A fully owned subsidiary of

Petroleum sector is considered the most

sensitive sector of economy. Macro-
economic indicators are highly sensitive to
the price of petroleum products. The
three oil distribution companies namely
Padma Oil Company Limited, Jamuna Oil
Company Limited, and Meghna Petroleum

A Comparative Analysis on Limited procure, store, and market

petroleum products all over the country
Fuel-Oil Distribution from their main installations. The price
and margin of the petroleum products is
Companies of Bangladesh fixed by the Government on the basis of
quantity sold. According to BPC, the
demand of petroleum products in our
country stood at 5.26 million MT in year
2015-16.

EBL Securities Ltd. (EBLSL) is one of the fastest growing full service brokerage companies in Bangladesh and a fully
owned subsidiary of Eastern Bank Limited. EBLSL is also one of the top ten leading stock brokerage houses of the
country. EBL Securities Limited is the TREC holder of both exchanges of the country; DSE (TREC#026) and CSE
(TREC#021)
 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Oil & Petroleum Industry Dynamics

The oil and petroleum industry of Bangladesh is mostly under the control of Government. With a view to providing
petroleum products to all consumers at equal price irrespective of transportation cost, the government established
Bangladesh Petroleum Corporation (BPC) by a presidential Ordinance in 1976. Presently BPC is composed of three oil
marketing companies, two blending plants, one LPG bottling company and a refinery as its subsidiaries.

The production, processing, refining and marketing of petroleum

Bangladesh Petroleum Corporation (BPC) products in the country is vested exclusively with the
Government of Bangladesh as per the Bangladesh Petroleum Act,
1974. The Petroleum Act also specifies the authorities,
Marketing Petroleum Lubricant LP Gas functions and responsibilities of BPC including establishment of
Companies Refinary Blending Bottling plants & infrastructure, building necessary facilities and their
POCL
extensions for marketing of petroleum products; monitoring
Eastern Eastern LP Gas Ltd. coordination of the subsidiary companies of BPC and any other
Refinery Ltd Lubricants
JOCL Blending Ltd functions and responsibilities as directed by the government.
Intense competition has been prevailing in the lubricant market
MPL
Standard due to the presence of more than 50 market players along with
Asiatic Oil Co. the brands marketed by three state owned oil marketing
Ltd
companies. Marketing of petroleum products is responsibility of
three oil marketing companies namely Padma Oil Company
Source: Bangladesh Petroleum Corporation (BPC)
Limited (POCL), Jamuna Oil Company Limited (JOCL), and Meghna
Petroleum Limited (MPL).

At present only about 30% of the market demand of the lubricant products are served by the three oil marketing
companies. It is notable here that BPC has no price control on the lubricants products. The pricing structure is settled by
the Government at ex-refinery level, depots level, and also at consumer level in different distances. The commission
at each level of suppliers namely oil marketing companies, agents, dealers are also fixed by the Government. As per
the requirement of the state, the Government of Bangladesh imports crude oil and refined oil, then the crude oil is
refined through Eastern Refinery Ltd. (ERL), another subsidiary of BPC and distributed through its oil marketing
companies. There exists some special arrangement among the three oil marketing companies with a few direct customers.
Among the direct customer groups, there are some Government organizations (PDB, Bangladesh Railway, and Defense
Service), autonomous body (Chittagong Port Authority, BIWTA, Bangladesh Ordnance Factory) and nationalized industries
etc. The oil marketing companies are engaged in marketing of oil products and the income it earns is termed as ‘Margin’
that is fixed by and determined by the Government. Sales net of cost of goods sold (net earnings from petroleum products)
is recorded in the financial statements as a form of net revenue rather than gross revenue.

Price fall in world market decreased the oil price in Bangladesh

The oil industry, with its history of booms and busts,

has been in its deepest downturn in year 2015. Many Crude Oil Price in USD Per Barrel
of the companies have gone through bankruptcy as 130.0 106.5 107.3 106.0
98.3 97.7
price of the oil came down more than 52.5% of 2013- 110.0
79.5
71.8
14’s price within a short period of time. As 90.0 64.9 62.1
70.0 54.0 51.7 54.5 50.4
Bangladesh is a net oil import country, decrease in
50.0
oil price helped to control inflation and made a 30.0
positive impact on overall economy. The price of the 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

oil was USD 107.3 per barrel in 2012 which came Source: InvestmentMine
down to USD 97.7 per barrel in 2014. In 2015 it
sharply fell down to USD 51.7 per barrel because of Percentage of Sector-wise Fuel Consumption
46.5%
over supply (one of the reasons) in world market by
25.7%
most of the oil producing countries. Bangladesh has 17.5%
4.3% 6.1%
taken this low price benefit and prices of diesel and
kerosene have been brought down by BDT 3.0 a liter, Industry Domestic & Others Agriculture Power Transport
octane and petrol by BDT 10.0 and furnace oil by BDT
Source: Bangladesh Petroleum Corporation (BPC) based on 2015-16 data
18.0.

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 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Transportation, power and agriculture sectors drive the fuel demand in Bangladesh
Petroleum is considered as the energy driver of an economy. It has great influence directly or indirectly in all economic
sectors. It is the fundamental input of production and constitutes a significant portion of production cost in every sector of
the economy. Fuel is used intensively in every sector including irrigation of agriculture sector, transportation sector and
power production. The use of petroleum products in the country is varied. Petrol and diesel are the major fuels for
transportation. Diesel is also widely used by farmers for irrigation, while kerosene is mostly used for lighting, especially by
rural households without electricity. As a result an increase in petroleum price directly influence the inflation and GDP of
the economy. Transportation, power and agriculture sectors are the main fuel-demand driver of Bangladesh. According to
BPC, the demand of petroleum products in our country stood at 5.26 million MT in year 2015-16. The consumption of
petroleum products in Bangladesh decreased by 1.23% in 2015-16 compared to the previous year. High Speed Diesel (HSD)
and Furnace Oil (FOSH) drive 82.2% of total petroleum demand. A whole import dependency of fuel requires huge foreign
exchanges that have a major impact on country’s macro economy.

