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.