Higher growth in HSD sale pushes PSO’s market share up
Ibn-e-Ameer
The increase in sale volume of Pakistan State Oil (PSO) pushed its share price up in the stock market despite its all times high receivables that touched Rs 436 billion mark.
According to figures released by the oil industry, amongst the listed companies, Pakistan State Oil (PSO) sales increased by 24% YoY basis.
Its sale clocked in at 860,000 tons is also up 25% Month on month (MoM).
This is primarily due to major growth in sales of High-Speed Diesel (HSD).
Pakistan State Oil (PSO)’s market share also clocked in at 48% in January 2022 compared to 46% in January 2021.
The major increase in sale volumes pushed the share price of Pakistan State Oil up by over Rs 3 on the stock market. PSO’s share price was over Rs 192 today.
Before the outbreak of the Covid-19 pandemic, the market share price of Pakistan State Oil (PSO) had crossed Rs 200.
However, per share price witnessed a sharp decline.
Equity transfer to PSO: Energy, Finance Ministers want to sell off Plants
The covid-19 spread had also led to crashing oil prices in the global market. This had also resulted in inventory losses for the state-run oil marketing company.
It had faced a loss of around Rs 12 billion in just one month in June 2020 when the country faced an oil crisis. Other oil marketing companies like Shell, Hascol had curtailed oil supplies to their retail outlets to avoid inventory losses.
However, as soon as the oil prices started to go up after economic recovery, PSO had made inventory gains.
The oil prices still continue rising and PSO along with other companies is making inventory gains.
Recently, the geopolitical crisis in Ukraine and the Middle East had caused a spike in global oil prices.
The higher prices in the global market will also push the oil prices in Pakistan further, pushing the profits of PSO up in the coming months.
The profitability of PSO is likely to impact the share price further, promising dividends for the shareholders.
Pakistan’s oil sales in January 2022 clocked in at 1.8mn tons, up 19% YoY and 20% MoM driven by higher High-Speed Diesel (+36% YoY) and MOGAS (+17% YoY) sales, respectively.
PSO recorded the highest oil sales during FY21
During 7 months of the current financial year 2022, Pakistan oil sales witnessed a growth of 14% YoY to 13 million tons, led by major economic recovery and higher transportation activities during the period.
Furnace Oil (FO) sales reduced by 11% YoY to 258,000 tons during Jan-22. However, as compared to Dec-21, FO sales witnessed a significant growth of 103%.
The ex-FO sales stand at 1.5mn tons in Jan-22, up 26% YoY and 12% MoM during the period. During 7MFY22, ex-FO sales reached 11mn tons, up by 15% YoY.
Other listed companies like Shell Pakistan (SHEL) and Attock Petroleum Limited (APL) also increased by 11% YoY and 20% YoY to 136k and 160k tons, respectively.
In contrast, Hascol Petroleum (HASCOL) witnessed a decline in sales by 57% YoY to reach 29000 tons led by lower HSD and MS sales. Also, the market share of APL deteriorated to 1.6% in Jan-22 vs. 4.0% in Jan-21.
We have a market weight stance on OMC with ‘PSO’ as our top pick Topline Research said in a note. Macroeconomic recovery, higher car/bikes sales, higher oil prices, and revision in OMC margins are likely to drive the profitability of the sector.
