Pakistan OIL & GAS Marketing companies

Hi-Tech Lubricants Limited

Lubricant business to flourish
27-Aug-2024
REP - 300

Best Securities House:

Best Investment Bank: Best Equity House: Best Equity Advisor:
2023
Muhammad Abrar | Muhammad Amad, CFA Best Investment Bank:
2022 2021

D: +92 21 38280264
UAN: +92 21 111 245 111 Ext: 255 Best Brokerage House: 2023
E: [email protected] | Corporate Finance House: 2023
Best Economic Research House: 2023 Top 25 Companies Excellence Award
[email protected] Best Equity Sales Person (Runner up): (2019, 2018 & 2017) Leading Brokerage House Best Money Market Broker
2023
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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Lubricant business to flourish HTL PA

We initiate coverage on Hi-Tech Lubricants Limited (HTL), one of the fastest Recommendation Buy
growing lubricants and petroleum products companies in Pakistan, with a ‘Buy’ Target Price (Jun-25) 62.9
call and Jun’25 target price of PKR 62.9/share, offering a potential total return of Last Closing 38.3
62%. Our optimistic outlook is supported by i) Strategic Alliance with SK Enmove, Upside (%) 64.1
resulting in reduced custom duties for blending business, boosting gross Shares (mn) 139.2
margins, ii) expanding petroleum business with new fuel outlets to drive growth, Free float (%) 25.0
iii) unlocking new investment horizon amid export and iv) Introduction of polymer Market Cap. (PKR mn) 5,335.7
business. We project the company to generate a 5-year forward earnings CAGR Market Cap. (USD mn) 19.2
of 105%. Hence, we recommend a strong ‘BUY’ on the scrip. Currently the stock Price Performance
is trading at an attractive forward P/E (x) for FY25F / FY26F of 3.7 / 2.6, offering a 3M 6M 12M
dividend yield of 14%/ 20%.
Return (%) 2.0 63.7 54.7
Strategic Alliance with SK Enmove Avg. Volume (000) 2,576 2,001 1,370
Hi-Tech Lubricants Limited (HTL) has recently signed a Memorandum of Understanding ADTV (mn) - PKR 95 69 44
(MOU) with its supplier, SK Enmove Co. Ltd., for the supply of specific additives, ADTV (000) - USD 341 248 159
ingredients, and formulas for blending and packaging of international-grade lubricant High Price - PKR 41.8 41.8 41.8
products. This strategic partnership will enable HTL to blend these products locally,
Low Price - PKR 28.9 22.8 21.7
resulting in significant cost reductions due to lower import duties and taxes. About 18-
Source: PSX, AHL Research
19% of duty is imposed on the import of fully blended and packaged lubricant products,
Shareholding Pattern
whereas custom duty on local blending is 12%. This reduction in import duties is
Others
expected to substantially boost gross margins. Additionally, with more competitive
4%
pricing, the company's market share is projected to increase from 6% to 30% over the Associated
Cos
next three years. 6%

Unlocking new investment horizon amid export

Individuals
The partnership with SK Enmove Co. Ltd. opens significant export opportunities for Hi- 19%
Tech Lubricants Limited (HTL). SK Enmove’s extensive network, with production hubs
in Europe and Asia and joint ventures with global partners, would allow HTL to tap into
Directors,
a supply chain that serves 50 regions worldwide. This strategic alignment enhances CEO &
HTL's potential to expand its market presence beyond Pakistan and capitalize on others …

international demand for high-quality lubricants.

Source: Company Financials, AHL Research
Expanding petroleum business with new fuel outlets
HTL KSE100
Hi-Tech Lubricants Limited (HTL), since 2020, has been actively expanding its footprint 180%
in the oil sector, now operating 60 fuel stations, with plans to increase this number to
150 by FY26. This strategic expansion positions HTL to effectively capitalize on the 160%
growing demand for petroleum products, further strengthening the company’s bottom
140%
line.
120%
Introduction of polymer business
HTL has diversified into manufacturing, producing bottles, caps, and polymer products. 100%
In FY23 the capacity utilization for bottles, caps and injection moulding parts were
recorded at 64%, 51%, and 58%, respectively. Addition of this segment is expected to 80%
Dec-23
Sep-23
Oct-23

Nov-23

Aug-24
Aug-23

Apr-24
Mar-24
Feb-24

Jul-24
May-24
Jan-24

Jun-24

elevate the profitability of the company.

