Attock Petroleum posted net a profit of PKR2.4bn for 1QFY22

Attock Petroleum Ltd (APL) has posted a net profit of PKR2.4bn (EPS PKR24.0) for 1QFY22, up 90% qoq and 60% yoy. The result is slightly above our estimated EPS of PKR21.65, due to seemingly higher inventory gains. 

Key Highlights for 1QFY22:    

Net Sales are up 38% qoq to PKR72.8bn (up 61% yoy) and higher than expected, potentially due to greater sales of deregulated products (such as asphalt). APL considerably improved its overall market share to 9.7% in 1Q compared with 8.3% in the previous quarter (improvement in both retail fuels).     

Gross profit of PKR4.7bn is slightly higher than our estimate of PKR4.4bn, potentially due to greater inventory gains and profits from deregulated products. Notably, APL had 16% market share in the higher-margin Furnace oil, which benefited from both higher oil prices and PKR devaluation. Thus gross margins have come in at 6.4% vs. 4.4% previous quarter.

APL has booked a reversal, of PKR284mn, for the second consecutive quarter of an earlier impairment charge on its investment in Attock group refineries (upon recovery in their stock prices).

Opex of PKR1.7bn are higher by 15% qoq (in tandem with sales) and nearly doubled yoy, because APL has added new storages but also most of the new pumps are company-owned-company-operated (COCO). Thus salaries and depreciation expenses both rose 39% yoy in FY21. 

The headline result is impressive but inventory gains are estimated to be about PKR15.0/sh after tax (63% of total earnings). Given the present trend in global prices and the government not holding back price increases, however, APL and other OMCs will again book gains, in our view. Key variable to watch is volumes, which may come under pressure from all-time high retail prices in Pakistan. We have a Buy stance on APL based on a June 2022 TP of PKR470/sh.

Courtesy – Intermarket Securities Limited. 

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