FAIR VALUE OF APL RS. 462

"FAIR VALUE" OF "APL" RS. 462

Current Price: Rs.331.53

APL’s two major advantages are that; it is a part of a vertically integrated group and it’s less susceptibility towardsoil price fluctuations because its volumes are driven from non-energy products and furnace oil, which are deregulatedproducts. APL has been aggressively expanding storage capacity and retail network which currently stands at 200outlets. It handles approximately 28% of NRL and ARL offtake and is expected to generate approximately Rs838m inFY’08. Future plans include building of new terminal at Karachi at cost of Rs100m, new storage capacity of 2,700tons for HSD commissioned at Bulk oil terminal at Rawalpindi & sale of LSFO Attock Gen from FY10. Stock is trading at alow forward PER of 6.49x and gross margins are expected to remain in the range of 5.0% by the end of next fiscal year.At the current price level the scrip is trading at it’s 52 week low of Rs331.53/share and from this level the scrip’s TSR is33.3% (including dividend yield of 5.1%) from our target price of Rs462/share.