AKD Quotidian about — POL: FY11 Result Preview

Karachi: Pakistan Oilfields is scheduled to announce its full year FY11 result on Monday 11th September, 2011.

According to AKD Securities expects the company to report NPAT of PkR10.9bn versus NPAT of PkR7.4bn in the corresponding period last year. The result translates into an EPS of PkR46.20 against an EPS of PkR31.44 posted in FY10, translating into a growth of 47%YoY. Earnings growth is likely to underscore targeted top line growth of 41 %YoY backed by a blend of volume growth – oil and gas volumes expected to increase by 14%YoY and 39%YoY, respectively, and expanding development returns due to higher realized prices. Sequentially, AKD Securities expects POL to post 4QFY11 earnings of PkR13.06/share, up 17%QoQ due to 1) higher realized crude oil prices (average crude blend benchmarks are up 10% sequentially), 2) 6% increase in crude oil volumes and 3) lower exploration and prospecting expenditure. Alongside the result, AKD Securities expects POL to announce a final DPS of PkR20 taking full year payout to PkR3olshare. AKD Securities retains its upside bias to Pakistan Oilfields with monetization of new finds and completion of appraisal and reserve upside underpinning AKD Securities’ outlook at current market price, AKD Securities have an Accumulate stance on the scrip with a target price of PkR397/share.

Profit and Loss Accounts

 

(PkRmn)  FY11E FY10 YoY AKD Comments
Net Sales 25,145 17,845  41% increase due to a blend of

Higher volume growth (oil up

14%YoY and gas up39%YoY) and expending Development returns.

Op. Costs/Royalty/ED 8,481 5,851  40%  Higher field wide operating costs of owned and JV portfolios as well as higher LPG carriage costs
Develp./Decom Costs 1,038 1,108 -6% Expected decrease due to lower

decommissioning costs for the year

Exploration Costs 1,199 1,606 -25% High base on exploration write-offs and 3D surveys last year
Finance Costs/Admin 272 357 -24% Declined due to exchange gains

realized in the period as well as

lower provisions for decommissioning

Other Charges 1,098 709 55% Expected to increase in line with

higher profitability

Other Op. Income 1,727 1,377 25% Surge expected on the back of higher dividend flow from associates NRL and APL and returns on HIM investments
PBT 15,085 9,591 57% Line Item Effective tax rate expected to increase by 6ppt to 28% for the review period
Tax 4,156 2,154 93%
PAT 10,929 7,437 47% Line tem Earnings expected in increase by 47%YoY due to top line led growth and associate dividend income
EPS 46.20 31.44 47%
Source: Company Reports & AKD Research

 

Investment Perspective: A solid sequential finish to this year’s backed by high payout have propped up prices with the stock gaining 10% over the last 2 weeks outperforming the KSE by 2.P%. AKD Securities expects relative price performance to continue backed by 1) earning upgrades and 1) reserve accretion.

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