Oil Marketing Companies (OMCs) 9MCY10 Review

Sales increased by 10.5%YoY
The Oil Companies Advisory Committee (OCAC) has recently disclosed the sales figures for the period of 9MCY10. The sales increased by 10.5%YoY to 14.8 Million tons during the period comparing to 13.4 Million tons during the same period last year where during 9MFY10 the overall sales volume stood at 1.73 Million tons showing 33%MoM increase comparing to the previous month of the same year.
FO volumetric sales led the up-surge
The decent size up-surge was mainly in contribution to Furnace Oil (FO) volumes during the period which depicted an increase of 12.4%YoY to place at 6.6 Million tons comparing to 5.87 Million tons during the same period last year mainly on the back of higher dependence on the thermal power generation.
Mogas witnessed highest increase during the period
The Mogas sales witnessed 32.4%YoY growth to 1.42 Million tons comparing to 1.07 Million tons during the same period last year chiefly in response to the gas shortage which allowed the shutdown of CNG Stations and pulled the Mogas demand on high. Furthermore, the Jet Fuel upped by 31.5%YoY to 1.09 Million tons in contrast to 0.83 Million tons during the same period last year while HSD sales remained slower to stand at 5.53 Million tons comparing to 5.44 Million tons during the corresponding period last year mainly in contribution to the slowdown in economy.
PSO remained the market leader
Pakistan State Oil (PSO) remained the market leader during the period by maintaining its position at 69.5% mainly in response to the continuous rising trend in FO sales which stood at 88.7% during the period while Mogas and High Speed Diesel (HSD) sales of the company witnessed a downward momentum to 48.3% and 61.3% in that order. On the other hand, the market share of Attock Petroleum Limited (APL) also rose to 5.5% in response to the enhancement in the sale of HSD to 6.7% while shell dropped its market share to 12% during the period.
Looking Forward
I believe that the FO sales will continue rising as around 1,800MW thermal units are expected to commercialize by FY11 while the circular debt issue will remain the hurdle for industry. I currently maintain ‘buy’ stance for PSO, APL and SHELL by considering their FY10E trading at 6.47x, 6.67x and 7.50x respectively where my target price of PSO, APL and SHELL for FY10 is PKR 390, PKR 415 and PKR 390 per share respectively.