Karachi, February 24, 2023 (PPI-OT): PPL and APL: 2QFY23 Result Previews
PPL – Earnings expected at PkR8.41/sh for 2QFY23: Pakistan Petroleum Limited (PPL) is scheduled to hold its board meeting on Monday, wherein we expect the company to post NPAT of PkR49.2bn (EPS: PkR18.1) for 1HFY23, up by 58%YoY. The company’s topline is set to post its highest ever half-yearly topline, which is expected to clock in at PkR138.7bn (up 53%YoY), majorly driven by an appreciating US$ dollar (up 31%YoY) alongside higher crude prices ((Up) 28%YoY), which averaged at US$98/bbl during the period, which affects approximately 29% of company’s total revenues. Furthermore, the said growth in the company’s bottom line is majorly attributable to the absence of any substantial dry well during the period.
To recall, the company posted PkR11.0bn in dry well costs in 4QFY22, on account of Khipro East X-1 and Pandrani X-1, taking the exploration expenses to PkR14.1bn for the period. For 2QFY23 alone, the profitability is expected to settle at PkR22.9bn (EPS: PkR8.41), down by 13%QoQ, compared to PkR26.33bn (EPS: PkR9.70) in the previous quarter. Overall, production is expected to stand at ~9.2mn BOE (down 3%QoQ) amidst lower gas production at Sui/Qadirpur/Kandhkot/TAL during the quarter. We expect the company to incur exploration expenses of PkR2.0bn for the quarter. Alongside the earnings, we expect the company to announce a cash dividend of PkR2.0/sh. We have a ‘Buy’ rating on the stock, with a Dec’23 TP of PkR122/sh, representing an upside potential of 80% from last close.
APL – LAT to clock in at PkR135mn (LPS: PkR1.08) in 2QFY23: Attock Petroleum Limited (APL) is expected to announce its 2QFY23 financial result on Monday, where we expect the company to post LAT of PkR135mn (LPS: PkR1.08), down by 103% on a YoY/QoQ basis. The said decline is majorly attributable to falling offtakes (down by 18%/10% YoY/QoQ) and declining ex-refinery prices over the last quarter. We expect the company to record inventory losses of ~PkR954mn (PkR7.7/sh) for 2QFY23 as ex-refinery prices for MS/HSD fell by 18%/11% during the period as compared to the previous quarter, subsequently resulting in gross margins for the quarter to end at 1.2% (vs. 8.1% in previous quarter).
On the taxation front, we expect effective tax to clock in at ~150% for the period (vs 1QFY23: 33% ET), as minimum turnover tax (0.5% on gross POL sales) hampers the already beat-down bottom-line. At a normalized tax rate of 33%, the earnings per share would have clocked in at PkR1.50/sh. Alongside the result, we expect the company to announce a cash dividend of PkR10.0/sh. We have a ‘Buy’ rating on the stock, with a Dec’23 TP of PkR370/sh, representing a total return of 31% from last close.