Elixir Securities Limited – Elixir Research

Karachi, October 19, 2016 (PPI-OT): POL: Earnings Meet Estimates

Pakistan Oilfields Limited (POL) just announced its earnings for 1QFY17 at PKR9.8/sh up 65% YoY and 51% sequentially, broadly in-line with Elixir Securities Limited’s estimates of PKR9.6/sh.

Variation in earnings emanate from lower than estimated gross profit on account of lower sales which is likely attributable to lower than estimated volumes. Lower GP was partially offset by a lower effective tax rate of 18%. POL offers FY17 dividend yield of 9.5% a ~270bps premium to 5 year PIBs, assuming average oil prices of USD47.5/bbl for FY17, however Elixir Securities Limited’s 2P reserve based valuations remain constrained on account of limited reserve life (~6 years) thus Elixir Securities Limited maintains Elixir Securities Limited’s HOLD stance on the stock.