Daily Call

REP- 300 January 2, 2019

CY18: Petroleum Consumption Oil Marketing Companies
Sales Down by 21% YoY on Gloomy Petroleum Demand
f1

Retail Price vs Volum es (MS & HSD) Dec’18: Sales volumes plunged by 23% YoY
As per the latest petroleum sales data for the month of Dec’18, total White and Black Oil sales
MoGas
(PKR/ltr) HSD (mn tons) clocked-in at 1.43mn tons, depicting a decline of 23% YoY while up by 8% MoM. Despite
140.00 Retail Volumes (RHS) 1.7 continuous rise in sales of Motor cars and Motor bikes, MoGas sales remained stagnant
primarily due to prices climbing up by ~24% YoY compared to SPLY and surge in quantum of
120.00 1.5
smuggled fuel from Iran. On the other hand, High Speed Diesel (HSD) sales plunged by 22%
100.00 1.3 YoY and 2% MoM on account of significant surge in diesel prices along with focus and reliance
of electricity generation being shifted to the national grid as opposed to diesel based generation.
80.00 1.1 Likewise, Furnace oil (FO) sales plummet by 56% YoY amid 360 degree turn in power
generation dynamics as government decided to close expensive FO based power plants and
60.00 0.9
commence electricity generation through Re-liquefied Natural Gas (RLNG), Wind power plants,
May-18
Jan-18

Mar-18

Jun-18
Feb-18

Apr-18

Jul-18

Oct-18
Aug-18
Sep-18

Nov-18
Dec-18

Solar and Coal based power generation.

MoGas sales depicted a flattish trend on yearly basis as volumes clocked-in at 0.60mn tons, up
Source: AHL Research
by 12% on monthly basis. Whereas, HSD sales plummeted by 22% YoY and 2% MoM to
0.59mn tons. Meanwhile, FO sales witnessed a steep decline of 56% YoY while grew by 55%
Market Share (YoY Com parison) MoM to 0.19mn tons. We believe that this decline may become more evident in upcoming
months while demand may once again pick pace in summers to meet electricity demand.
During CY18, FO and HSD sales witnessed a steep decline of 51% and 10% YoY to 4.27mn
CY-18 tons and 8.00mn tons, respectively. Whereas, MoGas sales displayed growth of 3% YoY to
27% 7.28mn tons compared to 7.10mn tons in CY17.
19% During CY18, PSO suffered major loss from ongoing economic slowdown, higher petroleum
7% product prices and shift in power generation from captive to grid as overall sales slumped by
CY-17 43%
55% 38% YoY to 8.76mn tons (FO: -64%, HSD: -21% YoY and MS: -6% YoY) compared to 14.07mn
10%
8% tons in SPLY. As a consequence, market share dropped to 43.0% vis-à-vis 54.6% in CY17.
8%
On the other hand, total market share of HASCOL and APL increased to 12.4% and 10.3% in
12%
10%
CY18 compared to 10.2% and 8.3% in CY17, largely fueled by growth in sales of MoGas.
Meanwhile, SHEL maintained its market share at 7.7% vs. 7.5% in CY17.
PSO APL HASCOL SPL Others
Exhibit: OMC's Sales Volume
Source: AHL Research Million Ton Dec-18 Nov-18 MoM Dec-17 YoY CY18 CY17 YoY
Industry
MS 0.60 0.54 12% 0.60 0% 7.28 7.10 3%
Relative Perform ance
HSD 0.59 0.60 -2% 0.76 -22% 8.00 8.93 -10%
FO 0.19 0.12 55% 0.43 -56% 4.27 8.70 -51%
125% OMC Sector KSE100 Total 1.43 1.33 8% 1.87 -23% 20.39 25.77 -21%
PSO
115% MS 0.20 0.18 11% 0.24 -15% 2.69 2.86 -6%
HSD 0.20 0.23 -12% 0.39 -48% 3.11 3.94 -21%
105% FO 0.10 0.08 34% 0.29 -64% 2.31 6.45 -64%
Total 0.55 0.55 2% 0.98 -44% 8.76 14.07 -38%
APL
95%
MS 0.07 0.05 38% 0.05 51% 0.70 0.58 20%
HSD 0.08 0.07 17% 0.06 28% 0.82 0.86 -4%
85% FO 0.02 0.01 115% 0.05 -51% 0.52 0.66 -21%
Jul-18
Aug-18
Sep-18

