MMSPL

FEB 25, 2014

Research Equi Advise

research@mmsecurities.com.pk
Cont: 021-35317703-04
HESCOL PETROLEUM PUBLIC OFFER
Hescol Petroleum LTD is going for Public offer. HESCOL plans to
issue a total of 25 million shares, out of which 18.75 million will be
offered through book building process and the rest (6.25 million)

EPS
through an IPO. Book building is scheduled between 4-5 March
9am-5pm. The floor price is PKR 20. At floor price the company is
15 expected to raise around PKR 500,000,000.
Hescol is an Oil marketing company (OMC), with a market share of
2.40% that ranks her at sixth in industry. It has 210 retail fuel stations
10
across the country. The management has targeted to increase the mar-
ket share to 5% within next 2 years.
5
EPS
OMC Market share
0
PSO SHELL ATTOCK
CHEVRON TOTAL-PARCO HASCOL
BYCO
4% 3% 2%
5%
10%

10% 66%

Rationale for IPO:

1) CAPEX on completion of Mac hike storage facility which in-
cludes purchase of pipelines, Fuel pumps etc.
2) Setting up commission for new/under construction retail fuel
stations.
3) Finance the working capital requirements.

Valuation:
For the year ended CY13 company posted EPS of 5.97, a YOY in-
crease of 79%. Net sales grew by 93% YOY, which is driven by in-
crease in sales volume. Companies DCF based value is estimated to
be around PKR 40/ share (source HESCOL Information brief). The
floor price is set @ PKR 20. At floor price the company has per 3.3
xs. Lower than its peers PSO and shell with average 7x Per. We con-
sider it as a good investment opportunity.

M.M. Securities (Pvt.) Ltd M. M. Tower, 3 C, Khayaban-e-Ittehad, Phase II, Extension, Defence Housing Authority, P.O. Box 12414, Karachi 75500, Pakistan. Tel :

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