AKD Securities Limited - AKD Daily (December 27, 2022)

FLASHNEWS:

Sindh Government Commits PKR 14.7 Billion to K-IV Water Project

Snow Leopards Threatened by Road Construction in Gilgit-Baltistan

Punjab Government Subsidizes Agricultural Equipment to Boost Rice Farming Efficiency

Engro Fertilizers and Engro Polymer Expect Declines in Quarterly Earnings as per AKD Securities

Japan Grants $9.8 Million for Development Projects in Islamabad

PSX Experiences Minor Downturn Amid Varied Sector Performances

Technical Indicators Suggest Caution in Karachi Stock Market Trading

Exchange Rates Fluctuate Slightly in Pakistan’s Currency Market

KSE-100 Sees Minor Retreat Amidst Trading Caution

Fauji Cement and DG Khan Cement Anticipate Mixed Financial Outcomes for Q3 FY24

Spotify and Coke Studio Pakistan Announce Continued Collaboration for Music Season 15 in Karachi

SITE President Calls for Action as Rising Production Costs Threaten Factory Operations

FPCCI Criticizes Recent Increases in Petroleum Prices Despite Favorable Economic Indicators

Shabbir Mansha Churra Named Chairman of Pakistan-China Business Council

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AKD Securities Limited – AKD Daily (December 27, 2022)

December 27, 2022

Karachi, December 27, 2022 (PPI-OT): Pakistan OMCs: PSO: Undemanding valuation warrants another look!

We revisit our investment case for Pakistan State Oil (PSO), revising Dec’23 target price to PkR215/sh from previous PkR240/sh, providing a total return of 66% from last close.

The much awaited revision in OMC margin provides significant impetus to our valuation, subsequently we have incorporated uniform OMC margins of PkR6/litre for both MS and HSD from January 2023 onwards, up 61%/51% from current levels for MS/HSD, respectively.

With regards to the company’s working capital issues, measures taken by the Govt’ in order to meet with conditions set out by the IMF may be a breath of fresh air for the company.

However, in the near term, the national petroleum company is expected to suffer from increased circular debt build up during FY23 amidst volatile LNG prices due to current geo-political scenario, alongside with rapid depreciation of PKR/USD (-14% CYTD).