SALE OF PETROLEUM PRODUCTS DURING LAST FIVE YEARS (Quantity in million MT)
% of July’16 – % of
PRODUCT 2012-13 2013-14 2014-15 2015-16
Total Dec’16 Total
JET A-1 (Jet Fuel) 318,423 323,327 338,829 347,323 6.6% 190,065 6.8%
HOBC (High Octane Blending Component) 110,850 117,452 126,114 147,557 2.8% 86,381 3.1%
MS (Motor Spirit) 169,710 178,674 166,823 137,360 2.6% 95,673 3.4%
SKO (Superior Kerosene Oil) 314,876 289,871 263,029 213,685 4.1% 87,472 3.1%
HSD (High Speed Diesel) 2,964,604 3,242,554 3,396,061 3,606,404 68.6% 1,842,824 66.0%
LDO (Light Diesel Oil) 1,092 1,064 2,666 2,758 0.1% 538 0.0%
JBO (Jute Batching Oil) 25,841 23,538 18,729 16,859 0.3% 7,904 0.3%
FOHS (Furnace Oil) 1,076,423 1,202,505 906,771 711,889 13.5% 443,118 15.9%
LUBE (Lube Oil) 15,908 17,823 17,869 17,445 0.3% 9,396 0.3%
SBP (Special Boiling Point) 800 368 234 207 0.0% 89 0.0%
MTT (Mineral Turpentine) 9,875 7,821 7,038 2,037 0.0% 2,147 0.1%
LPG (Liquid Petroleum Gas) 19,671 17,529 17,424 16,050 0.3% 8,027 0.3%
BITUMEN 58,396 62,440 59,836 36,446 0.7% 18,056 0.6%
TOTAL 5,086,469 5,484,966 5,321,423 5,256,020 100.0% 2,791,690 100.0%
INC / (DEC) -127,177 398,497 -163,543 -65,403 - - -
% of INC/DEC from Previous Year -2.44 7.83 -2.98 -1.23 - - -
Source: Bangladesh Petroleum Corporation (BPC)

Government supplies almost all of the petroleum demand through import from various countries to support the energy
need in transportation, power generation, agricultural activities and others. Import of petroleum has been increased in
year 2016. Improvement in generation has a big impact on diesel consumption by the irrigation pump. Now a huge number
of pumps operate with electricity which earlier used to consume diesel. In upcoming year we can expect increase in
petroleum import as government has issued permission for setting up power plants where most of them will be furnace oil
based.

IMPORTED PETROLEUM PRODUCTS (Quantity in MT)

YEAR/PRODUCT GAS OIL JET A-1 MOGAS SKO HSFO LUBE ALC MURBAN Total
2009 2,243,758 256,576 98,064 141,103 - 7,248 612,913 425,614 3,785,276
2010 2,186,597 339,998 90,197 107,758 - 4,745 620,238 654,832 4,004,365
2011 2,955,798 318,202 95,824 153,598 665,260 4,980 627,535 583,960 5,405,157
2012 2,618,685 339,699 95,824 20,380 670,899 4,852 682,039 583,494 5,015,872
2013 2,608,746 310,884 97,641 28,376 1,005,104 - 592,054 591,091 5,233,896
2014 2,903,928 334,079 35,596 - 869,124 - 592,865 714,746 5,450,338
2015 2,974,749 338,315 33,842 - 414,451 - 697,667 395,006 4,854,030
2016 3,130,052 354,430 150,601 - 481,673 - 728,307 579,848 5,424,911
2017 (Up to June) 1,854,103 178,124 16,463 - 176,802 - 289,736 380,839 670,575
Source: Bangladesh Petroleum Corporation (BPC)

The major portion of imported petroleum is crude oil. Crude oil is refined through Eastern Refinery Ltd. (ERL), another
subsidiary of BPC and distributed through its oil marketing companies namely Meghna Petroleum Ltd. (MPL), Padma Oil
Company Ltd. (POCL) and Jamuna Oil Company Ltd. (JOCL). Right now total industry storage capacity is 1,189,172 MT. ERL
has the highest storage capacity (42.5% of total) as crude oil is refined through it followed by three distribution companies
POCL (20.6%), MPL (18.1%) and JOCL (15.5%).

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 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

PRODUCT-WISE STORAGE CAPACITY (Quantity in MT)

Product/Location ERL POCL JOCL MPL LPGL SAOCL ELBL TOTAL
CRUDE OIL 225,800 225,800
LPGL 1,200 540 1,740
NAPTHA 27,300 27,300
MS 4,500 6,865 8,077 7,510 26,952
HOBC 23,800 5,215 6,199 6,236 41,450
SKO 6,000 14,616 14,087 20,065 54,768
HSD 75,750 138,761 129,984 163,090 10,845 518,430
FOHS 63,900 19,934 23,009 16,957 9,260 133,060
JET A-1 1,500 56,785 56,251
SBP 191 191
MTT 1,831 1,831
LDO 110 110
JBO 1,600 2,729 3,001 1,855 9,185
LUBE OIL 8,990 9,464 18,454
BITUMEN 3,500 3,500
RCO (ABP+VB) 44,000 44,000
CONDENSET 19,000 19,000
OTHERS 7,150 7,150
Total 505,000 247,033 184,357 215,713 540 29,095 9,464 1,191,206
As % of BPC’s Total 42.4% 20.7% 15.5% 18.1% 0.0% 2.4% 0.8% 100.0%
Source:
storageBangladesh
capacity Petroleum Corporation (BPC)

Capacity

In terms of Capacity, Padma Oil Company Limited holds the highest position with a total capacity of 247,033 MT whereas
Meghna Petroleum Limited has a total capacity of 215,713 MT and Jamuna Oil Company Limited has the highest capacity
of 184,357 MT. The three oil marketing companies have the highest capacity for High Speed Diesel since demand for High
Speed Diesel is the highest among all the petroleum products.

