Oct 27, 2015 - 12M ADT (USD mn). 5.2. Shares Outstanding (mn). 272. PSMC - ... 9% against the risk free yield of ~6.5% a
Result Previews PSO, PSMC and NCPL
Wednesday October 27, 2015
PSO ‐ BUY
Pakistan State Oil (PSO): 1QFY16 Earnings Preview
Target Price: PKR 453 Current Price: PKR 314 PSO Performance 1M
3M
12M
Absolute %
6%
‐17%
‐11%
Relative to KSE %
3%
‐11%
‐23%
Bloomberg
PSO.PA
Reuters
PSO.KA
MCAP (USD mn)
830
12M ADT (USD mn)
5.2
Shares Outstanding (mn)
272
The board meeting of Pakistan State Oil (PSO) is scheduled on Wednesday 28th October, 2015 to declare its 1QFY16 financial results. We expect the company to post NPAT of PKR1.1bn (EPS: PKR4.1) in 1QFY16 compared to PKR5.2bn (EPS: PKR19.3) in 1QFY15, depicting a massive decline of 79%YoY. On a sequential basis, earnings will likely post a decline of 70%QoQ compared to PKR13.6/sh in the preceding quarter. The sharp decline in earnings can primarily be attributed to inventory loss of ~PKR1.5bn in 1QFY16 compared to inventory gains of PKR3.0bn and PKR0.4bn in 1QFY15 and 4QFY15, respectively. In addition, a 6%YoY/33%QoQ and 16%YoY/10%QoQ declines in the volumetric sales of HSD and FO, respectively, will further dampen the earnings. The aforementioned variables coupled with 54%YoY/26%QoQ decline in FO margins will also result in a heavy toll on gross profit, expected to decline by 53%YoY and 42%QoQ. We expect the dismal trend in quarterly earnings to bottom‐out in 1QFY16 as i) absence of inventory losses on stable oil prices, ii) reduced finance cost and iii) growth in HSD and MOGAS sales will likely keep earnings steady in subsequent quarters. Moreover, reduced burden of circular debt pile up owing to an expected 25%‐30% lower average FO price in FY16 will further improve the cash flows of PSO. Thus, we re‐iterate our stance on PSO (TP: PKR453/sh) as our top pick in Oil and Gas chain, offering a total return of 48%. Financial Summary (PKR mn)
1QFY16
1QFY15
S
4QFY15
S
Net Sales
204,076
290,435
‐30%
230,877
‐12%
Gross Profit
5,484
11,615
‐53%
9,427
‐42%
Expenses
4,310
4,371
‐1%
4,037
7%
Other Income
2,800
3,373
‐17%
4,712
‐41%
PAT
1,109
5,243
‐79%
3,694
‐70%
EPS
4.1
19.3
‐79%
13.6
‐70%
PSMC ‐ BUY
Target Price: PKR 530
Current Price: PKR 462 PSMC Performance
1M
3M
12M
Absolute %
10%
6%
56%
7%
11%
44%
Relative to KSE %
Bloomberg
PSMC.PA
Reuters
PKSU.KA
MCAP (USD mn)
347
12M ADT (USD mn)
0.9
Shares Outstanding (mn)
82
BMA Research
Source: BMA Research
Pak Suzuki Motor Company Ltd. (PSMC): 9MCY15 Earnings Preview The board meeting of Pak Suzuki Motor Company (PSMC) is scheduled on Oct 29’15 to consider the financial results for 9MCY15. As per our expectations, 9MCY15 earnings will clock in at PKR4.1bn (EPS: PKR49.7) compared to the 9MCY14 PAT figure of PKR1.6bn (EPS: PKR19.6), depicting a growth of 2.5xYoY. The growth in earnings will be primarily driven by 64%YoY jump in volumetric sales. The star contributors were Bolan and Ravi, with sales volumes up 2.5xYoY and 2.6xYoY, respectively, backed by the Apna Rozgar Scheme. Favorable JPY/PKR trend during 9MCY15 (down ~14%YoY) and declining raw material costs such as steel (down ~38%CYTD) is expected to improve company margins and further enhanced the bottomline. 3QFY15 alone was a golden quarter for PSMC as we expect the company to post earnings of PKR1.7bn (EPS: PKR20.3), up 13%QoQ/2.9xYoY from PKR1.47bn (EPS: PKR17.9) and PKR576mn (EPS: PKR7.0) for 2QCY15 and 3QCY14, respectively. We currently have a BUY stance on the scrip, offering an upside of 15% and total return of 20% with our target price of PKR530.
[email protected] +92 111 262 111
BMA Capital Management Ltd. 801 Unitower, I.I.Chundrigar Road, Karachi, 74000, Pakistan For further queries, please contact:
[email protected] or call UAN: 111‐262‐111 This memorandum is produced by BMA Capital Management Limited and is only for the use of their clients. While the information contained herein is from sources believed reliable, we do not represent that it is accurate or complete and should not be relied upon as such. Opinions expressed may be revised at any time. This memorandum is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned.
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Nishat Chunian Power Limited (NCPL): 1QFY16 Earnings Preview
NCPL ‐ REDUCE Target Price: PKR 41 Current Price: PKR 56 NCPL Performance 1M
3M
12M
Absolute %
‐5%
10%
22%
Relative to KSE %
‐8%
‐5%
10%
Bloomberg
NCPL.PA
Reuters
NCPL.KA
MCAP (USD mn)
197
12M ADT (USD mn)
0.2
Shares Outstanding (mn)
367
The board meeting of Nishat Chunian Power Limited (NCPL) is scheduled on Oct 29’15 to consider the financial results for 1QFY16. As per our expectations, 1QFY16 earnings will clock in at PKR551mn (EPS: PKR1.5) compared to the 1QFY15 PAT of PKR711mn (EPS: PKR1.9), depicting a decline of 22%YoY. The decline in earnings will primarily be driven by lower load factor on the back of likely overhauling being undertaken during the quarter. The sales of the company are likely going to clock at PKR4.1bn, down 40%YoY on the back of lower FO prices as well as lower load‐factor. The finance cost of the company will however likely to come off by 43%YoY to PKR308mn on the back of lower DR and better liquidity position of the IPPs. The scrip currently offers a dividend yield of 9% against the risk free yield of ~6.5% and trades at a forward P/E of 8.8x.
BMA Capital Management Ltd. 801 Unitower, I.I.Chundrigar Road, Karachi, 74000, Pakistan For further queries, please contact:
[email protected] or call UAN: 111‐262‐111 This memorandum is produced by BMA Capital Management Limited and is only for the use of their clients. While the information contained herein is from sources believed reliable, we do not represent that it is accurate or complete and should not be relied upon as such. Opinions expressed may be revised at any time. This memorandum is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned.
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