Middles East crisis has impacted market but the most important aspect of market "Corporate Profitability" is still there. Once the issues get settled down in Middle East, market will show its strength again.
PSO, which occupies the largest share of "Oil Marketing Sector" has posted its result. Profit is PKR 7.13 billion (EPS: 41.58) as compared to PKR 5.08 billion (EPS: 29.64) over the corresponding period last year, which translates into an improvement of 40% however, this includes a one time reversal of turnover tax which GoP reduced from 1% to 0.5%, the impact of this reversal is around PKR 23.46/share which means if we deduct this reversal then EPS becomes PKR 18.12. But the result is exactly as per expectations and this is what counts. The company also announced an interim dividend of PKR 5 as well. Full year EPS is expected to be PKR 71 with accumulated dividend of PKR 10.
The good news is despite the healthy results the stock of PSO is sliding downwards because of overall market correction as discussed above. The relevant data is as follows:
Current Price = 268
Target Price = 340-350
P/E = 3.77 (if you include one time tax reversal then P/E = 5.6)
Dividend Yield = 3.73%
Total Expected Return = 27% + 3.7% = 31%
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