INDU volumes contracted by 12% MoM and 71% YoY, amounting to 1,718 units. All INDU’s var...
- Anand Kumar
Pakistan OMCs – Sales update - Seasonality helps volumes in May’23
Petroleum product volumetric sales increased by 11% MoM to 1.3mn MT in May’23, mainly led by higher HSD sales that surged by 18% MoM owing to Kharif sowing season. MS sales, on the other hand, increased by a muted 4% MoM. However, on a YoY basis, overall demand plummeted by 40%, taking 11MFY23 volumes to 15.2mn MT, down 26% YoY. Smuggling of HSD from Iran, elevated oil prices amid petroleum levy and Rupee devaluation, and overall slowdown in economic activity have weighed heavily on petroleum...
- Shahmir Malik
Pakistan Autos - Attractive valuations take care of the risks
* We maintain our Buy ratings on INDU (TP: PKR1,200/sh) and PSMC (PKR160/sh), but downgrade our stance to Neutral on HCAR (PKR120/sh). We look beyond interim Fx losses for PSMC and focus on its operational improvement. We also like INDU for its resilience and plans to introduce HEVs. HCAR is impeded by its relatively limited product offerings. * We think the worst of the macroeconomic shock is behind us, with auto OEMs already experiencing "default-like conditions." Demand and supply ma...
- Anand Kumar
Pakistan OMCs - Margin revision to neutralize slower demand growth
* Given the severity of the macroeconomic shock, demand for petroleum products will likely be slow to rebound. We see an increase of just 2%/7% in FY24/25f, after the sharp contraction in FY23f. * Respite comes from better margins, after the recent increase in HSD and MS margins to PKR6.0/litre. This will help the sector to meet higher working capital requirements, caused by rising circular debt and monetary tightening. * We have a Marketweight stance on the sector, where we value ...
- IMS Research Team
Pakistan OMCs: April 2023 - Sales volume update
SEASONALITY IMPROVED MONTHLY SALES; BUT OVERALL DYNAMICS ARE ALARMING Petroleum products volumes have shown some improvement and increased by 6% MoM to 1.2mn MT in April, mainly led by higher HSD sales that lifted by 16% MoM basis due to the start of Kharif sowing season. MS sales also increased by 4% MoM. However, on a YoY basis, overall demand slumped by 47% taking 10MFY23 volumes to 13.3mn MT, down 28% YoY. The massive jump in local oil product prices amid higher taxes and PKR devaluation,...
- IMS Research Team
Pakistan State Oil: 3QFY23 Review - Elevated earnings backed by higher...
Pakistan State Oil (PSO) has reported NPAT of PKR13.6bn (EPS: PKR29.07) in 3QFY23 vs. a loss of PKR4.5bn (LPS: PKR9.71) in 2QFY23. There was no dividend as expected. The sequential jump in earnings is primarily led by inventory gains. This resulted in elevated gross margins. We expected earnings of PKR32.70/sh, where higher finance cost and loss from associate lead to the major deviation. This takes 9MFY23 earnings to PKR10.3bn (EPS: PKR21.91), down 84% YoY Key highlights from 3QFY23 result: ...
- IMS Research Team
OMCs: 3QFY23 Result Preview - Earnings to rebound on exuberant exchang...
* The IMS OMC Universe is expected to post NPAT of c.PKR18.3bn in 3QFY23 compared to a loss of c.PKR3.3bn in the previous quarter. Higher expected inventory gains amid Rupee devaluation and upward revision of OMC margins should lift quarterly earnings. * Sector inventory gains are expected to arrive at c.PKR21.9bn in the quarter as compared to inventory losses in the last quarter. This should offset the impact of dwindling demand amid overall slowdown in the economy. * ECC approved...
- IMS Research Team
Pakistan Suzuki: 1QCY23 Review - Amplified FX losses slash equity furt...
Pak Suzuki Motor Co. (PSMC) has posted a massive net loss of PKR12.9bn (LPS: PKR156.94) in 1QCY23, down from a loss of PKR3.8bn (LPS:46.55) in 4QCY22. The loss came in higher than our expected LPS of PKR122.47, where the major deviation stemmed from lower than expected gross margins and high finance costs. KEY RESULT HIGHLIGHTS FOR 1QCY23: * Revenue clocked in at PKR 21.8bn, down 54% YoY and 64% QoQ. This is higher than our expected topline of PKR20.9bn. The decline can primarily be attribut...
- Shahmir Malik
Pakistan OMCs: March 2023 - Macro headwinds depressed volumes further
Petroleum products volumes remained depressed falling by 25.0% YoY and 9.0% MoM to 1.1mn MT in Mar’23. Sluggish offtake is primarily led by higher petroleum product prices, slower economic activity and likely smuggling from Iran via Balochistan. International oil prices declined by 4.4% MoM. However, local prices remain unchanged amid Pakistan’s macro-economic weakness and elevated taxes. * HSD volumes continued to decline by 17.0% MoM and 42.5% YoY to 0.4mn MT in Mar'23. This takes 9MFY23 H...
- Shahmir Malik
Pakistan OMCs: Sales update - February 2023 - Demand falls on elevated...
Petroleum product volumes fell by 21% YoY and 16% MoM to 1.22mn MT in February. This reduction in offtake is attributable to upward revision of local petroleum product prices owing to the PKR devaluation of 14% in the last week of January 2023 and general deterioration of economic conditions in Pakistan. Higher local oil prices and multi-decades high inflation will likely continue to keep a check on future demand of petroleum products. The petroleum development levy (PDL) on HSD and MS remain...
- Shahmir Malik
Pakistan State Oil: 2QFY23 Result - Inventory losses and finance cost ...
Pakistan State Oil (PSO) has posted a net loss of PKR4.6bn (LPS: PKR9.71) in 2QFY23 from NPAT of PKR20.2bn (EPS: PKR43.02) SPLY. The result is better than our expected LPS of PKR14.90 – higher than expected GMs amid lower inventory losses was the major deviation. This dragged 1HFY23 towards a net loss of PKR3.5bn (LPS: PKR7.16) from a profit of PKR1.2bn in 1Q. The company did not announce any dividends, in line with our expectations. KEY HIGHLIGHTS FOR 2QFY23: * Net Sales clocked in at PKR84...
- Shahmir Malik
Pakistan OMCs - 2QFY23 Previews - Inventory losses to dent earnings
IMS OMC universe is expected to post losses of PKR7.4bn in 2QFY23 versus NPAT of PKR5.5bn in 1Q. Losses are a function of inventory losses, delay in upward revision of OMC margins despite inflationary pressures and lackluster petroleum product demand. Elevated interest rates will reduce losses for PSO and APL. We expect the former will likely book penal income while APL may benefit from a higher than average build up in short term investments last quarter. The OMC sector underperformed the KS...
- Shahmir Malik
Pakistan OMCs: January 2023 - Respite in local prices improved demand
POL volumes recovered 8% MoM in January, with furnace oil volumes showing the largest recovery (16% MoM) followed by HSD (12% MoM) and MS (4% MoM). The recovery in offtake is mainly attributable to the continued ease off in international oil prices from Dec’22 that helped the government maintain local MS and HSD prices in Jan’23. However, post PKR devaluation by the end of Jan’23, the federal government increased MS and HSD prices on 29th Jan to PKR249.84 and PKR262.84 per litre, respectively...
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