Sui Northern Gas Pipelines Limited (SNGP) announced the financial result for 9MFY22 today, posting a profit after tax (PAT) of PKR 9,437mn (EPS: PKR 14.88) compared to PKR 8,939mn (EPS: PKR 14.09) in SPLY. During the second quarter of FY22, the company posted earnings of PKR 3,854mn (EPS: PKR 6.08) while profitability for 3QFY22 arrived at PKR 2,551mn (EPS: PKR 4.02). In addition, SNGP announced an interim cash dividend of PKR 2.50/share vs. PKR 2.00/share last year.
· During 9MFY22 sales underwent a noteworthy growth of 59% YoY primarily aided by a nearly 80% jump in RLNG prices in lieu of rising international Brent Oil price (up by 67% YoY) to USD 83.48/bbl vs. USD 49.84/bbl in SPLY. This offset the impact of a 4% decline in RLNG imports. Moreover, domestic volumes also posted a decline in our view amid declining local gas reserves, but we await full year accounts to quantify the same.
· Operating profit of the company settled at PKR 49.8bn in 9MFY22 vis-à-vis PKR 41.6bn in SPLY given lower charge of unaccounted for gas losses (UFG) led by effective UFG control plan, and shrunk domestic volumes which countered the impact of a higher weighted average cost of gas.
· Finance costs displayed a jump of 24% YoY in FY22 to PKR 36bn primarily owed to a sharp hike in the benchmark policy rate by the SBP during the year.
· The company booked effective taxation at 33% during 9MFY22 (9MFY21: 30%).
· One auditor note has been highlighted, that is Note 14.1 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