Source: Bloomberg AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Exhibit: Valuation Snapshot

FY24e FY25e FY26e FY27e FY28e
EPS PKR 0.89 10.58 15.31 23.14 25.85
D/Y % - 13.6% 19.6% 29.7% 33.1%
P/E x nm 3.51 2.43 1.61 1.44
Source (s): Company Financials, AHL Research

Valuation
We have valued HTL using DCF-based valuation whereby our Jun’25 target price is
set at PKR 64.3/share, which translates into an upside potential of 65% from last
closing of PKR 38.3/share. Our valuation parameters include 3-yr adjusted beta of
1.5x, risk free rate of 15.0% and a risk premium of 6.0%, which gives a cost of equity
of 24.0%. Currently the stock is trading at FY25 and FY26 P/E of 3.7 and 2.6,
respectively. Hence, we recommend ‘BUY’ on the stock.

Exhibit: Valuation Snapshot

PKR mn FY25e FY26e FY27e FY28e FY29e
EBIT after tax 1,948 2,346 3,126 3,535 4,554
Add: Depreciation 349 409 471 536 603
Capital Expenditure (649) (676) (704) (734) (765)
▲ in Working Capital (631) (758) (1,097) (1,631) (1,813)
Free Cash Flow to Equity 1,018 1,321 1,795 1,705 2,579
Discounted Factor 1.00 0.84 0.70 0.58 0.48
Discounted Cash Flows 1,018 1,105 1,255 986 1,226
PV of Future Cash Flows 5,590
PV of Terminal Value 6,181
Net Debt 2,824
Equity Value 8,947
Outstanding shares (mn) 139
Target price per share 64.3
Source (s): Company Financials, AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

About the company

Hi-Tech Lubricants Limited (HTL) is a prominent name in the lubricants industry, with a strong
presence in the Pakistani market for over 26 years. Known for its flagship ZIC products, HTL
has established an extensive distribution network, with products available at around 20,000
retail outlets and wash stations. This is supported by a dedicated sales and technical team of
174 employees and over 300 distribution vans ensuring door-to-door delivery to customers.

HTL operates a state-of-the-art blending plant through its wholly owned subsidiary, Hi-Tech
Blending (Private) Limited (HTBL). This facility is designed to produce lubricants that meet
international quality standards, complete with a comprehensive bottle processing unit and
advanced automated filling lines.

In 2017, the Company entered the retail service industry with HTL Express Centers, offering
a one-stop vehicle maintenance solution. In 2020-2021, the Company shifted its strategy to a
franchise model. Currently, franchises have been established in four major cities of Pakistan:
Lahore, Gujranwala, Rawalpindi, and Karachi.

In 2020, the company entered into the sale and marketing of petroleum products in Punjab
under the brand name HTL Fuel Stations.
Further diversifying its portfolio, HTL has ventured into the polymer segment through HTBL.
This initiative includes the installation of cutting-edge machinery for the production of polymer
products for external customers.

Shareholding pattern
HTL boasts a shareholder base of 6,068 individuals, collectively holding 139.204mn
outstanding shares. The largest stake of 70.54% belongs to Directors, CEOs, their spouses,
and minor children. The general public follows with a significant ownership of 20.04% of the
shares. Associated companies, Modarabas & Mutual Funds, and others hold smaller portions,
with 5.9%, 1.0%, and 2.6% of HTL shares respectively

Figure: Shareholding pattern (as of FY23)

Others
4%

Associated Cos
6%

Individuals
19%

Directors, CEO &

others
71%

Source (s): Company Financials, AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Strategic Alliance with SK Enmove

HTL has recently signed a Memorandum of Understanding (MoU) with its supplier, SK Enmove
Co. Ltd, to acquire specific additives, ingredients, and formulas for blending and packaging
high-quality, international-grade synthetic lubricants, rather than importing pre-blended
products. Utilizing its state-of-the-art blending facility operated by its wholly owned subsidiary,
Hi-Tech Blending Limited, HTL will convert mineral oil into finished blended products.

