BMA Today for October 15, 2019 
 
     TUESDAY 15 October 2019 
 
 

 

   

Select Archives

 

At a Glance

Previous Market Session

Local Market    
 KSE 100 N.A N.A
 KSE T. Value PKRbn N.A N.A
 10YR PIB N.A N.A
 6M KIBOR N.A. N.A.
 PKR/USD N.A. N.A.
Asia Pacific    
 BSE SENSEX 30 N.A N.A.
 NIKKEI 225 N.A N.A.
 STRAITS TIMES INDEX N.A N.A.
 KUALA LUMPUR N.A N.A.
 JAKARTA COMP. N.A N.A.
 THAI SET 50 N.A N.A.
Middle East    
 DFM GENERAL N.A N.A.
 TADAWUL ALL SHARE N.A N.A.
 MSM30 INDEX N.A N.A.
 KUWAIT SE WEIGHTED N.A N.A.
 DSM 20 INDEX N.A N.A.
Global Markets    
 OIL (NYMEX) N.A. N.A.
 US 10YrBOND N.A. N.A.
 LIBOR6MTH N.A. N.A.
 FTSE 100 N.A N.A.
 DOWJONES N.A N.A.
 S&P 500 N.A N.A.
       
 
In Focus
Pakistan Oil & Gas Exploration Sector: Deep discounts allay concerns on production decline – Overweight Maintained

   Pakistan Oil and Gas Exploration & Production sector is primed to offer handsome gains. Our investment case is premised on i) accelerated exploration efforts, ii) a weak PKR against the dollar, and iii) healthy balance sheets. The recently announced divestments of OGDC and PPL by the government dampened market sentiments in these stocks. However, we are of the view that these transactions will likely take a while to materialize. The recovery of oil prices and PKR devaluation in the past 2 years has churned up sector profitability registering 3-yr CAGR of 31% to PKR190bn for BMA E&P Universe that is now estimated to grow through the next three years at a CAGR of 9%. The uptick shall be a function of our assumption of a stable oil price environment, increased efforts on exploration that will counter ongoing reserve depletion and a weak PKR. However, the same has yet to transpire in terms of valuations where the sector trades at a weighted average implied oil price of USD29/bbl (current oil price of US$59/bbl) after the sector corrected by 14% in past 6-mths. Despite the uptick in exploration activity since the past two years, depletion of reserves will need to be addressed by a substantial find. Current drilling targets are set at 92 wells (120 in FY19) of which 52 wells planned are exploratory. We expect oil production to reside at 88/85kbpd for FY20/21E compared to 91kbpd in FY19. Moreover, gas production is likely to register at 3,803mmcfd in FY20. The sector currently sits on cash heavy balance sheets where robust cash generation continues to remain the key strength given favourable USD/PKR parity and strong margins. We are Overweight on Pakistan E&Ps with BUY ratings for OGDC, PPL and POL with price targets of PKR183/sh, PKR165/sh (adjusted for bonus), and PKR463/sh respectively. Our top picks are OGDC and PPL due to deep discounts on implied oil price.

Click to Read More

Media Watch

Economy: Investment in govt papers reaches record Rs10.3tr / Dawn
National: PM Imran’s Iran-Saudi mediation mission an uphill task / Tribune
Sectoral: FBR warns insurers to comply with guarantee standards / The News
Click to Read More

Trailblazer


click to view

  Previous Session
Equity Round Up


Click to View
Forex Round Up


Click to View
Fixed Income Round Up


Click to View
 
 Important Info  
 
 
 
   
 BMA CAPITAL - Pakistan's Premier Investment Group
  Capital Markets | Corporate Finance | Asset Management | Research | Retail Brokerage | Funds Distribution
   www.bmacapital.com    

DISCLAIMER
This memorandum is produced by BMA Capital Management Limited and is only for the use of their clients. While the information contained herein is from sources believed reliable, we do not represent that it is accurate or complete and should not be relied upon as such. Opinions expressed may be revised at any time. This memorandum is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned.