Result Previews
Research Entity Notification Number: REP-005
POL and APL
Wednesday January 25, 2017
POL - UNDERWEIGHT
POL: 1HFY17 EPS expected at PKR19.1, up 23%YoY
Target Price: PKR 496 Current Price: PKR 537 POL Performance 1M
3M
12M
Absolute %
-1%
26%
169%
Relative to KSE %
-9%
3%
108%
Bloomberg
POL.PA
Reuters
PKOL.KA
MCAP (USD mn)
1,212
12M ADT (USD mn)
8.3
Shares Outstanding (mn)
237 Source: PSX, BMA Research
APL - OVERWEIGHT Target Price: PKR 745
The board meeting of Pakistan Oilfields Limited (POL) is scheduled on Friday January 27, 2017 to declare its 1HFY17 financial results. We expect the company to post NPAT of PKR4.5bn (EPS: PKR19.1) in 1HFY17 compared to PKR3.7bn (EPS: PKR15.5) in the corresponding period last year, up a significant 23%YoY. The notable increase in earnings is expected on the back of i) a 5%YoY increase in oil production and ii) subdued exploration cost. The increase in oil production can primarily be attributed to i) tie in of Mardankhel and ii) increased flow from Adhi and Balkassar. However, a cumulative ~21%YoY reduction in oil production from Maramzai and Pariwali fields will likely contain the upside in overall oil production from POL. In addition to steady core operations, higher dividend payout from NRL at PKR20/sh in FY16 (FY15 payout: PKR10/sh) will also contribute to the earnings growth. In 2QFY17 alone, earnings of the company are expected at PKR2.2bn (EPS: PKR9.3), depicting a decline of 5%QoQ. The decline in earnings is expected on the back of a steep decline in other income due to absence of dividend from associated companies. However, operating profit of the company is expected to report a 25%QoQ growth following i) 11%QoQ recovery in oil prices, ii) 8%QoQ and 5%QoQ higher oil and gas production, respectively and iii) steep decline in exploration costs. The result announcement is expected to accompany an interim cash dividend of PKR17/sh for 1HFY17. Based on reserve based DCF valuation, we currently have an underweight stance on the scrip at our TP of PKR496/sh.
Financial Summary
Current Price: PKR 719
1HFY17
1HFY16
2QFY17
1QFY17
12,338
12,243
1%
6,614
5,724
16%
Operating Expense
4,153
4,468
-7%
2,128
2,025
5%
PKRmn APL Performance
Net sales 1M
Absolute % Relative to KSE %
3M
12M
4%
23%
68%
Operating Profit
5,581
3,985
40%
3,103
2,477
25%
-3%
1%
7%
Profit before tax
5,753
4,181
38%
2,926
2,827
3%
Profit after tax
4,512
3,671
23%
2,194
2,318
-5%
Bloomberg
APL.PA
EPS
19.07
15.52
23%
9.28
9.80
-5%
Reuters
APL.KA
DPS
17.0
15.0
13%
17.0
-
-
MCAP (USD mn)
569
12M ADT (USD mn)
0.6
Shares Outstanding (mn)
83 Source: PSX, BMA Research
Sajjad Hussain
[email protected] +92 21 111 262 111 Ext: 2062
www.jamapu
