PSO - Pakistan State Oil Company Limited

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Apr 11, 2017
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#21

Pakistan State Oil (PSO): 20%YoY lower EPS expected in 9MFY18


19 April 2018
Pearl Securities Limited




  • The board of Pakistan State Oil is scheduled to meet on March 21st, 2018 to announce its 9MFY18 financial results.
  • We estimate PSO to register profit after tax of PKR11.28bn (EPS PKR34.59) in 9MFY18 versus PKR14.16bn (EPS PKR43.42) in the corresponding period last year, exhibiting a substantial decline of 20%YoY. The expectation of dwindling bottom-line is primarily on the account of decline in other income, higher operating expenses (FX losses due to around 10% USD/PKR devaluation) and inventory losses incurred during 9MFY18.
  • Along with the result, we anticipate PSO to declare an interim cash-dividend of PKR5.0/share.
  • In terms of quarterly performance, 3QFY18 earnings are expected at PKR2.75bn (EPS PKR8.45) versus PKR4.14bn (EPS PKR12.70) registered in 3QFY17, representing a hefty decrease of 34%YoY mainly due to decline in HSD/FO volumes 3%/69% YoY and 1.07pps YoY lower margins.
  • Net sales of PSO are expected to escalate by 18%YoY to PKR743.60bn during 9MFY18 due to higher domestic POL prices following the surge in the international oil prices, supported by strong demand for retail fuels, as PSO’s MS and HSD sale volumes were up 12% and 5% YoY respectively. However, FO sales volumes declined by 29%YoY after change in government policy in Nov’17 to shift power generation mix to cheaper fuel sources (RLNG & Coal) and subsequent elimination of expensive FO based power generation.
 
Apr 11, 2017
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#22
Pakistan State Oil (PSO): 9MFY18 EPS arrived at PKR40.56, down 7%YoY


23 April 2018
Pearl Securities Limited




  • Pakistan State Oil announced its 9MFY18 financial results with profit after tax of PKR13.22bn (EPS PKR40.56) versus PKR14.16bn (EPS PKR43.42) in the corresponding 9MFY17, declined by 7%YoY. The earnings fell primarily due to decline in other income as high yield PIB’s matured in July’17 and increase in operating expenses due to FX losses in 9MFY18.
  • PSO also announced higher than expected cash dividend of PKR10 alongwith the results.
  • Top-line arrived at PKR744.64bn during 9MFY18, up by 18%YoY, as against PKR629.49bn last year in the same period. The growth in retail product volumes (MS/HSD +12%/5% YoY) accompanied by higher POL prices led to healthy growth in sales revenue despite decrease in FO volumes by 29% YoY.
  • Gross profits settled at PKR28.91bn as compared to PKR27.04bn in 9MFY18, up by 7%YoY attributable to increased volumetric growth and higher margins on retail products in 9MFY18.
 
Apr 11, 2017
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#23

Pakistan State Oil Company Limited (PSO): 3QFY18 EPS printed at PKR 14.42; up 14%YoY – Above estimates


23 April 2018

Taurus Securities Limited



  • Pakistan State Oil Company Limited (PSO) has announced its financial results for the quarter ended on Mar'18, where its PAT for the period clocked of PKR 4.70bn, translating into EPS of PKR 14.42 (+14%YoY), taking 9MFY18 cumulative PAT to PKR 13.23bn (EPS:pKR 40.56), down by 7%YoY. Alongside the result the company announced DPS of PKR 10.00/sh.
  • Topline of the Company inched upwards by (+4%YoY) despite fall in total POL volumes by 31%YoY as FO volumetric sales went down 70%YoY mainly as a result of surge in crude oil prices (+21%YoY).
  • In 3QFY18, we attribute growth in bottom-line to likely higher inventory gains of ~PKR 1.75bn (after tax EPS impact: PKR 3.75) as against 0.62bn (after tax EPS impact: PKR 1.31) recorded in SPLY, and higher other income (+24%YoY).
 
Apr 11, 2017
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#24

Pakistan State Oil (PSO): 3Q EPS clocked in at PKR14.4; DPS: PKR10 – Above expectations


23 April 2018
Insight Securities (Private) Limited




  • Pakistan State Oil (PSO PA) has announced its 3QFY2018 results where the company has posted profit after tax of PKR4.7b (EPS: PKR14.4), taking 9MFY2018 profits to PKR13.2b (EPS: PKR40.6). Along with the result, PSO has announced cash dividend of PKR10/share.
  • The result was significantly above our expectations most likely due to, i) inventory gains in the quarter (over ~PKR2b as per our calculations) against our expectation of inventory losses, ii) significant penal income in the quarter and, iii) lower than expected exchange losses. However, dividend was in line with our expectations.
  • In 3QFY18, despite lower volumes, PSO’s net sales increased by 4% YoY mainly due to higher prices, while gross profit increased by 10% which could be attributed to higher inventory gains in the quarter as well as higher margins on petrol. Other income surged by 24% which we believe is due to significant penal income following recent payments to IPPs.
 