JOCL: Sotrage Capacity - 184,357 MT POCL: Storage Capacity - 247,033 MT MPL: Storage Capacity - 215,713 MT

2.10%
3.4%
2.80%
1.6% 2.10% 2.9%
4.4% 6.00% 10.1%
3.5%
7.6%
8.10%
7.9%
13.0% 56.60%
22.30%
70.0% 75.6%

HSD Furnace Oil SKO Motor Spirit HOBC JBO HSD JET A-1 Furnace Oil SKO Motor Spirit HOBC Others HSD Furnace Oil Motor Spirit HOBC Others

3 EBL Securities Limited Research

 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Company Overview

Jamuna Oil Company Limited (JAMUNAOIL)

Jamuna Oil Company Limited (JOCL) is a petroleum Particular Facts & Figures
marketing company which has been serving the nation for
Current Price 205.1
last five decades. It was established in 1964 with the name Paid-up Capital (BDT mn) 1,104.2
‘Pakistan National Oil Limited’ and after independence the Total No. of Securities (mn) 110.4
company was renamed as Bangladesh National Oils Limited. Market Capitalization (BDT mn) 22,648.1
Jamuna Oil Company Ltd. was formed as a private limited 3 month Average Daily Turnover (BDT mn) 26.4
company on 12 March, 1975 under the Companies Act 52 Week Price Range (BDT) 178.90 – 227.00
1913 with the objective to take over all the properties, DSE Code JAMUNAOIL
rights, interests and assets of Bangladesh National Oils Listing year 2007
Limited (ex-Pakistan National Oils Limited). The ownership Category A
of the company was vested with Bangladesh Petroleum Source: DSE & EBLSL Research
Corporation (BPC) through the agreement entered into between the company and BPC. JOCL also acquired all the
properties, rights, interests and assets of Indo-Burmah Petroleum Company Limited. The company was converted into
public limited company on 25 June 2007.

Due to decrease in sales of some of the petroleum products around the country, the company has posed negative growth
in terms of profitability in the FY 2015-16. Furthermore, fall of margin earned because of direct product purchase by BPC
from Government and private fractionation plants has caused its net earnings to fall.

Financial performance
2016-17
2012-13 2013-14 2014-15 2015-16
(9m,An)
Financial Information (BDT mn):
Net Earnings 1,404 1,471 1,733 872 1,160
EBITDA 1,166 1,174 1,240 419 430
Operating Profit 1,116 1,112 1,167 330 331
Other Income 1,798 2,121 1,990 2,408 2,891
Profit After Tax 1,990 2,317 2,253 1,959 2,301
Assets 20,724 31,359 41,452 53,855 65,683
Equity 6,575 11,898 15,100 15,839 17,546
Retained Earnings 1,200 1,254 2,503 1,858 2,480
Cash & Cash Eqiv. 3,809 10,205 15,227 23,643 26,025
Enterprise Value 13,297 11,147 6,482 -3,568 -3,156
Dividend (C/B)% 90/10 90/10 100/0 100/0 N/A
Margin:
EBITDA 83.10% 79.80% 71.60% 48.00% 37.10%
Operating Profit 79.50% 75.60% 67.30% 37.90% 28.50%
Pretax Profit 187.90% 208.80% 173.10% 298.30% 263.80%
Net Profit 141.80% 157.50% 130.00% 224.70% 198.40%
Growth (YoY):
Net Earnings -32.40% 4.80% 17.80% -49.70% 33.00%
Operating Profit -26.90% -0.40% 4.90% -71.70% 0.10%
Pre Tax Profit -4.30% 16.50% -2.40% -13.30% 17.60%
Net Profit -4.30% 16.40% -2.70% -13.10% 17.50%
Profitability:
ROA 9.73% 8.90% 6.19% 4.11% 3.85%
ROE 34.70% 25.10% 16.70% 12.70% 13.80%
Non-operating Income/PBT 68.20% 69.10% 66.40% 92.60% 94.50%
Valuation:
Price/Earnings 8.59 9.22 9.64 10.25 9.94
Price/BV 2.6 1.63 1.19 1.27 1.3
EPS (BDT) 21.81 23.08 20.4 17.74 20.84
DPS (BDT) 9.00 9.00 10.00 10.00 N/A
NAV per share (BDT) 72.05 130.38 165.46 143.44 158.9
Z-Score 1.14 0.97 0.77 0.32 0.28
**Net earnings from petroleum products has been treated as revenue for oil marketing companies as per their accounting procedure
Source: Website of Jamuna Oil Company Limited and EBLSL Research

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 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Padma Oil Company Limited (PADMAOIL)