This strategic partnership is expected to significantly reduce costs by lowering customs duties
and taxes, as opposed to importing fully blended and packaged lubricants. Currently, a duty
of approximately 18-19% is levied on such imports, but this could be reduced to 12% if
agreement with SK Enmove Co. Ltd materializes. Consequently, HTL margins are anticipated
to rise substantial, leading to a surge in profitability.

If successfully implemented, this development could propel the company’s market share from
6% to 30% within three years, driven by enhanced pricing flexibility due to reduced customs
duties. It is also worth noting that the total lubricant market size in Pakistan is approximately
400,000 tons, according to our channel checks.

Exhibit: Historical sales of lubricant Exhibit: Lubricant market dominated by SHEL, PSO & TPPL

MT (000) Historical sales Growth

180,000 40%

160,000
30% 14.8%
140,000

120,000 20% 36.8%

100,000
10% 23.2%
80,000

60,000 0%

40,000
-10% 25.2%
20,000

- -20%
2020

2021

2022

2023

SHEL PSO TPPL others

Source (s):OCAC, AHL Research Source (s): OCAC, AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Margins to sky-rocket amid import of mineral oil

We expect, due to the reduction in duties, the gross margins are expected to sky rocket,
reaching 17.4% in FY25 and 18.6% in FY26. No major cash outflow is anticipated for the local
blending of lubricants by the company, as during FY23 the company's capacity utilization stood
at 5.8% for blending and 6.7% for filing. With the new agreement with SK Enmove, HTL
anticipates a significant increase in production activity, with its capacity utilization reaching
80%.

Exhibit: Net sales and gross profit margnis

(PKR mn) Net Sales Gross margins (RHS)
64,000 22%

56,000
20%
48,000
17%
40,000

32,000 15%

24,000
12%
16,000
10%
8,000

- 7%
FY24a
FY23a

FY25f

FY26f

FY27f

FY28f

FY29f

Source (s): Company Financials, AHL Research

Mid-tier segment having a lion’s share in lubricant market

The lubricant market can be divided into three key segments i) Mineral/Classical oil ii) Premium
segment (fully synthetic) and iii) mid-tier segment (Semi-synthetic). Mineral oil, a conventional
option derived from refining crude oil, is known for its cost-effectiveness. In contrast, synthetic
oil is chemically engineered to meet specific vehicle requirements. Due to its high cost, this
segment captures only a small share of the overall lubricants market and is primarily dominated
by HTL and SHEL. Semi-synthetic oils, a blend of mineral and synthetic oils, offer a balance
of both and account for approximately ~60% of the total lubricant market share. It is imperative
to note that, in contrast to conventional oil, synthetic oil provides greater engine protection and
clearner engine due to its higher viscosity level. However, the conventional oil is two to three
times cheaper then fully synthetic oil.

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Exhibit: Comparision of synthetic & conventional oil

Extreme Fuel
Specifications Composition Longevity Protection Cost
temperature efficiency

Synthethic Uniform structure Good performance Higher resistance Enchance High High

Conventional oil Contains impurities Poor performance Less resistance Adequate Less Low

Source: AHL Research

Hi-Tech Lubricants Limited portfolio composition

Currently, HTL has a preimum brand mostly focused on passenger cars motor oil
(PCMO), diesel engine oil (DEO) and motorcycle oil (MCO).

Key Products offered by HTL

▪ Gasoline Engine Oils (GEO): ZIC Synthetic Oil, based on Very High Viscosity
Index (VHVI) technology, offers superior engine protection and fuel efficiency.
Products include ZIC Top, X9, X7, X5, X3, and X1, suitable for vehicles running
on petrol, LPG, and CNG.
▪ Motorcycle Oils (MCO): The range includes fully synthetic ZIC M9 and M7, high-
quality semi-synthetic M5, and classic M3 oil blended with refined base oil and
additives. M1 is a multi-viscosity oil designed for three-wheelers.
▪ Diesel Engine Oils (DEO): For heavy-duty engines, ZIC offers X7000 and X5000
synthetic oils, X3000 mineral oil, and X1000 blended at HTBL.