Apr 11, 2017
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#25
Pakistan State Oil (PSO): Analyst Briefing Highlights 9MFY18


24 April 2018
Shajar Capital Pakistan (Private) Limited




  • PSO held its 3QFY18 Analyst Briefing yesterday, where the management discussed 9MFY18 earnings and business outlook. To recall, Pakistan State Oil (PSO) reported Profit after Tax of PkR4.7bn (EPS: PkR14.42/sh) for the quarter, up by 35%QoQ from the PkR3.49bn (EPS: PkR10.7/sh) reported in the earlier quarter. For 9MFY18, the company reported Profit after Tax of PkR13.25bn (EPS: PkR40.6/sh) 7% lower than the PkR14.16bn (EPS: PkR43.4/sh) reported in the SPLY.
  • During the period, PSO reported inventory losses of PkR327mn for 9MFY18. However, for 3QFY18, the company had an inventory gain of PkR1.7bn, largely driven by the company’s FO shipments (9MFY18 FO Inventory Gain: PkR2.87bn)
  • As of March 31, 2018, the company had receivables of PkR185.6bn from the Power Sector, which further reduced to PkR179.7bn on April 22, 2018. At the end of the earlier quarter, the receivable stood at PkR202.9bn.
  • PSO management indicated that the government was mulling over another injection in the range of PkR100bn in the system, which would be distributed proportionately between the suppliers such as PSO—further reducing the circular debt issue. The company does not expect to book a substantial penal income for this.
 
Apr 11, 2017
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#26

Pakistan State Oil (PSO): PSO Averts Exchange Losses, Benefits from Contained Circular Debt


24 April 2018
Ismail Iqbal Securities (Pvt.) Limited




  • Pakistan State Oil (PSO) reported 9MFY18 PAT of PKR 13.2bn (EPS: PKR 40.56), down 7% YoY, mainly due to lower FO volumes. Another factor that constrained earnings was that the company incurred inventory losses of PKR 327mn in 9MFY18, despite rising oil prices. Meanwhile, release of funds from GoP helped arrest the growth of circular debt. A factor that helped buoy earnings was that despite losing market share, the company attained significant growth in all of its liquid fuel segments. The company was also able to deflect exchange losses due to its accounting practice of recording exchange losses on USD denominated loans as receivables. Going forward earnings may improve as the company ordered further shipments of Furnace Oil (FO) in anticipation of its continued demand.
  • PSO’s overall market share clocked-in at 50.7% (down from 55% in SPLY). The company witnessed 12% growth in MOGAS, 5% growth in HSD, 10% growth JP-1 and 160% growth in JP-8 segments. Major reason for the growth in jet fuel segment is due to opening of the new Islamabad airport. Currently PSO is the preferred supplier of Pakistan Civil Aviation and has taken over considerable market share from Shell in Jet Fuel segment.
 
Apr 11, 2017
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#27

Pakistan State Oil (PSO): Mar’18 end Analyst briefing takeaways


24 April 2018
Pearl Securities Limited




  • To recall, PSO beat our expectations with a wide margin due to inventory gains and posted its 9MFY18 profit after tax at PKR13.22bn (EPS PKR40.56) versus PKR14.16bn (EPS PKR43.42) in the corresponding 9MFY17, declined by 7%YoY. Simultaneously, PSO posted highest ever 9MFY core earnings of PKR14.0bn, which witnessed a CAGR of 8.8% in 9MFY14-18 period
  • PSO’s overall market share declined to 50.7% during 9MFY18, down 4.5pps as compared to same period last year. In white oil segment, market share of the company shrank by 0.9pps due to decline in HSD share, down 2%YoY while MS/JP/SKO witnessed 0.2%/5.6%/1.4% YoY growth. The decline in FO market share by 5.6pps in 9MFY18 rendered major hit to the overall market share of PSO during the period.c
  • In 9MFY18, the volumetric growth was witnessed in all products except FO. The company witnessed higher than market growth in MS sales volumes - up by 12.3% YoY - while HSD volume stood at 2.96mn tons - up by 5.4% YoY . On the other hand, FO volumes declined by substantial 29%YoY to 3.64mn tons due to changing industry dynamics
 
