PPL: Sleeping giant waking up; 2nd discovery in 2 months

PPL has announced a discovery in Gambat South block (65% owned by PPL), having initial flow of 16.8mmcfd of gas and 144bpd of condensate. Our calculations suggest annualized EPS impact of PRs0.58.

Despite a 19% performance in 2-mths, we believe valuations are still attractive at 7.1x FY14E P/E given the presence of positive volume catalysts.

Update on Makori East-III drilling, exploration in Tal Kot-1 & Gambat, reserve upgrade for Nashpa, Adhi & Tal would be the triggers to watch out for.

Any progress on resolution of circular debt via direct cash injection or cash-based PPL/OGDC bond, should also keep PPL in the lime-light.

We expect PPL to announce FY13 EPS of PRs27.5 (+10% YoY) with a final cash payout of PRs7/sh, where late resolution of circular debt resolution may impact payout and near term capex plans.

Research Report

By: KASB Securities and Economics Research