By: Shahid Ali
+9221-111-226-100 – Ext 700
Summit Capital (Pvt.) Limited
- OGDC profitability is likely to increase by 27.7% to PKR115.88n (EPS: PKR26.94) in FY14.
- We expect the company to announce final cash dividend of PKR2.75/share making total payout of PKR9.0/share for the year.
- Other income of the company expected to increase by 7% to PKR16.7bn.
- Oil and gas production of the company is projected to increase by 5.6% and 5.7% respectively to 41,045bpd and 1,137mmcfd.
- At current level we have a HOLD stance on OGDC with the TP of PKR275.
OGDC Result Preview FY14…
The BoD’s of the company are scheduled to meet on 05th August, 2014 to announce its FY14 financial result. As per our estimates company is likely to post highest ever profit after tax (PAT) of PKR115.88bn translating into EPS of PKR26.94 in FY14 as compared to PKR90.77bn and EPS of PKR21.11 in the same period last year. The estimated growth in profitability is mainly due to higher oil and gas production up by 5.7% and 5.6% respectively over last year and higher wellhead gas prices (+3%) for the year.
On quarterly basis, we expect the company to report PAT of PKR24.95bn (EPS: PKR5.80) in 4QFY14 against PKR15.11bn (EPS: PKR3.51) in same period last year, showing YoY growth of 65.1% mainly due to normal effective tax rate in 4QFY14 as compared to higher effective tax rate of 54.4% in 4QFY13. Further, we expect company to announce final cash dividend of PKR 2.75/share which will be in addition to PKR6.25/share already paid by the company
Top-line likely to reach at PKR252bn up by 13% over last year…
OGDC is likely to report highest ever net revenue of PKR252.2bn in FY14 (+12.9% YoY) mainly due to higher oil and gas production and higher wellhead gas prices during the year. Further, the depreciation of 5.7% in Pak rupee against USD during the year has further supported topline. Moreover, Arab light crude price has increase by 0.6% to USD108.44/bbl in FY14 as compared USD 107.74/bbl in same period last year.
Production estimates for the year…
We expect oil production of the company to increase by 5.6% to 41,045bpd as compared to 38,858bpd in corresponding period last year. The growth in oil production of the company is due to higher production from Sinjhoro, Nashpa and Jakhro blocks. Moreover, gas production is expected to increase by 5.7% to 1,137mmcfd owing to higher gas production from Uch, Nashpa, Nandpur, Sinjhoro and Kunnar blocks.
At current level we have a HOLD stance on OGDC with the TP of PKR275.