The Bell about Oil and Gas – Elixir Securities Limited

Karachi, October 13, 2011 (PPI): APL: 1QFY12 EPS expected at PKR14.30

Volumes up 37% YoY; down12% QoQ

According to Elixir Securities, 12% and 121% YoY higher HSD and FO volumes, respectively, led APL to register 37% YoY higher volumetric sale during 1QFY12. Moreover, MS witnessed robust 85% YoY jump in its volume during 1QFY12, due to which its contribution to core profitability has increased to 12% in 1QFY12 from 9% in the same period of last year. APL’s asphalt volumes, on the other hand, took a massive hit of 47% QoQ and 11% YoY. 1QFY12 volumes, however, were down 12% on QoQ basis primarily due to high base.

APL Outstanding Shares: 69mn
Net Sales 35,155 18,383 91% 41,262 -15%
Gross Profit 1,030 841 22% 1,968 -48%
Other Operating Income 510 436 17% 543 -6%
Operating Expenses 141 137 2% 165 -15%
Operating Profit 1,399 1,140 23% 2,345 -40%
Income on Investments 220 279 -21% 212 4%
Finance Cost 152 170 -11% 157 -3%
Share of Profit from Associates 22 27 -17% 16 40%
Other Charges 105 86 23% 165 -36%
Profit Before Tax 1,385 1,190 16% 2,252 -39%
Taxation 397 315 26% 748 -47%
Profit After Tax 988 875 13% 1,504 -34%
EPS 14.30 12.66 13% 21.75 -34%

Margins per ton to decline by 11% YoY

APL’s realized margin on HSD was PKR0.84/litre, which is 40% lower than normalized margin of PKR1.39/liter during 1QFY12. This shall taper an estimated PKR116mn from the 1QFY12 gross profit. Ex‐depot price of HSD are based on weighted average cost of PSO import and local ex‐refinery prices, which often squeeze margins of other OMCs especially in times of cheaper import by PSO. 1QFY12 EPS would likely have been higher by PKR1.11 to PKR15.41, had APL realized normalized margin on HSD. 1QFY12 inventory gains are estimated at a mere PKR35mn. With muted 1QFY12 estimated inventory gains and lesser margin on HSD, APL’s margins/ton is estimated to observe 11% YoY drop during 1QFY12.

Other income; an additional cushion

Other income which comprises of commission/handling income and late payment charges is expected at PKR510mn (up 17% YoY) or approximately PKR5/share. With 10% YoY jump in naphtha export, commission and handling income are estimated to beef up by 49% YoY during 1QFY12. APL’s penal mark up income earned on receivables and penal interest expenses on late payments have roughly moved in tandem during last four quarters. Elixir Securities expects this trend to continue in 1QFY12 too, since APL effectively passes on the impact of piling receivables by delaying payments to fuel supplier.


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