Padma Oil Company Limited (POCL) is the biggest and also Particular Facts & Figures
the oldest petroleum marketing company among the Current Price 244.1
subsidiaries of BPC. Prior to the partition of the sub- Paid-up Capital (BDT mn) 982.3
continent in 1947, mainly two oil marketing companies Total No. of Securities (mn) 98.2
namely Burmah Oil Company (BOC) and Burmah Shell Oil Market Capitalization (BDT mn) 23,978.6
Storage and Distribution Company (BSOC) were operating 3 month Average Daily Turnover (BDT mn) 13.0
52 Week Price Range (BDT) 175.70 – 269.00
Petroleum Business in the area what now comprise
DSE Code PADMAOIL
Bangladesh. In the year 1985, BOC transferred its entire Listing year 1976
property in Bangladesh in favor of BPC, which is renamed as Category A
‘Padma Oil Company Limited’ in the year 1988. Source: DSE & EBLSL Research

The company has posted negative growth in terms of profitability in the FY 2015-16 due to fall in non-operating income
which has been caused by gradual reduction of bank interest rate. The total sales of petroleum has also experienced a
nosedive. Private power plants have received license to import furnace oil which has caused threat for local oil marketing
companies as reflected in the financial performance during FY 2015-16. Furthermore, due to marketing of gas field products
through BPC from January 2015, a significant profit on the gas field products has been decreased.

Financial performance
2016-17
2012-13 2013-14 2014-15 2015-16
(9m,An)
Financial Information (BDT mn):
Gross Profit 1,503 1,838 1,810 1,869 1,956
EBITDA 780 804 1,256 1,284 1,138
Operating Profit 714 706 1,130 1,137 987
Non-Operating Income 2,400 2,286 1,587 1,498 1,669
Profit After Tax 2,067 2,127 1,928 1,874 1,872
Assets 79,185 90,223 96,215 113,639 132,043
Equity 5,967 7,291 8,237 9,128 9,549
Retained Earnings 5,074 6,309 7,254 8,146 8,567
Cash & Cash Eqiv. 20,641 25,602 16,732 18,313 20,682
Enterprise Value -3,022 3,117 7,266 122 4,456
Dividend (C/B)% 90/10 100/0 100/0 100/0 N/A
Margin:
EBITDA 51.90% 43.80% 69.40% 68.70% 58.20%
Operating Profit 47.50% 38.40% 62.40% 60.80% 50.50%
Pretax Profit 196.70% 154.60% 142.60% 133.90% 129.00%
Net Profit 137.50% 115.70% 106.50% 100.20% 95.70%
Growth (YoY):
Net Earnings -1.50% 22.30% -1.60% 3.30% 4.60%
Operating Profit -3.20% -1.10% 60.10% 0.60% -13.20%
Pre Tax Profit 36.20% -3.90% -9.20% -3.00% 0.80%
Net Profit 41.30% 2.90% -9.40% -2.80% -0.10%
Profitability:
ROA 2.71% 2.51% 2.07% 1.79% 1.52%
ROE 40.10% 32.10% 24.80% 21.60% 20.00%
Non-Operating Income/PBT 81.10% 80.40% 61.50% 59.80% 66.10%
Valuation:
Price/Earnings 11.51 14.85 12.45 9.74 13.43
Price/BV 3.99 4.33 2.91 2 2.63
EPS (BDT) 23.15 21.66 19.63 19.07 19.05
DPS (BDT) 9.00 10.00 10.00 10.00 N/A
NAV per share (BDT) 66.82 74.22 83.85 92.92 97.21
Z-Score 0.36 0.43 0.41 0.33 0.33
**Net earnings from petroleum products has been treated as revenue for oil marketing companies as per their accounting procedure
Source: Website of Jamuna Oil Company Limited and EBLSL Research

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 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Meghna Petroleum Limited (MPETROLEUM)

Meghna Petroleum Limited (MPL) is one of the largest Particular Facts & Figures
companies operating its oil business in Bangladesh. It’s Current Price 199.0
working alone with other seven operating companies under Paid-up Capital (BDT mn) 1,082.2
Bangladesh Petroleum Corporation to mitigate huge gap Total No. of Securities (mn) 108.2
Market Capitalization (BDT mn) 21,535.0
between demand and supply. It was setup on 27 December,
3 month Average Daily Turnover (BDT mn) 13.9
1977 as a private limited company with the objective of 52 Week Price Range (BDT) 167.4 – 211.2
taking over the physical possession of all the fixed assets of DSE Code MPETROLEUM
the erstwhile Meghna Petroleum Marketing Company Listing year 2007
Limited (MPMCL) and Padma Petroleum Limited (PPL) as on Category A
March 31, 1978. Source: Source: DSE & EBLSL Research
Meghna Petroleum Marketing Company Limited was created after acquiring the operation of the then ESSO Eastern Inc.
(1962) of America in 1975 and Padma Petroleum Limited was created in 1972 after acquiring the operation of the then
Dawood Petroleum Limited (1968). In the year 1976 the assets and liability of the company were transferred and handed
over to BPC. Since then Meghna Petroleum Limited has been functioning as a subsidiary of BPC and serving as one of the
petroleum distribution company of BPC.

Meghna Petroleum Limited has also faced a critical year during FY 2015-16 as the business has incurred increasing operating
expense due to Modified New Pay Scale 2015 and increasing gratuity provision. The company has also faced challenges
similar to other oil marketing companies which have caused their profit to decline.

