Pakistan OMCs: OMC volumes continue to remain strong in Pakistan.

· OMC sales clocked in at 1.5mn tons for Feb’22, up 10%YoY while on MoM basis, sales witnessed a decline of 15%. FO sales led the YoY increase as power production on FO has increased due to the low availability of gas, resulting in a shift to other sources

· Overall, OMC volumes have increased by 14%YoY for 8MFY22 where HSD took the lead with an increase of 18%YoY while MS/FO posted an increase of 10/14%YoY.

· APL turned out to be the star performer for the month with an increase in total volumes of 27%YoY against an increase in total industry volumes of 10%YoY where the difference was also visible in the retail fuels segment with APL’s retail fuels’ volume increasing by 17%YoY against 6%YoY of the industry, taking APL’s market share to 8.7% for Feb’22 against 8.6/7.8% for Feb’21/Jan’22.

· APL (TP: PkR438/sh) is our top pick from the sector given i) company’s low leverage protecting it against any increase in interest rates, ii) high payout ratio of the company providing it attributes of a defensive play, and iii) improved storage network of APL expected to aid in enhancing market share.

Courtesy – AKD Research