SNGP announced a final cash dividend of PKR 1.50/share for FY22 – earnings hit by the high cost of financing.

Sui Northern Gas Pipelines Limited (SNGP) announced the financial result for FY22 today, posting a profit after tax (PAT) of PKR 10,366mn (EPS: PKR 16.34), dropping by 6% YoY. During the 4QFY22, the company registered earnings of PKR 929mn (EPS: PKR 1.46), plunging by 55% YoY. Alongside the result, the company announced a final cash dividend of PKR 1.50/share (PKR 4.00/share in FY22).

Result Highlights

· During FY22 sales depicted a phenomenal growth of 71% YoY, majorly due to 105% YoY jump in RLNG prices in lieu of rising international Brent Oil price (up by 66% YoY) to USD 90.72/bbl vs. USD 54.61/bbl in SPLY. Meanwhile, RLNG imports declined by 7% YoY in FY22. In addition to this, domestic volumes witnessed a fall in our view amid declining local gas reserves, but we await full year accounts to quantify the same.

· The operating profit arrived at PKR 72.8bn in FY22 vis-à-vis PKR 55.9bn in SPLY given lower charge of unaccounted for gas losses (UFG) led by effective UFG control plan, and reduction in domestic volumes which offset the impact of a higher weighted average cost of gas.

· Finance costs showcased a surge of 43% YoY in FY22 to PKR 57bn primarily due to higher interest rates.

· The company recorded reversal of revenue relating to prior years amounting PKR 13.77bn in 4QFY22. The company was involved in legal disputes with respect to take or pay agreements with the National Power Parks Management Company Limited (NPPMCL) and Quaid-e-Azam Thermal Power Limited (QATPL) in the High Court of London.

· The company booked effective taxation at 33% during FY22 vis-à-vis 31% in FY21.

Other highlights

One auditor note has been highlighted, that is Note 28.3 of the financial statements, which explains that the settlement of the circular debt including tariff adjustment relies on resolution of outstanding balances owed by the Government of Pakistan, and increase in gas prices / subsidy by the government. The report, however, is not modified.

Courtesy – AHL Research.

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