Attock Petroleum Limited (APL) announced the financial result for 1QFY21, whereby the company has posted a profit after tax (PAT) of PKR 1.49bn (EPS: PKR 14.92), up by 21% YoY and 11x QoQ compared to PKR 1.22bn (EPS: PKR 12.31) in 1QFY20 and PKR 138mn (EPS: PKR 1.38) in 4QFY20.

Result Highlights

·        During 1QFY21, topline of the company settled at PKR 45bn, down by 24% YoY due to decline in volumes of 2% YoY (volumes of Furnace Oil grew by 46% YoY while HSD and MS sales witnessed a decline of 29% and 15% YoY, respectively) and lower petroleum product prices compared to same period last year.

·        Gross margins of the company improved by 324bps YoY to 6.78% in 1QFY21 compared to 3.55% in 1QFY20. Improvement in gross margins can be attributable to higher sales of furnace oil which is a high margin product while the company also recorded inventory gains of PKR ~800mn, we view.

·        Finance cost jumped up by 43% to PKR 416mn given rise in markup charged on delayed payments.

·        The company recorded effective taxation at 30.35% in 1QFY21 compared to 30.17% in SPLY.

Recommendation

·        Currently, we have a ‘BUY’ call on the stock with a Jun’21 target price of 402/share. (AHL Research)