AKD Securities Limited Equity Research – Daily Report (19-09-2019)

Karachi, September 17, 2019 (PPI-OT): OGDC: Earnings and institutional shareholding remain on track

The domestic E and P behemoth has had undergone wild swings this year, with the stock price swayed by developments surrounding Kekra-1 offshore well, foreign institutional selling and a cloudy oil price outlook driving sentiments in an increasingly fluid manner.

Recent developments surrounding the GoP’s bid to privatize ~7% holding in the firm bring to the fore the recent round of institutional selling in the stock, which an analysis of historic shareholding patterns reveals are not as unruly as previously though, where the top fifteen shareholders have maintained their share in ownership with foreign funds mostly absorbing major selling.

OGDC is slated to report FY19 NPAT of PkR113.77bn (EPS: PkR26.45/sh) marking a rise of 44.5%YoY with 4QFY19 earnings of PkR28.45bn (EPS: PkR6.62/sh) an increase of 30%YoY while remaining flat QoQ, on the back of value accretive macro factors and other income growth. In addition to the results, final year payout of PkR3.0/sh is expected, taking full year payout to PkR11.5/sh.

Citing strong earnings growth, attached with resilient payouts and institutional shareholding remaining firm, we believe these trends bode well for easing investor concerns over flow absorption, confirmed by Our TP of PkR215/sh implying a Buy stance.

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