Karachi, May 15, 2012 (PPI-OT): E and Ps: Oil stocks trading below 3yr average PE multiples
Better volumes to drive earnings growth in FY13
Elixir Securities Limited expects oil and gas volumes for E and P companies to increase by 2 15% in FY13.
According to Elixir Securities, the growth in volumes is driven by production commencement from new fields in Tal block, Kunar Pasakhi, Sinjhoro along with higher production from Kadanwari and Nashpa. With oil expected to average above USD100/bbl for this year and the next, earnings for OGDC, PPL and POL will increase by 25%/17%/29% in FY13E to PKR26.2/36.4/70.4 per share.
Higher payouts in PPL and POL will be another trigger
Payouts for E and P companies are back-loaded i.e. a large part of the payouts are announced along with full year result announcements or in the fourth quarter. Accordingly, Elixir Securities Limited expects interest to pick up in E and P stocks, especially PPL and POL, given high dividend payouts along with expectations of stock dividend.
Elixir Securities Limited expects PPL to announce a dividend of PKR7/share in this quarter along with a 10% stock dividend.
For POL, Elixir Securities Limited expects the company to announce a final dividend of PKR 26.5/share. Elixir Securities Limited would also like to highlight the possibility of a 20-30% stock dividend given POL’s share price is now trading in the vicinity of PKR400/share. POL has historically issued stock dividend (bonus) in order to keep its share price within a certain range.