National Refinery Limited (NRL)continuestopost
positive aftertax profitsdue toitsalmostmonopolyinthe domesticlubricantsect...
 Strongrefiningmarginsinthe upcomingyearwill givea boostto the refineriesoperatingin
Pakistan.
 Lowercrude oil Pricesint...
CPEC agreements,repairsandmaintenance of roadsandhighwaysindicateahigherthananticipated
demandof Asphalt,asthe inventories...
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National Refinery Limited Report

Published on: Mar 3, 2016
Source: www.slideshare.net


Transcripts - National Refinery Limited Report

  • 1. National Refinery Limited (NRL)continuestopost positive aftertax profitsdue toitsalmostmonopolyinthe domesticlubricantsector.Facing competitionfromthe importedproducts,ittakesadvantage of the deregulatedlubeoil prices.Butin the comingyears,not onlythe lube segment,butthe fuel segmentisalsoexpectedtoperform betterdue to reducedCrude Oil Pricesinthe worldcoupledwithhighdemandinthe domestic market. 0 2000 4000 6000 8000 10000 12000 14000 2012 2013 2014 2015 2016E 2017E 2018E 2019E Crude Oil Prices (per Barrel) Gross Refining Margin
  • 2.  Strongrefiningmarginsinthe upcomingyearwill givea boostto the refineriesoperatingin Pakistan.  Lowercrude oil Pricesinthe InternationalMarketinthe past yearalreadygave themthe refineriessome supportbutfurtherriftsamongthe countriescanholdthe Crude Oil prices.  PML-N’sfocuson infrastructure will favourthe sale of asphaltwhere highinventorieswere heldbythe refineries.  Improvedrailwaysandhighautomotivesaleswill addtothe fuel sectorof the refineries. Gross RefineryMarginsare expectedtobe muchhigherthanthe past few years.Highermarginscan be attributedtomultiple factorsbutthe mostimportantof themisthe International Crude Oil prices. OPEC cartel seemstoshowmot muchresistance tothe fallingcrude oil pricesandSaudiainfact vowsto keepthe supplyatthe same level inhopesof gettinghighermarketshare.Withtwoof the maincartel membersIranand Saudiahavingriftsamongthemselvesonwhatseemstobe political issue,the hopesof astrong resilience isnegative. WithsanctionsbeingremovedaftermanyyearsonIran,it surelyplanstodepictaheavycomeback. As a result,itisfurtherexpectedthatthe price of the International Crude Oilwillremainlow asit triesto regainthe lostmarkets. While International marketsuppliersfightamongthemselves,USA startsbringingShale Oil inthe market,furtherpullingthe pricesdown.Inotherpartsof the world,ratesinChinahave beencut for the 5th time whichnegatestheirownstatementof agood growthof the economy.Marketshave sloweddowninthe US and China,alsobeinganotherfactorforlessenedOil demand. First 5 monthsof the FY16 has showna phenomenalgrowthinthe sale of automobiles.Notonly householdcards,butthe sale of tractors and withGovt’sscheme,pick-upsale hasalsopeaked. Eitherways,National Refinerywill enjoyhigherrevenuesinbothitslube segmentanditsfuel segment. Withenormousbudgetsforthe infrastructure,the PML-N ledgovernmentseemstotake the economytowardsa growthrate of 5.5% inFY16.
  • 3. CPEC agreements,repairsandmaintenance of roadsandhighwaysindicateahigherthananticipated demandof Asphalt,asthe inventoriesgodown,asper the company’sdirector.WithMetroBus projectcompletedwithinrecordtime,announcementsof projectslike BusTransitSysteminKarachi won’ttake much time.NotonlyAsphalt,butthe sale of Diesel will alsoincrease,leadingtoan increase inthe grossrefiningmargins. On the downside,the future of furnace oil anddiesel isnotverybright.TAPIgaspipeline,whichis plannedtobeginin2019, will supply1.3billioncubiccmof gas per day,enoughforalmost10% of Pakistan’senergyrequirementasof now. I expectthatall these factorswill gointhe favourof NRL and the stockseemsto be currently undervalued. Hence aBUYcall witha maximumpotentialof Rs2000/share is likely. - 50,000.00 100,000.00 150,000.00 200,000.00 250,000.00 300,000.00 350,000.00 400,000.00 2012 2013 2014 2015 2016 Automobile sales (units) Automobile sales (units)

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