One of Pakistan’s
pioneer exploration and production (E&P) Pakistan Petroleum Limited (PPL)
is scheduled to announce its FY16 financial results on 17th January
2017. During this period global crude oil price hovered at low levels.
Therefore, the investors/shareholders await the result anxiously.
Pakistan’s leading
brokerage house, AKD Securities has released its forecast hinting towards a
decline in Earnings per Share (EPS) by 40 percent. The brokerage house attributes
this potential decline to 44 percent decline in international oil prices. It
has also hinted towards some other positives.
According to the
brokerage house, PPL profit after tax for the period under revive is estimated
to decline to Rs20.40 billion (EPS: Rs10.35) as compared to net profit of
Rs34.25 billion (EPS: Rs17.37) for a year ago, a plunge of 40 percent.
Brokerage house has
attributed this decline primarily to a 44 percent decline in average
international crude oil price of USD41/barrel in FY16 as compared to
USD73/barrel during FY15.
The report also
suggests that PPL may also announce a final cash dividend of Rs2.75/share that
would the full year payout to Rs5.00/share for FY16.
The story would
begin with an expected fall in topline by 24 percent, to Rs79.13 billion in
FY16 from Rs104.02 billion in FY15. Other
income is expected to decline by 30 percent to Rs5.32 billion owing to decline
in short-term investments. Finance cost is expected to go up by 24 percent to
Rs688 million owing to greater real discount rate set for the decommissioning
obligations.
A decline in royalty
expenses is likely to provide some relief. However, slide in crude oil price
remains a key risk to declining revenues/earnings and consequently valuations.