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Key Brands & Products

Variant
GASOLINE ENGINE OILS (GEO)

X9-0W-40 (Fully Synthetic) X5-20W-50 (Synthetic) X7-5W-20 (Fully Synthetic)

MOTOR CYCLE OILS (MCO)

M3-20W-50 M5-20W-40 M9-10W-40

DIESEL ENGINE OILS (DEO)

X1000-50 (CF/SF) (Economy) X3000-15W-40 (CF-4/SG) (Classic) X5000-15W-40 (CH-4) (Synthetic)

X7000-10W-40 (CI-4) Zic X7000 10W-40

Source: AHL Research, PakWheels

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Local blending and surge in fuel stations set to boost lubricant market share

The mid-tier segment in Pakistan holds the largest share in the lubricant market, accounting
for approximately 60%. Honda Motor Company, a Japanese multinational conglomerate,
dominates the premium motorcycle oil market with a 90% share, offering a retail price of
around PKR 670 for a 0.7/liter bottle of CD70 bike oil. In comparison, HTL's price for the same
specification was PKR 1,000. However, following a recent shift to local blending, resulting in
the company to import raw material instead of imported finished product, HTL was able to
successfully reduced its price to PKR 650, making it more competitive. This strategic move is
expected to boost HTL's market share by leveraging a competitive pricing strategy.
Additionally, HTL's plan to expand its OMC segment will serve a dual purpose: increasing its
presence in the OMC market and providing mid-tier lubricant consumers with direct access to
lubricants, ultimately driving profitability for the company.

Exhibit: Revnue contribution from OMC and lubricant segment

Exhibit: Expected rise in lubricant sales
(FY25f)

(PKR mn) forecasted sales Growth

20,000 30%
18,000 25%
16,000
20% 33%
14,000
12,000 15%

10,000 10%
8,000 5% 67%
6,000
0%
4,000
2,000 -5%

- -10%
FY24e

FY25f

FY26f

FY27f

FY28f

OMC Lubricant

Source (s): AHL Research Source (s): AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Unlocking new investment horizon amid export

In addition to domestic growth, HTL is exploring opportunities in the export market. SK Enmove
Co. has established production hubs in Europe and Asia and has formed joint ventures with
global partners, enabling it to supply to 50 regions worldwide. Furthermore SK Enmove's ZIC
products captures a global premium base oil (Group III/III+ base oil) market share of over 40%.
Group III base oil has a viscosity index of 120 or above, whereas Group III+ base oil is
composed of a viscosity index of 130 or above. HTL aims to meet regional demand from SK
Enmove Co.’s international customers by exporting lubricant products, thereby expanding its
clientele across regional countries.
ZIC brand products export to the Afghanistan
In 2021, the Company strategically expanded its market presence internationally by entering
into a Non-Exclusive Distribution Agreement with M/S Osman Ghani Limited, a company
based in Afghanistan. This agreement facilitates the export of locally blended ZIC brand
products to the Afghan market. This has resulted the company to tap expand its customer
base, leading to higher sales volumes and revenue growth.

Exhibit: Afghanistan petroleum imports country wise

Country Import (USD mn) Market share

United Arab Emirates 48.1 46.2%

Uzbekistan 44.4 42.7%

Pakistan 7.6 7.3%

Spain 0.9 0.6%

Kyrgyzstan 0.7 0.7%

Othes 1.9 2.51%

Source: Central statistics organization of Afghanistan, AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Expanding petroleum business with new fuel outlets to drive growth Exhibit: Number of fuel stations as at FY23
City Name Number of HTL Fuel stations
Hi-Tech Lubricants Limited (HTL) is a key player in the procurement and distribution of
Lahore 3
lubricants and petroleum products. The company successfully manages the marketing and
sale of petroleum products through its network of HTL Fuel Stations, which are operated by Multan 3

dealers primarily in the Punjab Province. Currently, as per the management, there are a total Lalian 1

of 60 fuel stations across Punjab and KPK, which are expected to rise to 80 fuel stations by Faisalabad 2

the end of 2024 on the back of formal approval from the Oil and Gas Regulatory Authority Toba Tek Singh 1

