Morning Briefing for February 25, 2014 – Standard Capital - AsiaNet-Pakistan

Morning Briefing for February 25, 2014 – Standard Capital

February 25, 2014 | Brokerage | Share:

Karachi, February 25, 2014 (PPI-OT): Hascol Petroleum IPO note | Growing OMC |subscribe

Primary market offering
Currently HPL has announced the issue of 25 million Ordinary shares (27.59% of total Post IPO paid up capital) of Rs 10 each for cash at a price of Rs 20 per share.

According to Standard Capital, 18.75 million Shares (75% of total Issue size) will be made through book building process at a floor price of Rs. 20 (including share premium of Rs 10 per share). Application from institutions and HNW investors for book building process will be entertained from March 4 to March 5, 2014.

Remaining 6.25 million ordinary shares (25% of total size) will be offered to general public through Initial Public Offering (IPO) at Strike price which will be determined through the Book Building Process. The dates for IPO is not announced till yet but soon will be announced.

Hascol- Engaged in OMC business
Hascol Petroleum Limited (HPL) was incorporated in March 2001, engaged in business of owning, leasing and renting oil storage facilities as well as importing petroleum products for its own account. In 2005 HPL entered into oil marketing industry and strived to develop its retail network with brand name of HASCOL and currently owing 210 retail outlets across Pakistan (98 in Punjab , 72 in Sindh and 30in KPK). Along with this HPL has constructed its one storage installation at Shikarpur, Sindh and other is being constructed at Machike, in Sheikhupura district of Punjab.

Hascol financial highlights:
HPL is a growing entity and expending its business in terms of sales and outlets. During CY13 company reported net profit of Rs 391mn converting to basic EPS of Rs 5.96/sh (Diluted EPS of 4.32 as per Standard Capital’s working).

Furthermore during CY13 company’s net sales were doubled to Rs 49.2bn against Rs 25.9bn in CY12. Where in gross profit and EBIT were reported as Rs 1.36bn and Rs 570mn respectively in CY13. Wherein company also posses strong balance sheet with Current assets of Rs 6.7bn, non-current asset of Rs 2.6bn in CY13 which are majorly financed through short term liabilities of Rs 7.6bn which is good.

Hascol strategic business partners
HPL has an arrangement with Germany based lubricant manufacturer FUCHS to manufacture, import, distribute and sell FUCHS brands in Pakistan. HPL is also in contract with Orient Oils (Pvt).

More over HPL has agreement with PSO for storage and handling of HPL’s POL products at Keamari, Shikarpur and Machike. Conversion of 400 cars in LPG (being proximity to rural economy).

Valuation:
On the floor price of Rs 20 during book building process HPL yield PE of 4.6x* based on diluted EPS of Rs 4.32/sh reported in CY13 .Which is best PE multiple to subscribe for an IPO, SUBSCRIBE.

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