The board meeting of the PSO is due on February 21 to announce its 1H-FY05 results.
An analyst from Capital One Equities, said that despite the flat petroleum product prices in 1H-FY05, the performance of the company remained fairly maiden as the brunt of burgeoning global crude oil prices was borne by the government.
We believe that the only edge, which the OMCs enjoyed during the said period were the furnace oil prices which remained on the higher side in consequence of spikes arising from the international oil prices as well as growing demand of the power and industrial sector, and this to an extent has improved the revenue picture in Q2-FY05, the same analyst said.
During 1H-FY05, Pakistan imported $1.87 billion petroleum crude and its products in the first half of this fiscal year, up from $1.36 billion import during the same period last fiscal year.
Since the beginning of the 2H-FY05, inflated Arab Light prices and upward revision of POL prices would correspondingly benefit PSO and alleviate the government''s smolder on local oil prices to some extent.
However, the expected improvement in the water availability in the country, the furnace oil intake is likely to decline in 2H-FY05, which can hamper the revenue stream of PSO to some extent. The hydel power generation in 2H-FY05 is likely to increase, and this would decline the intake of Hubco, which is major customer of PSO for furnace oil. This is evident from the recent news on the extension of the date for opening the tender by PSO to import of 330,000 tonnes High Sulphur Fuel Oil (HSFO) during February-April 2005 (it is worthwhile to note that currently Hubco''s intake of furnace oil has declined from 5,000 tonnes to 2,500 tonnes per day).
An analyst from First Capital Equities, believed that profit after-tax of PSO would reach Rs 2,539 million (EPS Rs 14.8) for the first half of FY05. The driver for increased bottom line is the 38 percent improved top line owing to higher prices and improved products sales.
"We also expect the company to announce an interim cash dividend in the range between Rs 7.5 and Rs 8.00 per share. After the revival of the privatisation of the company, the scrip has been displaying quite significant rallies", he added.
Despite the fact that during the most of the six months, local petroleum prices have been kept unchanged, but the government was taking the hit on its revenues through PDLs.
On December 15, 2004, OCAC after a gap of seven and half months revised these prices upwards in the range between 6.25 and 7 percent. On year-on-year basis, average petroleum products prices increased in the range between 5 and 8.4 percent during the first half.
Coupled with the increase in local POL products prices, PSO is also expected to maintain its robust volumetric growth in white oil products as well as black oil. The sales revenue is expected to report an increase of 38 percent owing to these factors, the PSO is expected to maintain a robust growth in its earnings owing to higher international oil prices, operating and marketing efficiencies resulting in improved products sales. The PSO is also likely to be helped by growing furnace oil consumption in the country such as greater demand of the IPPs over the last six months.