Result Preview PPL: FY14 EPS expected at PKR24.84 Result expectation Pakistan Petroleum Limited (PPL) is scheduled to announce its FY14 financial results tomorrow. We expect the company to announce EPS of PKR24.84 for FY14, up 17% YoY. 4QFY14 EPS is estimated at PKR5.52, up 29% YoY. We also expect the company to announce a cash payout of PKR5/sh along with the result, taking full year payout to PKR10/sh. Changing product mix to drive 4Q earnings Production of PPL for 4QFY14 is estimated to drop by 3% YoY to 12.7mmboe on account of 6% decline in gas volumes. However, oil production is estimated to have risen by a whopping 31% YoY during the quarter partially offsetting drop in gas volumes. As a result, oil production is estimated to comprise 10% of overall PPL’s volumes. Increase in oil production is estimated to lift up well head prices and thus support 4Q earnings growth. Well head prices for the quarter are estimated to rise by 18% YoY due to change in product mix and 6% YoY PKR depreciation. Higher dry well costs to continue PPL had ownership stake in two (out of four) dry wells recognized during 4QFY14 namely Falah X-1 and Umran X-1. We estimate cost of these wells would likely be expensed during 4QFY14 and thus keep exploration costs high. Operating costs for the quarter are estimated to rise by 11% YoY to PKR10.2bn. Investment perspective At current levels, PPL offers an upside of 8% to our Jun-15 PT of PKR240/sh along with FY15 dividend yield of 5%. BUY.
Posted on: Tue, 26 Aug 2014 11:53:46 +0000
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