(OGRA). Furthermore, the company is all set to increase its presense in Sindh, as the company Jaranwala 1

anticipates to receive Shikarpur depot license which is a pre-requisite for operations of fuel Hasilpur 1

stations. Additionally, the company expects to achieve a total of 150 fuel stations, as the Jhang 2
company has already signed 150 leases with the relevant dealers for 20 years. Gujranwala 3
Arifwala 1
Exhibit: Fuel stations projections Wazirabad 1
Total fuel stations Growth YoY (RHS) Lalamusa 1
160 150 125% Okara 3
140 Chakwal 1
100%
120 Bahawalpur 1
100 75% Rahim Yar Khan 1
80
80 Dera Ghazi Khan 1
60 51 50%
Rawalpindi 1
38
40 23 27 Islamabad 1
25%
20 Swat 3
0 0% Lower Dir 1
FY21a

FY22a

FY23a

FY24a

FY25e

FY26e

Malakand 1
Di Khan 2
Source: Compnay Financials, AHL Research Bannu 1
Mansehra 1
HTL’s white oil sales during FY24 witnessed a jump of 71% YoY to arrive at 0.45mn tons. The Total 38
company’s market share witnessed a massive jump of 86% to 0.29% in FY24 compared to Source: Company Accounts, AHL Research

0.16% in SPLY. We expect the sales of white oil to increase by 15% YoY in FY25, amid a
potential reduction in petroleum prices due to a downward trend in international oil prices, and
a revival of economy , moreover, we also expect the HTL to increase its market share due to
expansion plan of fuel station to 80, hence HTL will capture market share of white oil segment.

Exhibit: Historical volmetric sales of HSD & MS

tons HSD MS
50,000

40,000

30,000 30,422

14,782
20,000
18,514
15,370
10,000
14,562 14,240
6,619 7,505
1,540
1,280
-
FY20

FY21

FY22

FY23

FY24

Source: OCAC, AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Impressive distribution network

HTL’s extensive distribution network covers 136 locations across Pakistan, strategically
divided into South (29), North (49), and Central regions (58), with the majority of revenue
generated in Punjab province. With over two decades of experience, HTL continues to be a
dominant force in Pakistan’s lubricant market.

Exhibit: Distribution network across Pakistan

South, 29

Central, 58

North, 49

Source (s): Company Financials, AHL Research

Diversified its revenue stream

HTL has expanded its operations into the plastic packaging sector through its subsidiary, Hi-
Tech Blending (Pvt.) Ltd. (HTBL), which is equipped with state-of-the-art technology. In 2023,
the company commenced commercial operations within the polymer segment, strategically
broadening its customer base by supplying polymer products. During the reporting period, HTL
sold 2.78mn bottles, 3.02 million caps and 0.114mn injection moulding parts, achieving
capacity utilization rates of 64%, 51%, and 58%, respectively. This initiative is anticipated to
diversify the company's risk profile and contribute positively to its profitability.

Exhibit: Polymer business capacity utilization

(000)
Capacity Production Utilization
7,000 70%

6,000 60%

5,000 50%

4,000 40%

3,000 30%

2,000 20%

1,000 10%

- 0%
Bottles Caps Injection moulding parts

Source: Company’s financial’s, AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Massive surge in profitabilty

To recall, HTL generated a loss of PKR 318mn (LPS: PKR 2.3) during 9MFY24 compared to
loss of PKR 179mn (LPS: PKR 1.29) during SPLY. The company is expected to post earnings
of PKR 442 mn (EPS: PKR 3.2) in 4QFY24, bringing the total earnings for FY24 to PKR 124mn
(EPS: PKR 0.89).

In FY25, we anticipate the company to achieve a significant earnings increase of PKR 1,473
mn (EPS: PKR 10.58). This surge is expected to be driven by improved margins resulting from
the import of raw materials rather than blended finished products, benefiting from reduced
customs duties and thereby enhancing profitability. Additionally, the expansion of fuel stations
is likely to sustain elevated profit levels.

