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Karachi, December 14, 2012 (PPI-OT): ATRL: Dec-12 result excitement to precede snooze in the 2nd half
Strong 2Q results in the offing
Attock Refinery books dividend income from its investments in National Refinery, Attock Petroleum and Attock Power Gen in the second quarter.
According to Elixir Securities Limited estimates the company to record PKR 1,106 million of dividends resulting in an EPS impact of PKR 11.45.
On the other hand, refining operations will likely slow down after posting earnings of PKR 1,472 million (PKR 17.26/share) in the first quarter, helped by estimated inventory gains of PKR 1,485 million and contributing 65% of 1Q earnings. Elixir Securities Limited expects core earnings to drop to PKR 500 million (PKR 5.9/share) due to lower refining margins and minimal inventory gains.
Expansion talks taking shape
At an estimated cost of USD245 million, Attock Refinery is planning to enhance its refining capacity by 10,400 barrels per day to 53,000 barrels per day (+25%) and increase gasoline production by 20,000 tons per month (+66%). The outlay also accounts for an 18MW expansion in existing captive power plant and a ‘Diesel Hydrodesulphurization Unit (DHDS)’ – a plant to reduce sulphur content in diesel. Construction of the DHDS plant is however subject to favorable government incentives.
Maintain Price Target at PKR 170, HOLD, recommend selling on strength
Elixir Securities Limited has valued ATRL’s investment in its group companies at PKR 160/share, which is the present value of expected future dividends from these companies (Dividend Discount Model). Refining operations only make up PKR 10/share of Elixir Securities Limited’s Price Target.