Petroleum: Sales edge up 4% YoY in Aug

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Oil Sector

  • As per our industry checks, sale of petroleum products clocked in at 1.84mn tons in August 2014, 4% YoY higher vis-à-vis August 2014 offtake of 1.78mn tons.
  • On a MoM basis, overall consumption declined by 6% MoM given 15% MoM lower sale of High Speed Diesel (HSD). Meanwhile, 2MFY15 petroleum product sales are up 0.5% YoY to 3.79mn tons.
  • Attock Petroleum Ltd’s (APL) sales edged up by 6% YoY, while Pakistan State Oil’s sales clocked in 2% YoY lower in August 2014; with APL’s market share expanding to 9.6% in 2MFY15 vis-à-vis 8.4% in 2MFY14.
  • We expect oil sales growth to remain muted at 3% YoY for FY15F given reemergence of circular debt, with some media reports highlighting circular debt as high as Rs400bn.
  • Our preferred play in Pak OMC space remains PSO, where relief on circular debt will be a key stock price catalyst. Meanwhile, we flag APL as our defensive pick in the sector offering FY15F D/Y of 9%.

Oil Sales

Oil sales edge up 4% YoY in August 2014

As per our industry checks, sale of petroleum products clocked in at 1.84mn tons in August 2014, 4% YoY higher vis-à-vis August 2014 offtake of 1.78mn tons. Demand growth was led by (1) 14% YoY higher High Speed Diesel (HSD) sales and (2) 3% YoY higher Motor Gasoline (MS) sales. The same more than offset the 3% YoY decline in Furnace Oil (FO) sales. That said, overall consumption declined by 6% MoM on the back of 15% MoM seasonal fall in HSD sales. Overall, Pak petroleum product consumption inched up by 0.5% YoY in 2MFY15.

During August 2014, Attock Petroleum Ltd’s (APL) sales edged up by 6% YoY (- 15% MoM), while Pakistan State Oil’s sales clocked in 2% YoY lower (-9% MoM) in August 2014; with APL’s market share expanding to 9.6% in 2MFY15 vis-à-vis 8.4% in 2MFY14. Meanwhile PSO market share contracted to 60.7% in 2MFY15 from 64.5% in 2MFY14.

Oil Product Sales

FY15F to remain largely unexciting

We expect oil sales growth to remain muted at 3% YoY (to 21.7mn tons) for FY15F given reemergence of circular debt, with some media reports highlighting circular debt as high as Rs400bn. We believe government’s efforts to eliminate/reduce circular debt menace will be a pivotal demand driver. Our preferred play in Pak

OMC space remains PSO, where relief on circular debt will be a key stock price catalyst. Meanwhile, we flag APL as our defensive pick in the sector offering FY15F D/Y of 9%.

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