The Bell about Oil & Gas – Elixir Securities Limited
Karachi, August 16, 2011 (PPI): SHEL: 1HCY11 EPS expected at PKR25.50
According to Elixir Securities Limited,
|Shell Pakistan Ltd||Outstanding Shares: 68mn|
|Cost of Products Sold||53,229||44,060||21%||108,028||84,422||28%|
|Admin & Marketing Expenses||867||888||-2%||1,759||1,952||-10%|
|Other Operating Income||43||116||-63%||96||387||-75%|
|Other Operating Expenses||291||242||20%||597||340||75%|
|Share of Profit from Associates||183||202||-10%||360||295||22%|
|Profit before Tax||1,531||1,015||51%||2,808||1,762||59%|
|Profit after Tax||988||318||211%||1,747||720||143%|
|Source: Elixir Research, Company accounts|
Improved 1HCY11 volumes despite dismal 2QCY11
Despite of 3% lower HSD, Shell’s volumes were up by 5% YoY during 1HCY11, primarily due to FO and Jet Fuel which were up by 34% and 19% YoY, respectively. Entire of the growth in volumes came in the 1QCY11 as 2QCY11 volumes were down by 12% primarily due to 70% plunge in FO sale coupled with 9% decline in HSD volumes. However, dismal 2QCY11 volumes are expected to be offset by 13% YoY higher margins per ton and estimated inventory gains of PKR1.4bn during 2QCY11. In addition, 9% YoY higher Lube volumes, which is responsible for more than 40% of Shell’s core earnings, are also expected to cover up part of lower energy product sales. 1HCY11 lube volumes were up by 2% YoY.
Opex/GP ratio expected to decline
Secondary transportation cost, which is mainly driven by FO volumes, is expected to decline in 2QCY11 on the back of 76% QoQ lower FO sale. Thus, with lower transportation cost amid 32% YoY higher expected gross profit; Opex/GP ratio is expected to decline to 51% in 1HCY11, compared with 65% in corresponding period of last year.