Apr 11, 2017
709
1
18
#28
Pakistan State Oil (PSO): PSO Averts Exchange Losses, Benefits from Contained Circular Debt


24 April 2018
Ismail Iqbal Securities (Pvt.) Limited




  • Pakistan State Oil (PSO) reported 9MFY18 PAT of PKR 13.2bn (EPS: PKR 40.56), down 7% YoY, mainly due to lower FO volumes. Another factor that constrained earnings was that the company incurred inventory losses of PKR 327mn in 9MFY18, despite rising oil prices. Meanwhile, release of funds from GoP helped arrest the growth of circular debt. A factor that helped buoy earnings was that despite losing market share, the company attained significant growth in all of its liquid fuel segments. The company was also able to deflect exchange losses due to its accounting practice of recording exchange losses on USD denominated loans as receivables. Going forward earnings may improve as the company ordered further shipments of Furnace Oil (FO) in anticipation of its continued demand.
  • PSO’s overall market share clocked-in at 50.7% (down from 55% in SPLY). The company witnessed 12% growth in MOGAS, 5% growth in HSD, 10% growth JP-1 and 160% growth in JP-8 segments. Major reason for the growth in jet fuel segment is due to opening of the new Islamabad airport. Currently PSO is the preferred supplier of Pakistan Civil Aviation and has taken over considerable market share from Shell in Jet Fuel segment.
 
Apr 11, 2017
709
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#29

Pakistan State Oil Company Limited (PSO): 9MFY18 Analysts’ briefing takeaways


24 April 2018
Taurus Securities Limited




  • Pakistan State Oil Company Limited (PSO) held its analysts briefing to discuss financial results for the 9MFY18 on 23rd April, 2018. Key takeaways are as under:
  • In 3QFY18, bottom-line of the company posted growth of 14%YoY to PKR 4.70bn (EPS: PKR 14.42), taking 9MFY18 cumulative PAT to PKR 13.23bn (EPS: PKR 40.56), down by 7%YoY.
  • Under white oil category, PSO's market share inched downward by mere ~1%YoY to ~44% mainly due to slow growth in HSD volumes (5.40% vs. industry growth of 10.20%). However, MS sales posted (12.30%) above industry (11.70%) growth. On the other hand, sharp fall in black oil sales by ~29%YoY as govt. earlier decided to shift power generation to LNG (PSO volumes: +34%YoY), total POL sales volumes went down by a meager 1%YoY. Additionally, Lubes and LPG business segment grew by ~4%/21%YoY.
 
Apr 11, 2017
709
1
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#30

Pakistan State Oil (PSO): Analyst Briefing Takeaways


24 April 2018
First Capital Equities Limited




  • Pakistan State Oil (PSO)’s EPS for 9MFY18 clocked in at PkR40.6 (down 7%YoY) while EPS for 3QFY18 stood at PkR14.4, up 14/35% YoY/QoQ.
  • Company booked inventory gain of PkR1.7bn for 3QFY18, bulk of which came from FO sales. On the other hand, PSO incurred inventory loss on MS sales. Overall, inventory losses for 9MFY18 stand at PkR327mn.
  • Exchange losses for the quarter clocked in at ~PkR130mn as company had very few LCs open for import of white oil products, while FO imports were already on a decline. Total exchange loss for 9MFY18 stands at PkR884mn.
 
Apr 11, 2017
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#31
Pakistan State Oil (PSO): Lower other income drags earnings growth


