⚡ Flash Summary

Sui Northern Gas Pipelines Limited (SNGPL) reported its financial results for the first quarter ended September 30, 2024. The company’s revenue inclusive of tariff adjustment increased slightly compared to the same period last year, but gross profit decreased. The company reported a profit for the period, though it was lower than the profit reported in the corresponding period of the previous year. The announcement also included details on earnings per share.

📌 Key Takeaways

• ⚠️ Revenue from contracts with customers (gas sales) increased to PKR 391.57 billion from PKR 318.47 billion year-over-year.
• 📉 Revenue inclusive of tariff adjustment increased to PKR 361.51 billion from PKR 355.99 billion year-over-year.
• ⚠️ Cost of gas sales increased to PKR 354.39 billion from PKR 347.08 billion year-over-year.
• 📉 Gross profit decreased to PKR 7.12 billion from PKR 8.90 billion year-over-year.
• ⬆️ Other income increased to PKR 12.34 billion from PKR 10.59 billion year-over-year.
• ⚠️ Operating profit increased to PKR 15.74 billion from PKR 15.26 billion year-over-year.
• ⬆️ Finance costs increased to PKR 9.78 billion from PKR 9.18 billion year-over-year.
• ⚠️ Profit before income tax decreased to PKR 5.97 billion from PKR 5.46 billion year-over-year.
• ⚠️ Profit for the period decreased to PKR 3.28 billion from PKR 3.71 billion year-over-year.
• 📉 Basic and diluted earnings per share decreased to PKR 5.18 from PKR 5.84 year-over-year.
• 💰 The company did not declare any cash dividend, bonus shares, or right shares.
• 🏦 Long-term financing from financial institutions (secured) decreased to PKR 20.37 billion from PKR 22.99 billion since June 30, 2024.
• 💵 Cash and bank balances decreased to PKR 20.09 billion from PKR 17.74 billion since June 30, 2024.

🎯 Investment Thesis

Based on the Q1 2024 results, a HOLD recommendation is appropriate for SNGPL. The company faces profitability challenges due to rising gas costs and finance expenses. The slight revenue increase is not enough to offset these challenges, resulting in lower EPS. Further monitoring of SNGPL’s ability to manage costs, improve efficiency, and navigate regulatory changes is needed before considering a BUY recommendation. Given the limited data, a specific price target cannot be confidently established at this time. The time horizon for this recommendation is medium-term (6-12 months).