Financial Performance
2016-17
2012-13 2013-14 2014-15 2015-16
(9m,An)
Financial Information (BDT mn):
Net Earnings 1,320 1,488 1,635 1,396 1,840
EBITDA 762 702 901 548 677
Operating Profit 693 625 821 438 576
Non-Operating Income 1,938 2,628 2,007 2,204 2,346
Profit After Tax 1,864 2,360 2,035 1,850 2,064
Assets 43,885 47,918 58,883 70,433 79,027
Equity 5,177 6,963 8,063 8,777 9,189
Retained Earnings 1,902 2,374 2,076 1,890 1,602
Enterprise Value 853 8,107 3,902 -5,684 -4,386
Cash & Cash Eqiv. 13,769 16,118 17,200 24,330 24,027
Dividend (C/B)% 70/20 95/10 105/0 105/0 N/A
Margin:
EBITDA 57.70% 47.20% 55.10% 39.20% 36.80%
Operating Profit 52.50% 42.00% 50.20% 31.30% 31.30%
Pretax Profit 189.30% 207.60% 164.30% 179.70% 150.80%
Net Profit 141.20% 158.60% 124.40% 132.50% 112.20%
Growth (YoY):
Net Earnings 10.50% 12.70% 9.90% -14.60% 31.80%
Operating Profit 6.06% -9.82% 31.51% -46.73% 31.59%
Pre Tax Profit 35.70% 23.62% -13.03% -6.59% 10.60%
Net Profit 33.93% 26.57% -13.77% -9.07% 11.56%
Profitability:
ROA 4.60% 5.10% 3.80% 2.90% 2.80%
ROE 42.50% 38.90% 27.10% 22.00% 23.00%
Non-operating Income /PBT 77.60% 85.00% 74.70% 87.80% 84.50%
Valuation:
Price/Earnings 7.84 10.26 10.37 10.08 9.51
Price/BV 2.82 3.48 2.62 2.12 2.14
EPS (BDT) 22.74 23.99 18.8 17.1 19.08
DPS (BDT) 7 9.5 10.5 10.5 N/A
NAV per share (BDT) 63.15 70.78 74.51 81.11 84.91
Z-Score 0.5 0.65 0.52 0.39 0.37
**Net earnings from petroleum products has been treated as revenue for oil marketing companies as per their accounting procedure
Source: Website of Jamuna Oil Company Limited and EBLSL Research

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 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Eastern Lubricants Blenders Limited (EASTRNLUB)

The company is engaged in blending lubricant oils and Particular Facts & Figures
greases on behalf of three oil marketing companies- Jamuna Current Price 881.7
Oil Company Limited, Meghna Petroleum Limited and Paid-up Capital (BDT mn) 9.94
Padma Oil Company Limited. The company is registered as a Total No. of Securities (mn) 1.0
public limited company under company act of 1913. It was Market Capitalization (BDT mn) 876.4
incorporated on 22 October 1963. It has plant in Chittagong. 3 month Average Daily Turnover (mn) 0.7
It works as a subsidiary of Bangladesh Petroleum 52 Week Price Range (BDT) 870.0 – 1,479.0
Corporation (BPC). The company blend lubricant only on the DSE Code EASTRNLUB
Listing year 1976
basis of requisition received from the POCL, JOCL and MPL.
Category A
It has been trying to diversify its business. It has started
importing Lube base oil for marketing and marketing “YUASA BRAND” batteries. It has 9,464 MT Lube Oil storage capacity
and 24,000 MT Lube Oil blending capacity. Its capacity utilization depends on the requisition received from the POCL, JOCL
and MPL.

The company’s huge growth in FY 2015-16 has been attributed to its base oil business which started running in the FY 2015-
16. Although the company incurred operating loss in lubricants blending business, the company earned an operating profit
of BDT 62.5 million in base oil business in the FY 2015-16. The business of base oil has played a significant role in achieving
healthy growth in terms of profitability in the FY 2015-16.

Financial Performance
2016-17
2012-13 2013-14 2014-15 2015-16
(9m,An)
Financial Information (BDT mn):
Revenue 9 9 6 215 193
Gross Profit -4 -4 -5 54 22
EBITDA -5 -5 -6 53 20
Operating Profit -5 -5 -6 53 20
Non-Operating Income 13 13 11 5 3
Profit After Tax 5 5 4 41 16
Assets 155 148 315 190 296
Equity 71 73 73 111 114
Retained Earnings - 62 63 101 104
Cash & Cash Eqiv. 72- 69 128 41 166
Enterprise Value 331 334 275 323 993
Dividend (C/B)% 30/0 30/0 30/0 100/0 N/A
Margin:
EBITDA -55.70% -50.50% -94.90% 24.70% 10.60%
Operating Profit -61.40% -55.40% -101.90% 24.50% 10.40%
Pretax Profit 79.30% 63.90% 80.20% 25.70% 11.30%
Net Profit 60.60% 48.90% 61.20% 19.30% 8.50%
Growth (YoY):
Revenue -22.90% 6.90% -34.40% 3407.00% -10.20%
Gross Profit 292.90% -15.60% 31.20% 1219.20% -59.90%
Operating Profit 160.90% -3.50% 20.60% 945.20% -62.10%
Pre Tax Profit -15.80% -13.80% -17.60% 1022.10% -60.40%
Net Profit -15.60% -13.70% -17.90% 1002.60% -60.20%
Profitability:
ROA 3.23% 3.02% 1.62% 16.44% 6.78%
ROE 7.80% 6.40% 5.20% 45.00% 14.60%
Non-Operating Income/PBT 182.80% 217.70% 232.20% 9.60% 13.70%
Valuation:
Price/Earnings 76.02 88.09 107.2 8.77 70.33
Price/BV 5.71 5.55 5.52 3.26 10.14
EPS (BDT) 5.33 4.60 3.78 41.70 16.57
DPS (BDT) 3.00 3.00 3.00 10.00 N/A
NAV per share (BDT) 71.01 73.03 73.41 112.08 114.9
Z-Score 3.31 4.26 1.49 6.24 5.66
Source: Website of Padma Oil Company Ltd. and EBLSL Research

7 EBL Securities Limited Research

 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Comparative Analysis of Fuel-Oil Distribution Companies of Bangladesh

Business Model and Products

The three oil distribution companies collect refined petroleum through pipe lines in in their main installations from Eastern
Refinery Limited while some refined products are imported directly. Then these oil distribution companies disseminate
petroleum products from their respective Main Installation (MI) facilities to all over the country through their distribution
networks. The price of the products is fixed by the Government. The margin is also fixed by the Government on the basis
of quantity sold.

