Hascol Petroleum Limited was granted an oil marketing license by the government in February 2005, and since then, Hascol has been engaged in developing a retail network under Hascol brand and has commissioned over 370 retail outlets in the four provinces of Pakistan and Jammu and Kashmir. It is primarily engaged in the purchase, storage and sale of petroleum products including diesel, petrol, and lubricants. The company also markets LPG and currently there are 15 AutoMax LPG stations across Pakistan in various stages of approval with the Government of Pakistan.
In the lubricant segment, Hascol has a strategic License agreement with FUCHS Middle East (FOMEL), an associate of FUCHS Petrolub based in Germany, to represent the brand in Pakistan. In the ongoing year (2017), the firm plans to start construction of a Lube Oil Blending Plant to make FUCHS branded lubricants and greases in Pakistan.
Hascol's share price and shareholding Hascol share price has beaten the benchmark index significantly, and more than just one reason explains its appreciation. Hascol today has become the second largest OMC in terms of volumes after PSO, and has seen the most volumetric growth in FY17. It has also surpassed the other listed OMC, APL in market share.
However, the price rally has not been recent. Hascol Petroleum share price has surged considerably since the listing in 2014 because of strong growth prospects. Also, its share price speaks largely about the OMC's financial and operational performance.
The growth phase has also been accompanied by the firm's efforts to broaden its network of retail outlets and storage facilities across the country. Apart from the retail network growth, the firm is constructing storage facilities at Keamari, Daulatpur, Shikarpur, Mehmood Kot, Machike and Amangarh. New storage facilities are also planned for Sahiwal, Kotlajam and Thalian
In November 2015, Vitol - the global oil trader acquired 15 percent of Hascol and another 10 percent in 2016, making it a key shareholder with 25 percent equity.
Financial and operational performance CY16 2016 is synonymous with growth for Hascol. The firm's sales volumes increased by almost 46 percent and profit before tax was in excess of Rs 2 billion. The gross profits improved by 65.83 percent, year-on-year.
Key highlights that kept the performance up and operations positive include the commissioning of ZY terminal at Keamari, which has enabled the company to import larger volumes of motor gasoline. Hascol also completed the storage facility at Mehmood Kot in 2016, and the pipeline has also been connected with the Papco Pipeline. This has helped the firm to be in a position to receive diesel directly via pipeline from Karachi.
The company has set up a new joint venture company with Vitol in the name of Hascol Terminals Limited, which will build 200,000-ton storage facility at Port Qasim.
HASCOL in 1QFY17 Hascol Petroleum financial performance in 1QCY17 has been robust; also, the OMC announced its director's approval of setting up a lube oil blending and grease plant, for which six acres of land has been acquired at Port Qasim for building the plant in collaboration with FUCHS-Germany. The project cost is around Rs 1.8 billion and will be operation sometime in 2018.
Top line growth has been phenomenal, rising by 71 percent, year-on-year. Sales volumes of the company increased by 29 percent, year-on-year in the 1QCY17. Earnings were up by 86 percent year-on-year, in the same period regardless of 71 percent increase in cost of goods sold, and 51 percent increase in selling and distribution expenses.
Outlook Where the firm's financial performance seems to be on track, the addition of a lube blending plant and grease plant will improve volumes and margins for its lubes business. No dividend declaration seems to be in line with the capex activity of the company. Additionally, Hascol has acquired land adjacent to the Byco Refinery to build a storage facility next to the refinery.
In 1QCY17, Hascol commissioned it Mehmoodkot installation, which it feels that it will give the firm a huge marketing advantage in Southern Punjab. The storage facility at Sahiwal is expected to be completed in the second quarter of CY17, while the work at Thalian and Kotlajam is also progressive. Among these positives, Hascol/Vitol have also started joint venture company for marketing of LNG in the country where Vitol will be a 70 percent shareholder and Hascol will be a 30 percent shareholder. Hascol has also signed a Technical Services Agreement with Vitol Aviation. This will enable Hascol to start fuelling aircrafts at Karachi, Lahore and Islamabad airports in the country.
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HASCOL PETROLEUM LIMITED
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2011 2012 2013 2014 2015 2016
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Profitability Ratios
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Gross profit ratio (%) 4.09 3.83 2.73 2.40 3.70 4.73
Net profit ratio (%) 0.48 0.84 0.79 0.75 1.48 1.22
EBITDA margin (%) 1.53 1.56 1.10 1.28 1.90 3.00
Return on equity (%) 0.19 0.33 0.36 0.23 0.25 0.24
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Liquidity Ratios
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Current ratio (times) 0.67:1 0.85:1 0.88:1 0.91:1 0.88:1 0.96:1
Quick ratio (times) 0.49:1 0.65:1 0.47:1 0.62:1 0.47:1 0.49:1
Cash to current liabilities (%) 0.06 0.15 0.11 0.15 0.20 0.22
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Investment/Market Ratios
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Earning/(loss) per share (Rs) 1.94 3.33 5.97 5.89 9.39 10.07
Breakup value per share (Rs) 7.01 16.11 22.01 34.21 47.94 50.59
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Source: Company accounts
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HASCOL RETAIL NETWORK
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Province Commissioned
Sites
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Sindh 143
Balouchistan 15
Punjab 232
Khyber Pakhtunkhwa 39
AZK, FATA and Gilgit 10
Total (as of June 30, 2017) 439
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Source: Company Website
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HASCOL PETROLEUM Pattern of Shareholding
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Categories of Shareholders Percentage
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Directors and their spouse (s) and minor children
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MUMTAZ HASAN KHAN 28.77
NAZIA MALIK 0.93
FAROOQ RAHMATULLAH KHAN 0.23
SALEEM BUTT 0.22
LIAQUAT ALI 2.2
NAJMUS SAQUIB HAMEED 0.04
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Associated Companies, undertakings and related parties
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MARSHAL GAS (PVT) LIMITED 7.31
FOSSIL ENERGY (PRIVATE) LIMITED 10.45
Executives 0.06
Public Sector Companies and Corporations 0.29
Banks, development finance institutions,
non-banking finance companies, insurance
companies, takaful, modarabas and pension funds 5.18
Mutual Funds 0.94
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General Public
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Local 14.51
Foreign 0.77
Foreign Companies 26.66
OTHERS 1.44
Total 100
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Source: Company accounts
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HASCOL PETROLEUM
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Rs (mn) 1QCY17 1QCY16 YoY
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Net sales 34,808 20,321 71%
Other revenue 86 32 173%
Net revenue 34,894 20,352 71%
Cost of sales 33,466 19,590 71%
Gross profit 1,428 762 87%
Selling and Dist. 540 358 51%
Administrative exp 149 121 23%
Other operating income 67 53 26%
Operating profit 806 336 140%
Finance cost 114 103 11%
Profit for the period 377 202 86%
EPS-basic and diluted 3.12 1.68 86%
Gross margin 4.09% 3.75%
Operating margin 2.31% 1.65%
Net margin 1.08% 0.99%
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Source: Company accounts
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