In November 2015, the global oil trader, Vitol acquired 15 percent of HASCOL along with an option to buy another 10 percent in one year, which it exercised in 2016, making Vitol the largest shareholder with 25 percent equity. HASCOL has a strategic license agreement with FUCHS Middle East (FOMEL), an associate of FUCHS Petrolub based in Germany, to represent the brand in Pakistan. With an estimated cost of $20 million, the company owned Lube Oil Blending Plant is expected to start operations by first half of 2018.
HASCOL is also the first OMC to market LPG through its retail network for the automotive sector. It has plans to market LPG for domestic consumers and to develop several auto gas LPG stations across the country in the coming years. Currently there are 15 AutoMax LPG stations across Pakistan in various stages of approval with the Government of Pakistan.
HASCOL's share price HASCOL's share price has appreciated considerably since the listing in 2014, showing the phenomenal growth in the company's operations. The firm's share price had been up and beating the stock market where investors have been keen in the company's growth plans, especially the expanding storage facilities and rising volumetric sales. In a short span of time, HASCOL has given stiff competition to peers. The firm broadened its network, while the premium that the stock has enjoyed earlier in 2015 and 2016 also come from the deal struck with Vitol. However, the firm's share price has seen correction lately like the other OMCs as the stock market depreciated.
Financial and Operational Performance FY16
HASCOL's growth drivers have been its aggressive expansion in the storage facilities and increasing volumetric sales, which still continue. It has overtaken its competitors to become the second largest OMC in Pakistan in terms of volumes and has witnessed volumetric CAGR of 54 percent over 2011-16.
2016 was another good year for the HASCOL as its volumes increased by almost 46 percent with improved net margins. The firm's gross profits also improved by 65.83 percent, and its profit after tax increased 7.27 percent year-on-year in FY16.
Key highlights for 2016 included the commissioning of ZY terminal at Keamari, which has enabled the company to import larger volumes of motor gasoline; and the completion of a storage facility at Mehmood Kot, which will enable the firm to receive diesel directly via pipeline from Karachi.
The company also started work on a new joint venture company with Vitol in the name of Hascol Terminals Limited, which will build 200,000-ton storage facility at Port Qasim.
HASCOL in 9MCY17
HASCOL's sales volumes increased by 39 percent year-on-year in the first nine months of CY17. Its revenues for 9MCY17 were more than the annual revenues for FY16, and profits increased by 21 percent, year-on-year. During 9MCY17, HASCOL's Sahiwal Depot was successfully commissioned, which will help the firm manage its supply chain better. According to the Chairman's Review 9MCY17, daily sales volumes at both Mehmood Kot (commissioned in 2016) and Sahiwal (commissioned in 2017) have exceeded the firm's projections, strengthening its upcountry supply chain and contributing towards volumetric growth. The company currently maintains a storage capacity of 143,050MT for HSD and MOGAS at Port Qasim, Machike and Mehmood Kot amongst others, and has plans to add another 366,200MT to its storage facilities.
During the same period, HASCOL also announced right issue of 20 percent at a price of Rs 165 per share including premium of Rs 155 per share. The purpose of the issue was to fund the upcoming projects like development of storage facilities, retail outlets and lube oil and grease blending plant.
Outlook
Where the firm's fundamentals seem to be on track, the firm's margins were lower in 9MCY17. On one hand a lube blending plant and grease plant can improve the firm's margins from the lube business. Whereas, the rising competition in the sector is likely to keep margins under control. With the deregulation of HSD, OMC competition is only going to increase. Also, furnace oil is slowly being phased out, which will give traditional players like PSO cleaner balance sheets and thus more room for expansion on the retail side. Which will eventually increase competition in the sector and keep a lid on the margins.
Among the positives, HASCOL/Vitol has also started joint venture company for marketing of LNG in the country where Vitol will be a 70 percent shareholder and Hascol will be a 30 percent shareholder. HASCOL is also venturing into jet fuel business in the country via a JV with Vitol BV Netherland, a leading supplier in the global jet fuels space, which will enable the firm to start fuelling aircrafts at Karachi, Lahore and Islamabad airports in the country.
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Hascol Retail Network
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Province Commissioned Sites
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Sindh 151
Balouchistan 16
Punjab 247
Khyber Pakhtunkhwa 38
AZK, FATA and Gilgit 11
Total (as of Sept 30, 2017) 463
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Source: Company Website
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Pattern of Shareholding (as on Dec 31, 2016) Categories of Shareholders Percentage
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Directors and their spouse(s) and minor children
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MUMTAZ HASAN KHAN 28.77
NAZIA MALIK 0.93
FAROOQ RAHMATULLAH KHAN 0.23
SALEEM BUTT 0.22
LIAQUAT ALI 2.2
NAJMUS SAQUIB HAMEED 0.04
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Associated Companies, undertakings and related parties
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MARSHAL GAS (PVT) LIMITED 7.31
FOSSIL ENERGY (PRIVATE) LIMITED 10.45
Executives 0.06
Public Sector Companies and Corporations 0.29
Banks, development finance institutions, non-banking finance 5.18
Mutual Funds 0.94
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General Public
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Local 14.51
Foreign 0.77
Foreign Companies 26.66
OTHERS 1.44
Total 100
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Source: Company accounts
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Hascol Petroleum Limited
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2011 2012 2013 2014 2015 2016
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Profitability Ratios
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Gross profit ratio (%) 4.09 3.83 2.73 2.40 3.70 4.73
Net profit ratio (%) 0.48 0.84 0.79 0.75 1.48 1.22
EBITDA margin (%) 1.53 1.56 1.10 1.28 1.90 3.00
Return on equity (%) 0.19 0.33 0.36 0.23 0.25 0.24
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Liquidity Ratios
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Current ratio (times) 0.67:1 0.85:1 0.88:1 0.91:1 0.88:1 0.96:1
Quick ratio (times) 0.49:1 0.65:1 0.47:1 0.62:1 0.47:1 0.49:1
Cash to current liabilities (%) 0.06 0.15 0.11 0.15 0.20 0.22
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Investment/Market Ratios
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Earning/(loss) per share (Rs) 1.94 3.33 5.97 5.89 9.39 10.07
Breakup value per share (Rs) 7.01 16.11 22.01 34.21 47.94 50.59
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Source: Company accounts
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Hascol Petroleum Limited
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Rs(mn) 9MCY17 9MCY16 YoY
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Net sales 124,024 70,154 77%
Other revenue 337 107 214%
Net revenue 124,361 70,261 77%
Cost of sales 119,919 66,917 79%
Gross profit 4,442 3,344 33%
Selling and Dist. 1,790 1,211 48%
Administrative exp 466.807 380 23%
Other operating income 243 151 60%
Operating profit 2,428 1,905 27%
Finance cost 389 319 22%
Other charges 181 37 386%
Profit for the period 1,096 904 21%
EPS - basic and diluted (Rs) 9.08 7.49 21%
Gross margins 3.6% 4.8%
Net margins 0.9% 1.3%
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Source: Company accounts
Copyright Business Recorder, 2017