POL posted FY13 net earnings of PRs45.78/sh and DPS of PRs45, which is well below ours and market expectation of EPS of PRs49.83. On the other hand, Final DPS of PRs25 (FY13 PRs45) is in line with our expectation.
Sales increased by 1% YoY on the back of Pak rupee devaluation and slight increase in Oil production of 1%. On the flipside, Gas production was down by 13%
Higher seismic studies conducted by company JV partners increased the exploration cost due to which our earnings expectations were missed
Other income of the company came lower by 23% YoY (33%QoQ).
It is worth mentioning here that POL’s payout ratio for the last 2 years is 100%
Our PO remains intact at PRs587, with FY14E EPS of PRs66.1 (DPS of PRs58.0). We maintain our Buy on POL.
Going forward, we believe that the company earnings will increase as full impact of Makori East-II, Mamikhel and Maramzai will be realized. Also commencement of Makori GPF by the end of CY13 will bode well for the company.
|Realized Oil (US$/bbl)||111||107||91||96||5%||96||89||-7%|
|Dubai Light (US$/bbl)||119||108||107||111||4%||111||105||-5%|
|Effective tax rate (%)||29%||29%||23%||25%||9%||32%||27%||-15%|