Rising Auto Sales and completion of CPEC to drive Pakistan’s lubricant market

The lubricant market in Pakistan is segmented by product type and end-user industry. Product
types include engine oil, transmission and hydraulic fluid, general industrial oil, gear oils,
grease, and others such as process oil and turbine oil. In terms of end-user industries, the
market serves sectors like power generation, automotive and transportation, heavy equipment,
and food and beverage, along with construction and other industries.

It is pertinent to note that, in Pakistan’s lubricant market is highly concentrated into two
industries, namely automotive and textile industry. As auto sales, which holds the largest share
in Pakistan, are expected to increase, driven by lower auto financing costs and easing inflation,
the demand for lubricants is anticipated to grow. Moreover greases, heat transfer fluids, gear
oils, engine oils, transmission and hydraulic fluids, and anti-static oils are all essential
lubricants used in the textile sector, each engineered to withstand various operational loads.
With global interest rates beginning to decline, the demand for textile products is expected to
rise, leading to an increase in lubricant consumption within the industry, Additionally, the
China-Pakistan Economic Corridor (CPEC), a 3,000-kilometer route encompassing road,
railway, energy, and other infrastructure projects, is likely to boost lubricant consumption due
to increased road transport. Hi-Tech Lubricants is well-positioned to capitalize on this
opportunity, leveraging its excess production capacity and strategic locations to meet the rising
demand. Furthermore, installation of IPPs under the CPEC umbrella would elevate the
requirement of lubricants.

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Exhibit: Relationship of lubricant with auto sales Exhibit: Lubricant categories

(tons) (tons) 2,729
Lubricant sold Auto sales (RHS) Units 8,561
784
2,022
180,000 300,000

160,000
250,000
140,000

120,000 200,000
30,041
100,000
150,000
80,000

60,000 100,000
94,776
40,000
50,000
20,000
Automotive oil Industrial oil Marline oil
- -
Auto oil Greaes Others
FY20

FY21

FY22

FY23

Source (s): OCAC, AHL Research Source (s): OCAC, AHL Research

Key risk(s)
• Failure to establish a presence in the mid-tier lubricant market could significantly
impact HTL's profitability
• Insufficient development of storage facilities and outlets across the country could
diminish profitability in the OMC segment and constrain lubricant sales.
• Higher than expected devaluation of PKR against the greenback could deteriorate
the profitability for the company.
• Higher use of electric vehicles could result in lower demand for lubricants.
• Changes in international markets, trade relations, or economic downturns could
influence demand for the company's products and services.

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Exhibit: Key Financial Highlights

PKR mn FY24e FY25f FY26f FY27f FY28f Unit FY24e FY25f FY26f FY27f FY28f
Income Statement Items (PKR mn) Per Share
Revenue 24,142 31,388 35,847 42,149 48,522 Earnings PKR 0.9 10.6 15.3 23.1 25.9
Cost of Sales 20,502 25,930 29,182 33,541 39,079 Dividend PKR - 5 8 12 13
Gross Profit 3,042 5,458 6,665 8,608 9,442 Book Value PKR 44.3 49.6 57.3 68.8 81.8
Distribution Cost 1,237 1,336 1,443 1,559 1,683 Valuation
Administrative Expenses 968 1,046 1,130 1,220 1,318 P/E x nm 3.5 2.4 1.6 1.4
Other Expenses 51 55 59 64 69 Dividend Yield % - 14.2 20.6 31.1 34.7
Other Income 513 103 68 57 62 P/B (x) x 0.8 0.8 0.6 0.5 0.5
Finance Cost 730 710 607 541 535 Payout Ratio % - 50.0 50.0 50.0 50.0
PBT 569 2,416 3,494 5,281 5,899 RoE % 2.0 22.5 28.7 36.7 34.3
PAT 124 1,473 2,132 3,222 3,599 RoA % 1.0 10.6 13.3 17.9 17.5
Balance Sheet Items (PKR mn) D/E x 1.05 1.20 1.11 1.00 0.93
Paid-up Capital 1,392 1,392 1,392 1,392 1,392 Turnover & Activity
Total Equity 6,168 6,904 7,970 9,581 11,380 Asset Turnover x 1.9 2.3 2.2 2.3 2.4
Current Liabilities 5,137 6,995 7,626 8,435 9,430 Current Ratio x 1.1 1.1 1.2 1.3 1.5
Non-Current Liabilities 1,349 1,287 1,234 1,189 1,151 Margins
Current Assets 5,586 7,819 9,196 11,336 13,895 Gross Margin % 12.6 17.4 18.6 20.4 19.5
Non-Current Assets 7,068 7,368 7,635 7,869 8,067 EBITDA Margin % - 11.1 12.6 14.9 14.4
Total Assets 12,654 15,187 16,831 19,205 21,962 Net Profit Margin % 0.5 4.7 5.9 7.6 7.4
Source (s): Company Financials, AHL Research

