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AKD Securities Limited – AKD Daily (October 05, 2022)

Karachi, October 05, 2022 (PPI-OT): Pakistan OMCs: POL sales down 23%YoY for 1QFY23

POL offtakes settled at 4.5mn tons during 1QFY23, down 23%YoY, compared to 5.8mn tons during 1QFY22. More specifically, RFO/HSD volumes remained depressed during the outgoing quarter, down 25% amid lower industrial activity (July LSM down 16.5%MoM) and power generation.

Company wise, major players in the sector, PSO/APL/SHEL/GOPL, delivered throughput levels of 806k/141k/114k/78k, taking total market share to stand at 53%/9%/7%/5% for Sep’22, respectively.

Govt’ is likely to take a major hit in non-tax revenue department, especially the petroleum development levy (PDL) front as retail offtakes have continued to decline in 1QFY23, down 25%YoY.

We expect OMC sales to be severely impacted by the said floods as overall economic activity in the affected regions are to be hit in the near term. Although, come winter, we may see a return of RFO based generation amidst consistent gas supply shortfalls, as the LNG procurement issue still remains. Currently, the country’s importers (PSO and PLL) are only able to secure 7-8 cargoes (850-900mmcfd) vs monthly demand of 12 cargoes (1230mmcfd).

APL (TP: PkR370/sh) is our top pick from the sector, with the company being a perfect mix of capital upside and dividend yield.