Nov-18
Dec-18
Jan-18

May-18
Jun-18

Jan-19
Feb-18
Mar-18
Apr-18

Oct-18

Total 0.17 0.13 31% 0.16 10% 2.10 2.14 -2%

SHEL
MS 0.07 0.06 19% 0.07 -1% 0.91 0.98 -7%
Source: Bloomberg, AHL Research HSD 0.05 0.04 4% 0.05 2% 0.59 0.80 -26%
FO - - na - na 0.00 0.02 -97%
Total 0.12 0.11 11% 0.13 -4% 1.58 1.93 -18%
Analyst HASCOL
Arsalan Hanif MS 0.05 0.05 -10% 0.07 -37% 0.82 0.88 -7%
HSD 0.04 0.07 -37% 0.10 -57% 1.12 1.18 -5%
arsalan.hanif@arifhabibltd.com
FO 0.02 0.01 145% 0.04 -40% 0.57 0.57 0%
+92-21-32462589 Total 0.11 0.13 -13% 0.21 -47% 2.52 2.63 -4%
Source: AHL Research
w w w .arifhabibltd.com

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www.jamapunji.pk
 Daily Call
January 2, 2019
Government prioritizes increase in tax revenue
In recent price revision, government of Pakistan slashed price of MoGas by 4.86/liter which is
lower than expectation. Despite decline in ex-refinery price by PKR 14.84/liter, government
increased petroleum levy to PKR 14.00/liter (previously this level was witnessed in May’09) from
PKR 9.81/liter and sales tax to 17% to PKR 13.22/liter compared to PKR 7.10/liter in Dec’18.
According to details, government has taken this step to control fiscal deficit by increasing tax
revenue and recover previous month’s tax deficit where government provided relief to
customers by reducing sales tax on petroleum products.

Exhibit: Mogas and HSD Price Break-up

Dec'18 Jan'19 Change Dec'18 Jan'19 Change
Mogas HSD
Ex-Refinery 69.53 54.69 (14.84) 83.33 66.30 (17.03)
IFEM 3.28 2.95 (0.33) 1.34 1.31 (0.03)
OMC Margin 2.64 2.64 - 2.64 2.64 -
Dealer Margin 3.47 3.47 - 2.93 2.93 -
PDL 9.81 14.00 4.19 7.94 18.00 10.06
PBT 88.73 77.75 - 98.18 91.18 -
GST 7.10 13.22 6.12 12.76 15.50 2.74
Total Price 95.83 90.97 (4.86) 110.94 106.68 (4.26)
Source(s): OGRA, AHL Research

Oil imports declined by 23% YoY during Dec'18 (down by 24% MoM)
Monthly oil & LNG imports registered a decline of 11% YoY (-17% MoM) to 1,849K tons during
Dec'18, as compared to 2,085K tons during Dec’17. Country imports zero quantity of FO during
Dec'18. In addition to this, imports of HSD and crude oil also declined by 50% YoY and 13%
YoY, respectively. However, LNG and MoGas imports increased by 33% YoY and 21% YoY,
respectively. During 1HFY19, imports declined by 17% YoY (Ex. LNG -29% YoY). However,
exports increased by 61% YoY to 82K tons during Dec'18 and declined by 2% YoY during
1HFY19.

Exhibit: Monthly Oil & LNG Exports & Imports

000 Tons Dec-18 Dec-17 YoY MoM 1HFY19 1HFY18 YoY
Imports
HSD 188 380 -50% -39% 1,348 2,103 -36%
LSFO - 50 nm nm - 398 nm
HSFO - 120 nm nm 283 2,553 -89%
Crude 567 653 -13% -35% 4,770 5,136 -7%
JP-01 10 32 -68% -52% 116 118 -2%
Mogas 494 408 21% 24% 2,678 2,689 -0.4%
LNG 589 442 33% 6% 3,723 2,634 41.3%
Total 1,849 2,085 -11% -17% 12,916 15,630 -17%
Exports
Naphtha - 11 nm nm 143 217 -34%
Mogas - - nm nm - - nm
Crude Condensate 82 40 104% 104% 230 165 39%
Total 82 51 61% -6% 373 383 -2%
Source: OCAC, AHL Research

www.arifhabibltd.com

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 Daily Call
January 2, 2019
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Equity Research Ratings

Arif Habib Limited (AHL) uses three rating categories, depending upon return form current market price, with Target period as December 2019. In addition, return excludes all
type of taxes. For more details kindly refer the following table;

Rating Description
BUY Upside* of subject security(ies) is more than +10% from last closing of market price(s)
HOLD Upside* of subject security(ies) is between -10% and +10% from last closing of market price(s)
SELL Upside* of subject security(ies) is less than -10% from last closing of market price(s)
* Upside for Power Generation Companies (Ex. KEL) is upside plus dividend yield.

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AHL Research uses the following valuation technique(s) to arrive at the period end target prices;
 Discounted Cash Flow (DCF)
 Dividend Discount Model (DDM)
 Sum of the Parts (SoTP)
 Justified Price to Book (JPTB)
 Reserved Base Valuation (RBV)

Risks
The following risks may potentially impact our valuations of subject security (ies);
 Market risk
 Interest Rate Risk
 Exchange Rate (Currency) Risk

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