Karachi, October 09, 2023 (PPI-OT): POL and APL 1QFY24 Result Previews

POL - PAT to clock in at PkR9.1bn (EPS: PkR31.9) in 1QFY24: Pakistan Oilfields Limited (POL)’s board of directors are scheduled to meet today, where we expect the company to post earnings of PkR9.1bn (EPS: PkR31.9) during the period, depicting an increase of 50%/9% QoQ/ YoY. The said rise is primarily attributed to higher average oil prices (up 12.2%QoQ) alongside a slight uptick in oil production (up 5.3%QoQ). The rise is largely driven by additions from the Mamikhel South well and recoveries from Makori East amidst sharp declines in the quarter before. However, production from Adhi (Down6%QoQ), Mardankhel (Down16%QoQ) and Pindori (Down23%QoQ) witnessed significant declines compared to the previous quarter.

To note, the aforementioned wells are estimated to have depletions of 80%, 66%, and 88%, respectively. On the non-operating front, we expect company to incur meagre exploration expenses of PkR756mn compared to PkR390mn in the quarter before. Other income is expected to remain relatively unchanged, clocking in at PkR4.1bn, reflecting the company's strong non-operational income due to robust cash and short-term investment balances amidst higher yields. Overall, we have a Buy rating on the stock, with a June’24 TP of PkR560/sh, alongside dividend yields of ~22/23% for the FY24/FY25, respectively.

APL - PAT to clock in at PkR5.9bn (EPS: PkR47.3) in 1QFY24: Attock Petroleum Limited (APL) is expected to announce its 1QFY24 financial results today, where we expect the company to post PAT of PkR5.9bn (EPS: PkR47.3), up by 124%QoQ/37%YoY. The said rise is majorly attributable to higher ex-refinery prices over the last quarter alongside slightly higher volumetric offtakes (up 5%QoQ). Average ex-refinery prices for MS/HSD stood higher by 5.2%/5.1% QoQ in comparison to the quarter before.

Overall, we expect the company to record inventory gains of ~PkR6.2bn (PkR49.8/sh) for the period, subsequently resulting in gross margins for the quarter to end at 7.0% (vs. 5.1% in the quarter before). On the topline front, company’s revenue is expected to clock in at PkR136.6bn, up by 11%QoQ/10%YoY, as offtakes for the quarter recovered by 6.90%QoQ, alongside higher average core gross profitability (OMC margin revision during mid-Sept). On the taxation front, we expect effective tax to clock in at ~39% for the quarter (vs 4QFY23: 53% ET), significantly lower due to absence of retrospective super tax applied in the last quarter. We have a Buy rating on the stock, with a June’24 TP of PkR410/sh, representing total upside potential of 39% from last close.