Jan 25, 2017 - Research Entity Notification Number: REP-005. POL: 1HFY17 .... 8%, the stock currently offers a total ret
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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.jamapunji.pk
Source: Company Accounts, BMA Research
APL: 1HFY17 EPS expected at PKR34.6, up 75%YoY The board meeting of Attock Petroleum Limited (APL) is scheduled on Friday January 27, 2017 to declare its 1HFY17 financial results. The company’s NPAT is expected to post an increase of 75%YoY clocking in at PKR2.9bn (EPS: PKR34.6) in 1HFY17 compared to PKR1.6bn (EPS: PKR19.8) in the same period last year. The notable upside in earnings can primarily be attributed to i) a sharp recovery in MOGAS sales (up ~54%YoY), ii) 3%YoY uptick in OMC margins on both MOGAS and HSD and iii) inventory gains. Overall, total volumetric sale of major products of the company increased by ~10%YoY in 1HFY17. To note, the market share of APL in MOGAS segment managed to post an impressive increase of ~2ppsYoY in 1HFY17. However, persistent decline in FO sales (down 10%YoY) is expected to limit the overall growth. On a sequential basis, earnings are expected to clock in at PKR1.3bn (EPS: PKR15.8) in 2QFY17, representing a decline of
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
1
Research Entity Notification Number: REP-005
16%QoQ. The decline comes on the back of i) 8%QoQ decline in overall volumes and ii) 2ppsQoQ higher effective tax. The result announcement is expected to accompany an interim cash dividend of PKR25/sh for 1HFY17. With growing petroleum sales and D/Y of 8%, the stock currently offers a total return of 11% at our TP of PKR745/sh ‘Overweight’
Financial Summary 1HFY17
1HFY16
2QFY17
1QFY17
61,302
60,842
1%
29,800
31,502
-5%
4,221
2,382
77%
1,930
2,291
-16%
Operating Expenses
297
863
-66%
380
420
-10%
Net Finance Income
455
502
-9%
230
218
6%
PBT
4,099
2,319
77%
1,899
2,200
-14%
Tax
1,226
678
81%
589
637
-7%
PKRmn Net Sales Gross Profit
PAT
2,873
1,641
75%
1,310
1,563
-16%
EPS
34.64
19.78
75%
15.79
18.85
-16%
DPS
25.0
15.0
67%
25.0
-
-
Source: Company Accounts, BMA Research
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
2
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Stock Rating Investors should carefully read the definitions of all rating used within every research reports. In addition, research reports carry an analyst’s independent view and investors should ensure careful reading of the entire research reports and not infer its contents from the rating ascribed by the analyst. Ratings should not be used or relied upon as investment advice. An investor’s decision to buy, hold or sell a stock should depend on said individual’s circumstances and other considerations. BMA Capital Limited uses a three tier rating system: i) Overweight, ii) Market-weight and iii) Underweight (new rating system effective Feb 29’16) with our rating being based on total stock returns versus BMA’s index target return for the year. A table presenting BMA’s rating definitions is given below:
Rating definitions Overweight
Total stock return > expected market return + 2%
Market-weight
Expected market return ± 2%
Underweight
Total stock return < expected market return - 2%
*Total stock return = capital gain + dividend yield Old rating system (discarded effective Feb 29’16) Buy
>20% upside potential
Accumulate
>=5% to