4 May 2018
Azee Securities (Pvt.) Ltd.




  • In our today's morning report, we would discuss the performance of Pakistan State Oil (PSO) in 9MFY18 as company recently announced its result.
  • Company posted negative growth of 7% as after tax profit fall at Rs 13.22 billion (EPS: Rs 40.6) as against Rs 14.15 billion (EPS: Rs 43.42) that it achieved during 9MFY17. This is primary due to lower volumetric sales, fall in other income, minor inventory losses of Rs 327 million and exchange losses. In 3QFY18, company register growth of 35% QoQ to Rs 4.70 billion (EPS: Rs 14.4) against Rs 3.49 billion (EPS: Rs 10.7) in 2QFY18 owing to higher inventory gains of Rs 1.7 billion manly driven by Furnace oil gains of Rs 2.7 billion in 3QFY18.
  • Revenue of the company hike by 18% to Rs 744.63 billion from Rs 629.50 over the same period last year mainly due to higher product prices. Volumetric sales drop by 10% YoY to 9.40 million tons versus 10.42 million in 9MFY17 mainly driven by lower sales of Furnace oil which reduce by 30% YoY to 3.59 million tons in 9MFY18 against 5.10 million on account of closure of furnace oil plant. However better performance of Mogas and High Speed Diesel (HSD) provided support. Mogas volumes up by 11% to 2.18 million tons in 9MFY18 against Rs 1.96 million in 9MFY17 due to higher demand. High Speed Diesel sales up by 5% to 2.95 million tons in 9MFY18 against Rs 2.81 million in 9MFY17. Gross profit of the company swell by 7% to Rs 28.91 billion versus Rs 27.12 billion in 9MFY17 mainly due to higher margin of regulated products despite inventory losses of Rs 327 million. During the period under review, other income falls by 37% YoY to Rs 5.08 billion versus Rs 8.02 billion on account of maturity of PIBs.
  • Trade debts increase by 11% to Rs 236.89 billion versus Rs 212.62 billion at June 2017 which includes overdue debts of Rs 110 billion from WAPDA, Rs 51 billion from Hubco and Rs 25 billion from Kapco. PSO has managed to get additional funds of Rs 23 billion in the month of March, bringing down the outstanding receivables. Going forward, further challenge is anticipated, as international oil prices have further increase.
 
Apr 11, 2017
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#32
Pakistan State Oil (PSO): Keeping ‘Buy’ intact despite earnings forecast cut; revised Dec-18 TP of Rs419


16 May 2018
JS Global Capital Limited




  • Recent changes in landscape warrant changes in our estimates for Pakistan State Oil (PSO). We accordingly revise our estimates down by ~5%-17% throughout our projection period (FY18E-FY23F).
  • In-line with earnings forecast downgrade, we are also slashing Dec-2018 Target Price for the company to Rs419 (Rs458 previously) while retaining our ‘Buy’ stance for PSO.
  • Reduction in FO business is a boon for PSO, in our view, given the resultant improvement in cash flows. Possibility of speedy recovery from existing receivable base cannot be ruled out.
 
Apr 11, 2017
709
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#33
Pakistan State Oil Company Limited (PSO): LNG business to top up FY2019 EPS by PKR17; Maintain HOLD


13 June 2018
Insight Securities (Private) Limited




  • As per news flows Economic Coordination Committee (ECC) has approved higher margins for the OMC sector. Margins on High Speed Diesel (HSD), Motor Gasoline (MS) and LNG shall be increased by PKR0.23/litre, PKR0.09/litre and 1.25pps. Although CPI-linked margins on retail fuels were expected to be revised and already incorporated in our assumptions, higher margins on LNG have come as a surprise and is particularly positive for PSO PA.
  • Since the LNG business was supposed to be transferred to Pakistan LNG, we had not incorporated it in our assumptions in FY2019. We believe revision in margins at this time gives an indication towards continuation of LNG business by PSO in FY2019, which we have now incorporated in our assumptions. Accordingly, we revise up our earnings for FY2019 by 36% to PKR64/share from PKR47/share previously. Higher earnings are mainly due to continuation of LNG as well as higher margins.
  • Following addition of LNG business in FY2019, we revise up or DCF based December 2018 Target Price by 4% to PKR322/share, implying a ‘HOLD’ call with 0% price upside but 8% dividend yield.
 
Apr 11, 2017
709
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#34
Pakistan State Oil Company Limited (PSO): Upwards Revision in LNG Margins to Raise Earnings


14 June 2018
Elixir Securities Pakistan (Private) Limited




  • We update our investment case for PSO, revising up FY18/19 EPS by 15/18% largely owing to upward revision in LNG margins; we also roll-forward our PT to Jun-19 which now stands at PKR375/share (from PKR369/share) incorporating changes in margins and higher risk free rate assumption.
  • Owing to regulatory risk of revision in OMCs margins and deregulation of retail fuel prices, we have assumed upward revision in margins based on 50% of CPI through the investment horizon. Certainty with regards to long term policy outlook on CPI linkage can significantly improve earnings profile and valuations
  • The stock trades at cheap FY18F/FY19F PE of 6.2x/6.1x and offers decent FY19F dividend yield of 6.6%. We have a Buy stance on the scrip as it offers capital/total upside of 13%/20% where we maintain liking for the scrip due to improved earnings profile and potential reduction in circular debt (post IMF Program entry) unlocking its value.
 

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