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Hi-Tech Lubricants Limited
Oil & Gas Marketing Conapmies
August 27, 2024
Detailed Report

Disclaimer
Analyst Certification: The research analyst(s) is (are) principally responsible for preparation of this report. The views expressed in this research report accurately reflect the
personal views of the analyst(s) about the subject security (ies) or sector (or economy), and no part of the compensation of the research analyst(s) was, is, or will be directly or
indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. In addition, we currently do not have any interest (financial or otherwise)
in the subject security (ies). Furthermore, compensation of the Analyst(s) is not determined nor based on any other service(s) that AHL is offering. Analyst(s) are not subject to the
supervision or control of any employee of AHL’s non-research departments, and no personal engaged in providing non-research services have any influence or control over the
compensatory evaluation of the Analyst(s).
Equity Research Ratings
Arif Habib Limited (AHL) uses three rating categories, depending upon return form current market price, with Target period as Jun’25 for Target Price. In addition, return excludes
all type of taxes. For more details kindly refer the following table;

Rating Description
BUY Upside* of subject security(ies) is more than +15% from last closing of market price(s)
Upside* of subject security(ies) is between -15% and +15% from last closing of market
HOLD
price(s)
SELL Upside* of subject security(ies) is less than -15% from last closing of market price(s)

* Upside for Power Generation Companies is upside plus dividend yield.

Equity Valuation Methodology

AHL Research uses the following valuation technique(s) to arrive at the period end target prices;
➢ Discounted Cash Flow (DCF)
➢ Dividend Discounted Model (DDM)
➢ Sum of the Parts (SoTP)
➢ Justified Price to Book (JPTB)
➢ Reserved Base Valuation (RBV)

Risks
The following risks may potentially impact our valuations of subject security (ies);
➢ Market risk
➢ Interest Rate Risk
➢ Exchange Rate (Currency) Risk

This document has been prepared by Research analysts at Arif Habib Limited (AHL). This document does not constitute an offer or solicitation for the purchase or sale of any
security. This publication is intended only for distribution to the clients of the Company who are assumed to be reasonably sophisticated investors that understand the risks involved
in investing in equity securities. The information contained herein is based upon publicly available data and sources believed to be reliable. While every care was taken to ensure
accuracy and objectivity, AHL does not represent that it is accurate or complete and it should not be relied on as such. In particular, the report takes no account of the investment
objectives, financial situation and particular needs of investors. The information given in this document is as of the date of this report and there can be no assurance that future
results or events will be consistent with this information. This information is subject to change without any prior notice. AHL reserves the right to make modifications and alterations
to this statement as may be required from time to time. However, AHL is under no obligation to update or keep the information current. AHL is committed to providing independent
and transparent recommendation to its client and would be happy to provide any information in response to specific client queries. Past performance is not necessarily a guide to
future performance. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for any investment decision. The user
assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent
evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his or her own advisors to
determine the merits and risks of such investment. AHL or any of its affiliates shall not be in any way responsible for any loss or damage that may be arise to any person from any
inadvertent error in the information contained in this report.
© 2023 Arif Habib Limited: Corporate Member of the Pakistan Stock Exchanges. No part of this publication may be copied, reproduced, stored or disseminated in any form or by
any means without the prior written consent of Arif Habib Limited.

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