Jamuna Oil Company Limited (JAMUNAOIL):

The prime activities of the company include the procurement, storage and marketing of petroleum products, non-
petroleum products and lubricants products. The petroleum products include High Octane Blending Component (HOBC),
Motor Spirit (MS), Superior Kerosene Oil (SKO), High Speed Diesel (HSD), Light Diesel Oil (LDO), Furnace Oil (FO),
and Jute Batching Oil (JBO). Non- petroleum products include Liquefied Petroleum Gas (LPG) and Bitumen. JOCL is the
distributor of lubricants of Mobil Jamuna Lubricants Limited. Lubricants products of JOCL include MOBIL DELVAC
SPECIAL 20W50, MOBIL DELVAC 1340, MOBIL HD 40, MOBIL SUPER XHP 20W50 and MOBIL ATF 220. Aside from those JOCL
also markets bitumen, LP gas, and lubricants and grease.

Padma Oil Company Limited (PADMAOIL):

The major activities of POCL are procurement, storage and marketing of Petroleum products, Lubricants and Greases,
Bitumen, LPG. In addition, the company is engaged with production and marketing of Agro Chemicals Products. The
petroleum products include Liquefied Petroleum Gas (LPG), Special Boiling Point Solvent (SBP), Naphtha, Motor Gasoline
(regular & premium), Mineral Turpentine (MTT), Superior Kerosene Oil (SKO), Aviation Fuel (JET-A1), Low Sulphur High
Sheep Diesel (LSHSD), High Speed Diesel (HSD), Jute batching Oil (JBO), Light Diesel Oil (LDO), High Sulphur Furnace Oil
(HSFO) and Bitumen (Grade 10-100). The lubricant products include Monograde Diesel Engine Oil, High Performance
Hydraulic Oil, Premium quality Industrial Gear Oil, Multigrade Gasoline Engine Oil, High performance engine Oil, High
Performance Diesel Engine Oil, Monograde Gear Oil, Extreme Pressure Automotive Gear Oil, Extreme Pressure Automotive
Gear Oil, Advance Hydraulic Transmission Fluid, Machinery Oil, Compressor Oil, Heat Treatment Oil, Metal Working Fluid,
Brake and Clutch Fluid and Spindle Oil. Aside from those POCL also market chemical based insecticide products for
agricultural use.

Meghna Petroleum Limited (MPETROLEUM):

The activities of the company comprise procurement, storage and marketing of petroleum oil and lubricant
products, bitumen and Liquefied Petroleum Gas (LPG) in Bangladesh. The petroleum products include High Octane
Blending Component (HOBC), Motor Spirit (MS), Superior Kerosene Oil (SKO), High Speed Diesel (HSD), Light Diesel Oil
(LDO), Furnace Oil (FO), and Jute Batching Oil (JBO). Non- petroleum products include Liquefied Petroleum Gas (LPG),
Battery Water, Lubricant and Bitumen.

Mode of Transportation

After procuring petroleum products, the products are distributed to different destination all over the country. Petroleum
products are distributed by three transportation modes. Due to higher capacity and cost effectiveness river is the first
choice. All three companies transport around 90% products by river.

Particulars PADMAOIL MPETROLEUM JAMUNAOIL

By River 90% 82% 88%
By Railway 8% 6% 10%
By Road 2% 12% 2%

Railway and road is used very little as their mode of transportation. Around 8% products are transported by railway
whereas rest 2% is carried through road.

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 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Distribution Network

Jamuna Oil Company Limited (JAMUNAOIL): JOCL has huge infrastructure and facilities as required by a petroleum
marketing company in order to ensure proper distribution of petroleum products throughout the country with
uninterrupted supply. The company possesses a countrywide extensive network of 16 depots in addition to its main
installation at Guptakhal in Chittagong, 560 Filling Stations, 20 Consumer Pump, 1067 Distributor Agent, 248 Packed Point
Dealers and 767 LPG Dealers as on June, 2016.

Padma Oil Company Limited (PADMAOIL): POCL has huge infrastructure and facilities as required by a petroleum
marketing company in order to ensure proper distribution of petroleum products throughout the country with
uninterrupted supply. The company has countywide extensive network with 1436 Agents, 805 Filling Stations, 370 Packed
Dealers, 892 LPG Dealers and 556 Chemical Distributors as on June, 2016.

Meghna Petroleum Limited (MPETROLEUM): In order to distribute petroleum throughout the country, MPL have 699 Nos.
Filling Station, 156 Nos. Packed point Dealer, 1140 Nos. Agent and 1253 Nos. LPG Dealers as on June, 2016. Company has
established business relationship with some direct customers, industries and power plants.

