Attock Petroleum to follow higher dividend trend

Faizan Saleem

The stock of Attock Petroleum Limited (APL) has outperformed the benchmark KSE-100 Index by 20 percent since the start of new fiscal year FY12 and appreciated by 11.3 percent attributed to strong volumetric growth and attractive dividend payout of Rs 41.5 per share for the previous fiscal year FY11.

APL has a history of announcing interim dividend along with its half yearly results. Hence, there is a possibility of a ‘dividend rally’ in January 2012 as the company is expected to pay an interim cash dividend of Rs 12-14 per share, according to the research note of Arif Habib Limited.

APL disbursed a healthy cash dividend of Rs 41.5 per share during the FY11 despite higher working capital requirement by the company, translating into a payout of massive 67.4 percent payout.

According to the note, the healthy payout trend is expected to continue in FY12 as well, with expected dividend of Rs 45 per share, translating into an attractive dividend yield of 10.9 percent.

Although, the oil segment of the company is going through liquidity constraints owing to circular debt issue, but APL has managed its receivables quite smartly. The company has also remained successful in expanding its market share through aggressive market penetration strategy in the retail fuel segment and opened 35 new stations per year on average since FY08.

Hence, the market share of the company in Motor Gasoline (MS) and High Speed Diesel (HSD) has improved to 7.2 percent and 11.1 percent respectively during the first five months of the current fiscal year (5MFY12). The company also attained strong volumetric growth of 41.2 percent and 7.2 percent in MS and HSD during FY11 and the momentum is expected to continue in the current year as well.

The major companies listed on KSE are about to announce their half yearly financial results during the month of January and February. It is expected that buyers’ interest would accelerate in selective scrips during the month of January to capitalize on the expected dividend yield.

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