▪ Mari Petroleum Limited (MARI) reported its 3QFY20 earnings earlier today, where Profit after Tax (PAT) came in at PKR 8,477 MN (EPS: PKR 63.54/sh), higher than our expectation of PKR 57.13/sh. The company’s bottomline grew by 16% Q/Q, 47% Y/Y.

▪ For the 9MFY20 period, the company reported earnings of PKR 23,225 MN or PKR 174.10/sh, higher by 38% Y/Y.

▪ MARI’s revenues came in at PKR 18,978 MN for the three-month period, higher than our expectations of PKR 17,826 MN. The topline increased by 14% Q/Q and 31% Y/Y. The sequential increase was driven by the resumption of offtake from the Mari field during the quarter, with the total gas production at the company averaging 726 MMCFD, compared to 635 MMCFD in the earlier quarter.

▪ Exploration expenditures at MARI also showed growth during the quarter, increasing by 52% Q/Q and 140% Y/Y to PKR 2,227 MN during the three-month period.

▪ Another boost to the company’s bottomline came in the form of a PKR 239 MN other income, contributing PKR 1.79/sh to the PBT level. This was likely driven by the exchange gains realized during the period as the PKR lost ~7% of its value against the USD.

▪ The company’s bottomline during the quarter was further buoyed by a lower effective tax rate during the quarter, coming in at 26% vs. the earlier quarter’s 29% and 28% in the same period last year.

▪ MARI is currently trading at 4.85x its FY21 projected earnings, and FY21 P/B of 0.48x. We have an “Outperform” rating on the stock with a TP of PKR 1,630/sh, representing an upside potential of 59% from current levels.