Business Expansion Plan

JAMUNA OIL COMPANY LIMITED
 BPC is planning to install an Oil
Installation at Mongla in
collaboration with subsidiaries
where JOCL has invested BDT
612.3 million for 33.3% stake.
 The company is establishing
storage tank with a capacity of
5,000 MT at the main
establishment which will cost
BDT 66.0 million and will be
completed by the end of 2018.
 To enhance the operational
capability, the company will
establish RCC Jetty in place of
Pontoon Jetty in the main
establishment.
PADMA OIL COMPANY LIMITED
 A 100,000 MT capacity expansion
project has been taken on 17 acre
land of BPC where POCL will invest
for stake of 33.3%. The estimated
cost for the project is BDT 1,792.5
million. It is estimated that the
project will be completed by 2018.
 Construction of three fuel storage
tank of 2,500 MT capacity each and
one storage tank of 6,000 KL
capacity are going on. The work will
be completed by 2017.
 Extension of Hydrant Line at the
Parking Bay of airport, Dhaka, is
going on to meet the additional
demand of refueling.
MEGHNA PETROLEUM LIMITED
 A Lube blending plant with a
capacity of 15,000 MT at a cost
of BDT 200 million is going to set
up in Chittagong.
 Company has taken step to
construct 100,000 capacity LPG
bottling plant and bottle
manufacturing plant in Khulna.
 The company has taken steps to
construct 40 storied building for
multipurpose commercial use at
Motijheel in Dhaka.

Revenue Breakdown

Jamuna Oil Company Limited (JAMUNAOIL): The net earnings of JOCL is mainly composed of major products such as
refined petroleum products and minor products such as bitumen, lubricants and grease and LPG. During FY 2015-16, 80.2%,
the bulk portion of the revenue, generated from net sales of petroleum products and 19.8% revenue came from net sales
of minor products.
Breakdown of Total Revenue Breakdown of Major Product Breakdown of Minor Product
1.2% -0.2% 3.2% 0.9%
19.8% 0.6%
5.3%
28.9%

80.2% 63.8%
95.9%
Major Product Minor Product HOBC MS SKO HSD FO JBO Bitumen Lubricants & Grease LPG

9 EBL Securities Limited Research

 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

During the period under review, it is found that major portion of total revenue came from High Speed Diesel by 51.4%,
followed by Furnace Oil by 23.3%, Lubricants and Grease 18.9%, Kerosene 4.3% and rest from others.

Padma Oil Company Limited (PADMAOIL): The net earnings of POCL is mainly composed of major products such as refined
petroleum products and minor products such as bitumen, lubricants and grease and LPG. During FY 2015-16, 93.0%, the
bulk portion of the revenue, generated from net sales of petroleum products and 7.0% revenue came from net sales of
minor products.
Breakdown of Total Revenue Breakdown of Major Products Breakdown of Minor Products
0.0% 0.2% 1.6% 11.5%
7.0% 11.4% 4.6% 4.0%
0.1% 0.0%
37.5%
30.4%

93.0% 14.1% 83.0%

1.8%
HOBC Jet A-1 MS SKO HSD Lubs & Greases LPG (Cylinders)
Major Products Minor Products
LDO FO MTT SBP JBO Bitumen Other Products

During the period under review, it is found that major portion of total revenue came from Jet A-1 by 34.9%, followed by
High Speed Diesel by 28.3%, Motor Spirit by 13.1%, Furnace Oil by 10.6% and rest from others. The sale of Furnace Oil
increased by 148.9% during 2015-16 compared to the previous year due to higher supply made to private power plants.
On the other hand, installation of solar home system and electricity supply made to the remote and other areas for meeting
the individual power demand caused a lower sale of karosene and use of CNG in transport sector is the reason for
decreasing of Motor Sprit sale by 51.6%.

Meghna Petroleum Limited (MPETROLEUM): The net earnings of MPL is mainly composed of major products such as
refined petroleum products and minor products such as bitumen, lubricants, Battery Water and LPG.

Breakdown of Total Revenue Breakdown of Major Products Breakdown of Minor Products

2.4% 1.3% 0.0%
4.3%
21.8% 7.9% 1.0%
31.9%
5.5%

68.1%
97.7%
58.1%
Lubricants LPG
Major Products Minor Products HOBC MS SKO HSD FO JBO
Bitumen Battery Water

During FY 2015-16, the bulk portion of the revenue, generated from net sales of petroleum products (68.1%) and 31.9%
revenue came from net sales of minor products. Major portion of total revenue came from High Speed Diesel by 39.6%,
followed by Lubricants by 31.2%, Furnace Oil by 14.9%, Motor Spirit by 5.4%, Kerosene Oil by 3.7% and rest from others.
The turnover decreased by 14.6% in year 2015-16 from 2014-15 due to lower demand of petroleum in the industry. The
sale of Furnace Oil increased by 13.9% in year 2015-16 from year 2014-15 due to higher supply of Furnace Oil required for
private power plants. MPL is serving 37.2% of total industry demands (according to the annual report 2014-15).

Eastern Lubricants Limited: From year 2015-16, company has been

2.6% 2.0%
focused on selling of imported base oil. According to 2015-16
Blending Charges
financial statements, bulk portion of revenue comes from sell of
Imported Base Oil
imported base oil (95.4%). Lubricant blending charges provides
Battery Marketing
2.6% revenue and rest 2.0% comes from battery marketing.

95.4%

10 EBL Securities Limited Research

 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Cost Structure

Jamuna Oil Company Limited (JAMUNAOIL): JOCL Cost Structure

42.4%
45. 0%

40. 0%
35.4%
Total operating expenses covers 57.1% of total expenses of the 35. 0%

30. 0%

company. During FY 2015-16 total operating expenses increased 25. 0%

20. 0%

9.9% 7.5%
15. 0%

4.9%
by 6.0%.This increase in operating expenses mainly resulted 10. 0%

5.0 %

from the increase in depreciation expense by 19.6%. Major

0.0 %

A,S&D Tax FE Cont. to Dep.

portion of cost goes to Administrative, Selling, and Distribution WPPF
expense which is 42.4% of total cost.

