Sui Southern Gas Company Ltd. (SSGC) held its corporate briefing session today to discuss FY23 financial results and provide insights on the future outlook. The key takeaway from the call is as follows:
· SSGC’s loss for FY23 was PkR836mn (LPS: PkR0.95), improving significantly compared to a LAT of PkR11.4bn (LPS: PkR12.95) in FY22.
· In 1QFY24, SSGC earned a PAT of PkR4.5bn (EPS: PkR5.16), compared to a LAT of PkR5.6bn (LPS: PkR6.32) in SPLY.
· The company attributed the improved performance in FY23 and 1QFY24 to the reduction in UFG losses.
· SSGC has been implementing a massive rehabilitation program to address the system leakages by strengthening its network integrity.
· The company is further establishing deterrence against theft by organizing special arrangements for technical gas theft and has established 27 and 11 gas theft courts in Sindh and Balochistan, respectively.
· These measures by SSGC have allowed it to restrain its UFG losses for the third consecutive year, bringing them down to 31.7bcf in FY23 from 51.6bcf in FY22, reflecting a 39%YoY decrease in UFG.
· To note, this resulted in a company-wide UFG to reduce to 10.4% from 16.7% in FY22. UFG, excluding Balochistan, stood at 6.4% during the year (vs 9.7% in FY22), while UFG for Balochistan stood at 37.2% during the year (vs 59.7% in FY22).
· SSGC has taken strong steps towards broadening its income streams by establishing two subsidiaries: SSGC LPG Limited, engaging in LPG marketing and distribution, & SSGC Alternate Energy (Pvt.) Limited, exploring out-of-box and unconventional solutions to mitigate the energy crisis in the country.
· SSGC operates the country’s only domestic gas meter manufacturing plant(MMP). A new assembly line comprising of automated equipment has been successfully commissioned by SSGC in the MMP.
· Under technology license from M/s. Itron, USA, SSGC’s MMP maintains the capacity to produce up to 2.5mn gas meters per annum. SSGC is making efforts to enhance the meter plant’s sales through export options by initiating processes to attain internationally acclaimed certification.
· Moving forward, SSGC plans to spin off the MMP, transforming the company into a partnership with SNGPL, as the northern gas utility remains the largest customer of the facility.
· PACRA enhanced the long-term credit rating of SSGC from A+ to AA-, along with maintaining a stable outlook for the company.
· The company is not included in our formal coverage.
Courtesy – AKD Research
