Earnings Report /
Pakistan

Attock Petroleum: FY22 review – All-time high earnings as inventory gains overshadow super tax

  • APL reported highest every earnings of PKR186/share, booking inventory gains in an increasing oil price scenario

  • Robust recovery in volumes also helped drive earnings, backed by better crack spreads realized by associates

  • OMC margin revision has positive bearing and base case, without margin hike, offers an attractive yield of 15%

Intermarket Securities
16 August 2022

APL announced all-time high earnings of PKR18.5bn (EPS: PKR 186.23) as the company was able to book high inventory gains during the year which overshadowed the impact of super tax. The continuous rise in oil prices aided by PKR devaluation, rocketed earnings of 4QFY22 to highest ever quarterly print of PKR 7.3bn (EPS: PKR 73.23), as most inventory gains were realized during this period. The company made a healthy dividend announcement of PKR30/share cash accompanied with a 25% bonus. Total cash payout of PKR45/share in FY22 is the highest since FY14.

Key highlights:

  • The 4Q topline has grown by 49% QoQ on the back of higher oil price and PKR devaluation. On the other hand, operating profitability grew by 132% QoQ owing to inventory gains during the period.

  • During 4Q, sales grew by 21% to 730ktons where major growth was seen in FO sales (+51% YoY to 229k tons) followed by HSD (+14% YoY to 250k tons and MS (+9% YoY to 240k tons).

  • It is pertinent to note that demand for MS/HSD/FO jumped significantly by 17%/31%/14% to 786k/800k/625k tons during FY22, respectively. 

  • Decline in late payment surcharges and better income from short-term investments continued to keep net financial income positive during FY22.

  • Better profitability from NRL and ATRL continued to add to associate income growth during the year with 4Q witnessing the highest contribution of PKR 245mn. This is largely owing to better crack spreads of MS and HSD during the period.

  • The company booked an Effective Tax Rate of 50% for 4Q translating into 39% tax for FY22 (FY21: 29%)

APL has continued to benefit from recovery in POL demand during the year. Moreover, a likely upward revision in OMC margins to PKR6.0/litre is expected to add favourably to annual profitability. The company continues to boast a healthy dividend yield of 15% at current levels we reiterate our liking for APL based on our bonus adjusted TP of PKR363/share.