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Karachi: ATRL: Sturdy inventory gains led to robust 1QFY12 earnings
According to Elixir Securities, strong 1QFY12 earnings: ATRL’s 1QFY12 EPS clocked in at PKR10.47 (up 53% YoY), nearly 2x of Elixir’s estimates, despite of high financial charges and nil non refining income, primarily due to inventory gains. In line with the historical trend, ATRL did not announce any dividend with 1QFY12 result.
Inventory gains flared up bottom line growth: ATRL’s realized 1QFY12 GRM clocked in at USD8.10/bbl, 46% higher than running GRM, primarily due to timing gains on crude procurement/product sale. ATRL is estimated to have realized inventory gains of PKR908mn during 1QFY12.
Robust non-refining income expected in 2Q to mark another splendid quarter: Strong earnings shall continue in 2Q as well, as ATRL is expected to book dividend income of PKR1.2bn from its associate companies, translating to PKR12.38/share. ATRL shall book PKR500/424mn from NRL/APL, while PKR274mn is expected from AGL during 2QFY12, as has been the case in past. Furthermore, GRM for the first two months of 2QFY12 clocked in at USD5.22/bbl, which is estimated to yield an EPS of PKR2.15 from refining operation, translating overall EPS to PKR14.53/share during 2QFY12.
FY12 estimates raised: KASB has revised up FY12 GRM by 7% and have incorporated stellar 1QFY12 earnings, which have resulted in 70% increase in FY12 EPS. At last closing price, the scrip offers an upside of 12% to Elixir’s Jun-12 PT of PKR140/share. BUY!
| Attock Refinery Ltd | Outstanding Shares: 85mn | ||
| PKR mn | 1QFY11A | 1QFY12A | YoY |
| Net Sales | 25,041 | 36,428 | 45% |
| Gross Profit | 877 | 1,462 | 67% |
| Operating Expenses | 72 | 75 | 4% |
| Operating Profit | 804 | 1,387 | 72% |
| Other Income | 321 | 447 | 39% |
| Finance Cost & Other Charges | 124 | 277 | 124% |
| PBT – Refining Operations | 1,001 | 1,556 | 55% |
| Tax | 418 | 663 | 59% |
| PAT – Refining Operations | 583 | 893 | 53% |
| PAT – Non Refining Operations | – | – | n.a |
| PAT – Total | 583 | 893 | 53% |
| EPS – Refining Op | 6.84 | 10.47 | 53% |
| EPS – Non Refining Op | – | – | n.a |
| EPS – Total | 6.84 | 10.47 | 53% |
| Source: Elixir Research, Company Accounts | |||
Inventory gains flared up bottom line growth
Helped by estimated inventory gains of PKR908mn, ATRL’s 1QFY12 earnings exceeded Elixir’s estimates by nearly 2x, despite of 267% YoY higher financial charges and zero non refining income booked in 1Q. ATRL’s realized 1QFY12 GRM at USD8.10/bbl was 46% higher than the running GRM of USD5.56/bbl. Moreover, 39% YoY increase in late payment income on overdue receivable jacked up the other income, which was however offset by exchange loss, which went up 263% YoY amid 2% depreciation in PKR.
Robust non-refining income expected in 2Q to mark another splendid quarter
ATRL’s associates companies, NRL and APL, have gone ex – dividend in Oct-11. Thus ATRL shall book dividend income of PKR953mn from these companies in 2QFY12. Moreover, ATRL is also expected to book income from AGL during 2Q which is estimated at PKR274mn, translating total non-refining income to PKR1.2bn or about PKR12.53/share. Furthermore, GRM for the first two months of 2QFY12 clocked in at USD5.22/bbl, which is 34% higher than 2QFY11 GRM and estimated to yield an EPS of PKR2.15 from refining operation. However, refining income shall remain sensitive to crude oil price which has started moving north during Nov-11 after having dropped in Oct-11.