- PPL is likely to post bumper earnings of PKR 41.89bn (EPS: PKR 32.30) in FY12, growth of 35% YoY. Earnings growth emanated from both higher oil and gas production and higher realized prices. FY12 has been a good year for Pakistan's E&P companies, due to higher Arab Light prices and production accretion from Tal Block and Nashpa.
- As the company omitted an early dividend in the current year, we anticipate final cash dividend of PKR 6 per share alongwith the final result to take cumulative FY12 cash payout to PKR 11 per share.
- PPL's oil production inched up by 2% on a sequential QoQ basis in 4Q FY12 to 9,500bopd, which is likely to support 4Q FY12 EPS. Preliminary calculations suggest 4Q earnings at PKR 8.54 per share, which will take FY12 earnings to PKR 32.30 per share. However, we remain conservative with our oil price assumption for FY13, maintaining it at USD 90 per bbl. Hence our FY13 earnings stay at PKR 31.87 per share.
- Production accretion from Manzalai-9 and Makori East-2 are likely to supplement revenues in FY13. At its last close of PKR 195 per share, PPL's stock trades at FY13 PE and PBV of 6.1x and 1.6x respectively and offers an upside of 26% to our Dec12 PT of PKR 246 per share. BUY!
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