PPL: EPS to drop to by 1%YoY to
We estimate decline in earnings on the back a) 15%YoY decline in oil prices, b) lower oil and gas production down by 6%/8%YoY and, c) higher effective tax rate. However, weaker PKR is likely to keep earnings decline restricted. Moreover, we expect PPL is book exchange gains which is likely to bring other charges down by 58%YoY amid PKR depreciation,
On a quarterly basis, earnings are expected to increase by +37%QoQ on the back of 76%QoQ drop in exploration cost as commercially unviable fields were booked as dry wells during 2QFY20. Furthermore, PPL is likely to book exchange gains amid weaker PKR closing towards Mar-20 end,
We recommend a 'BUY" stance on PPL with our Dec-20 target price of
Earnings to clock in at
Lower exploration cost to lift earnings on quarterly basis
On a quarterly basis, earnings are expected to increase by +37%QoQ on the back of 76%QoQ drop in exploration cost as commercially unviable fields were booked as dry wells during 2QFY20. Furthermore, PPL is likely to book exchange gains amid weaker PKR closing towards Mar-20 end compared to exchange loss of
Oil and Gas production down by 6%/8%YoY during 3QFY20
Total gas production for the Company fell down by 8%YoY on the back of nearly lower production from Kandhkot. This brings total gas production for 9MFY20 to 786mmcfd down by 9%YoY. Oil production also fell by 6%YoY on account of lower production from Nashpa, Adhi and Tal block however addition of Dhok Sultan in Nov-19 restricted overall decline in oil production. This brings total oil production for 9MFY20 to 14,898bopd down by 5%YoY.
Recommendation
We recommend a 'BUY' stance on PPL with our Dec-20 target price of
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