PIBTL Holds FY22 Analyst Briefing Session

Staff Report

KARACHI: Pakistan International Bulk Terminal Limited (PIBTL PA) held an analyst briefing session yesterday to discuss its financial/operational performance for FY22 and its future outlook. The key takeaways of the briefing are as follows:

Impact:

PIBTL has been set up for handling and delivering coal to power, cement, and other coal-based plants by utilizing the rail, road, and sea networks with a built capacity of handling up to 12mn tons of coal and 4mn ton of cement and clinker per year, which can altogether be further enhanced up to 20mn tons/annum.

PIBTL loss clocked in at Rs991mn (LPS of Rs0.56) in FY22 compared to a profit of Rs1.9bn in FY21 (EPS of Rs1.04). Management attributes the decline in the company’s profitability to the following:

1. Lower volumes handled by the company.
2. Exchange loss on translation of US$-denominated debt.
3. Higher finance costs due to elevated interest rates.

PIBTL revenue has decreased by 3% YoY in FY22. Management attributes this to an 18% YoY reduction in cargo handling.

PIBTL’s overall volume handling declined to 8.2mn tons in FY22, decreasing by 18% YoY against 10mn tons in FY21. Moreover, PIBTL’s cargo handling decreased/increased by 21.4/5.6% YoY/QoQ in 1QFY23 to 2.1mn tons compared to 2.8mn tons in 1QFY22.

The volumetric decline is due to the following:

1. Lower imports by the public and private sector given higher international coal prices.
2. The slowdown of growth in the manufacturing sector amid economic consolidation.
3. Greater reliance on Afghan/domestic coal by cement players.

PIBTL capacity utilization clocked at 69% in FY22, decreasing by 15% YoY. Furthermore, PIBTL capacity utilization decreased by 20ppt YoY to 73% in 1QFY23 compared to 93% in 1QFY22.

To highlight, PIBTL booked an exchange loss of Rs1.6bn in FY22 against Rs479mn in FY21. This is mainly due to the record rupee depreciation. Likewise, the company also booked Rs775mn of exchange loss in 1QFY23.

Management also disclosed that the Power sector is the largest client of PIBTL, contributing 44% in overall volumes handled in FY22. In addition, cement/traders/textile/chemical has accounted for 37/10/4/3% of volumes handled during FY22.

PIBTL’s finance cost inclined by 14% YoY in FY22. Management attributes this increase in finance cost to higher interest rates and rupee depreciation.

PIBTL management said they have no major expansion plan in the near future and expect YoY flat volumes handling in FY23.

Furthermore, management is focusing on strategies to bring more efficiencies in cargo handling operations and on volume consolidation.

Outlook:

The company is not under our formal coverage. However, we expect the company to remain beneficiary of (1) overall economic recovery, (2) improved liquidity, and (3) higher utilization levels due to an increase in the usage of imported coal as international prices came down. Furthermore, we expect PIBTL to witness growth in volume handling during FY23 due to increased coal imports by Lucky Electric Power Company.

However, the company remains exposed to inherent risks of:

1. Resumption of coal handling by KPT, which is currently suspended on Supreme Court directives.
2. The increased reliance of local industry on imported Afghan coal.
3. Rupee depreciation.