Karachi, October 20, 2022 (PPI-OT): Pakistan OMCs: APL 1QFY23 Result Preview: Inventory and exchange losses to mar greatly

Attock Petroleum Limited (APL) is expected to announce its 1QFY23 financial result on 25th Oct’22, where we expect the company to post PAT of PkR124mn (EPS: PkR1.0).

The said decline is majorly attributable to falling ex-refinery prices over the last quarter, where-in they peaked back in mid-June’22 at PkR249/277/liter for MS/HSD, respectively.

We expect the company to record inventory losses of ~PkR855mn (PkR8.6/sh) for 1QFY23, subsequently resulting in gross margins for the quarter to end at 1.1%.

With fuel prices (MS/HSD) forming a new base at current levels, we believe this to be the end of exorbitant inventory gain/loss fluctuations in the near-term, normalizing earnings in the fourth-coming quarters.

APL (TP: PkR370/sh) is our top pick from the sector, with the company being a perfect mix of capital upside and dividend yield.