Earnings preview: POL’s quarterly profits to double YoY taking lead from PKR devaluation

January 21, 2019 (MLN): Pakistan Oilfields Limited (POL)’s is expected to announce its financial earnings for the period ended December 31, 2018 tomorrow, i.e. January 22, 2019.

The general market expectation for the company’s earning, reflected by various research houses’ preview notes has turned out to be between Rs.4.4 billion to Rs.4.8 billion in 2QFY19, with EPS ranging from Rs.15.4 to Rs.17. This suggests that the company’s year-on-year earnings this quarter, is expected to have doubled over the year.

Turning our attention towards cumulative earnings, Arif Habib Limited (AHL) has projected POL’s profit after tax (PAT) at Rs.8.25 billion (EPS: Rs.29.07), for the 1HFY19, marking an improvement of 73% YoY.

AHL attributes the profitability growth to absence of one-off reversal along with 28% YoY higher realized oil prices tagged with incremental oil and gas production by 1% and 4% YoY, respectively.

On a quarterly basis, AHL expects earnings to clock-in at Rs.4.38 billion (EPS: PKR 15.44), up by a massive 97% YoY. This outlook comes about keeping in view the 85% increase in topline amid:

  1. low base impact where the company booked revenue reversal of TAL block amid imposition of windfall levy in 2QFY18,
  2. higher average realized oil prices by 16% YoY, and
  3. 26% YoY Pak Rupee depreciation against USD.

Meanwhile, Ismail Iqbal Securities has estimated the quarterly earnings of POL to clock in at Rs.4.83 billion (EPS: PKR 17), up by 25% QoQ. In addition to currency devaluation and higher oil flows, Ismail Iqbal attributes 10% QoQ increase in LPG production to an expected growth of 13% QoQ in revenue.

Ms. Sonia Manwani Senior Research Analyst at Ismail Iqbal elaborated that since the international oil prices are directly linked to the local prices, E&P sector in general benefits from devaluation and higher oil prices.

Ismail Iqbal has projected the earnings for the quarter to grow by 117% YoY.

Not deviating from this projection, Inter-Market Securities expects the 2Q earnings to mark a leap of 102% YOY due to the one-time write-off of incremental gas revenues related to three Tal block fields (the conversion terms remain undecided).

Similarly, Pearl Securities expects 2QFY19 earnings to log in at Rs.4.44 billion (EPS: PKR 15.64), demonstrating an expected rise of 99% YoY.

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Posted on: 2019-01-21T17:31:00+05:00