Dear Clients,

Mari Petroleum Company Limited (MARI) announced its financial results for 2QFY21 with earnings reported at PkR7.3bn translating to EPS of PkR54.98, underperforming street estimates, as compared to PkR7.3bn (EPS PkR54.61/sh) in the same period last year, up by 1% Y/Y.

– On a sequential basis, earnings are down by 19% Q/Q. This brings profitability for 1HFY21 to PkR16.4bn (EPS PkR122.95/sh) up by 11% Y/Y compared to PKR14.7bn (EPS PkR110.55) in the same period last year.

– Along with the result, the company announced a cash dividend of PkR6/sh. The dividend stood higher than industry expectations.

– Earnings reported for 2QFY21 were flattish on a Y/Y basis as a function of i) higher OPEX, ii) increase in exploration expenditure (up by 23%Y/Y), and iii) lower other income owing to exchange losses and lower return on bank deposits.

– Revenue for the quarter stood at PkR18.8bn up by 13% Y/Y on the back of better production growth and PkR devaluation against the greenback. For 1HFY21, total revenues stood at PkR39.2bn, up 14% Y/Y.

– The company has likely booked a dry well during the quarter leading the company to record exploration expenses at PkR1.8bn, up by 48% Q/Q and 23% Y/Y. This takes total exploration expenses for 1HFY21 to PkR3.0bn, down 14% Y.Y.

– Finance income stood at PkR0.8bn during the quarter, lower by 35% Y/Y likely from lower interest rates and recognition of exchange loss. MARI registered finance income at PkR1.8bn, down 35% Y/Y for 1HFY21.

– Effective tax rate stood at 29% during the quarter as against 30% in the sequential quarter. This takes effective tax rate for 1HFY21 to 30%. 

– The stock offers an upside of 14% from close and trades at a one year forward P/E ratio of 6.6x.  

Regards,
KASB Research