SNGPL’s profit climbs 12 times on strong sales growth

Besides domestic gas, company is also selling imported LNG

KARACHI: Sui Northern Gas Pipelines Limited (SNGPL) announced on Tuesday that its profit climbed 12 times to Rs2.50 billion in the quarter ended March 31, 2017 as sales grew with the arrival of imported gas and line losses fell, according to a bourse filing.

The public utility had registered a profit of Rs216.77 million in the same quarter of previous year.

Earnings per share (EPS) shot up to Rs3.94 in Jan-Mar FY17 compared to Rs0.34 in the corresponding quarter of previous year.

SNGPL’s stock price dropped 0.50%, or Rs0.82, to Rs160.52 with a volume of 1.21 million shares at the Pakistan Stock Exchange (PSX).

According to its profit and loss account, gross sales rose 54% to Rs76.70 billion from Rs49.82 billion.

Besides domestic natural gas, SNGPL also sells imported liquefied natural gas (LNG) with supplies ranging from 400 to 600 million cubic feet per day. The LNG goes to industrial and commercial consumers as well as mega power houses under the testing phase. Topline Securities said, in post-result comments, the profit growth came in the wake of higher capital expenditure and operating profits.

“SNGPL operates on return-on-asset formula, hence, its profitability is directly proportional to asset expansion and status of UFG [unaccounted-for-gas] losses,” it said.

“UFG losses came in at less than 8% [in Jan-Mar quarter] compared to over 9% during the same period last year.”

Operating profit improved 217% to Rs4.8 billion as the “company continued to undertake major capital expenditure for the completion of an LNG pipeline. We anticipate operating assets to increase 27% year-on-year to Rs128 billion, thus driving profitability.”

Earnings of the company are anticipated to stay strong going ahead on the back of construction of the second LNG pipeline and expected revision in the UFG benchmark.

“Key risks include a sharp rise in UFG losses, increase in gas prices and delay in construction of the LNG pipeline,” the brokerage house added.

In nine months ended March 31, the company recorded a profit of Rs6.10 billion (EPS Rs9.63), which was 4,660 times higher than Rs1.31 million (EPS Rs0.002) in the corresponding period of previous year.

Published in The Express Tribune, April 26^th, 2017.

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