Padma Oil Company Limited (PADMAOIL):

60. 0% 52.2% POCL Cost Structure
50. 0%

Total operating expenses covers 66.2% of total expenses of the 40. 0%

28.0%
30. 0%

company. As petroleum distribution is its major function, 20. 0%

7.4% 6.5% 5.9%
10. 0%

administrative, selling and distribution costs bear the major 0.0 %

portion of total cost in year 2015-16. It has a large amount of A,S&D Tax FE Dep. Cont. to
depreciation expense mainly for high fixed assets. Interest on WPPF
WPPF & WF and bank charges contribute to the financial
charges.

Meghna Petroleum Limited (MPETROLEUM): MPL Cost Structure

45. 0% 38.3% 37.7%
40. 0%

35. 0%

Total operating expenses cover 54.8% of total expenses of the 30. 0%

25. 0%

company. During FY 2015-16 total administrative, selling and 20. 0%

15. 0%
10.2% 7.5% 6.3%
distribution cost increased by 23.8% as employee salaries, 10. 0%

5.0 %

which is 44.6% of total administrative cost, increased by 31.5%.

0.0 %

Other expenses are quite stable relative to previous year. A,S&D Tax FE Cont. to WPPF Dep.

Private Initiatives’ Access to Import Fuel Oil

In 2011, the Government opened import of fuel oil for electricity generation under the private initiative. Such decision and
its implementation has curbed down the potential revenue earning avenue for BPC. There are currently 19 power plants
who use furnace oil for electricity generation with a combined capacity of 2,792 MW. A total of 14 electricity producers
arrange their own fuels taking advantage of nine percent service charges as well as tax waiver facilities on around 1.3
million tonnes of furnace oil. On August 7, 2017 the permission to import fuel oil without tax by 5 power plants was signed
by the Power Division. Such decision will further adversely impact BPC since the demand for fuel oil will be met by import
and BPC will miss out the opportunity of utilizing the existing demand. The importer will be able to procure fuel oil at BDT
22 per litre against the BPC’s price of BDT 42 per litre.

Investment Positives
JAMUNA OIL COMPANY LIMITED
 After completion of capacity,
expansion projects such as Oil
Installation and Construction of
Building will boost company’s
revenue and profitability.
 JAMUNAOIL is consistent in
paying dividend and constantly
paid 100% dividend (stock and
cash) in last four years.
PADMA OIL COMPANY LIMITED
 Many development projects
including expansion of depot,
construction and erection of
storage tanks and physical
infrastructure expansion program
are going on. Completion of these
projects will enhance company’s
capacity.
 PADMAOIL is consistent in paying
dividend and constantly paid
100% dividend (cash) in last three
years.
MEGHNA PETROLEUM LIMITED
 Company is improving its core
operating performance. As per
2016-17 quarter three (9 Months)
disclosure, Net Operating Cash
Flow Per Share (NOCFPS)
increased to BDT 24.32 against
BDT 16.39 in 2015-16 quarter
three (9 Months).
 MPL has consistently announced
105.0% cash dividend in recent
two years.

11 EBL Securities Limited Research

A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh
Investment Negatives
JAMUNA OIL COMPANY LIMITED
 Sales volume of most of the
products (except Octane and
Diesel) are in decreasing trend
over the last years. Sales of Petrol
fell due to conversion of vehicle
into CNG. If this trend continues,
the profitability will be negatively
affected.
 Almost 94.5% profit before tax
(PBT) comes from non-operating
income like, interest on FDR,
profit on disposal of fixed assets,
Interest on bank deposit,
dividend income etc. Decreasing
trend in interest rate will
negatively affect the earnings.
12 EBL Securities Limited Research
PADMA OIL COMPANY LIMITED
 Earnings from non-operating
income added considerably to
the company’s profitability. In
2015-16, non-operating Income
(interest come from SND & FDR)
was BDT 1.5bn whereas Gross
Earnings on Petroleum Products
was BDT 1.9 bn. Hence,
profitability of the company will
be hampered as interest rate is
decreasing day by day.
 Almost 66.1% profit before tax
(PBT) comes from non-operating
income like, profit on disposal of
fixed assets, Interest on bank
deposit, dividend income,
interest on house building loan
etc. Decreasing trend in interest
rate will negatively affect the
earnings.
 Company didn’t perform well in
its core business function as
according to its 2016-17 quarter
three (Q3) statements, its net
operating cash flow is negative.
Date: October 5, 2017
MEGHNA PETROLEUM LIMITED
 Almost 84.5% profit before tax
(PBT) comes from non-operating
income like, interest on FDR,
profit on disposal of fixed assets,
Interest on bank deposit,
dividend income, interest on
house building loan etc.
Decreasing trend in interest rate
will negatively affect the
earnings.
 On year 2015-16, companies
operating profit decreased
significantly by 46.7% from year
2014-15 due to lower sales
volume. As a result, its earnings
decreased.
 A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

Comparative Snapshot of Fuel-Oil Distribution Companies as on 2016-17 (9 Months Annualized) Statements

POCL MPL JOCL Comparative Investment Insights

Financial Information (BDT mn):
Gross Profit 1,956 1,840 1,160  POCL has the highest asset base among the three.
Operating Profit 987 576 331
Based on latest 2016-17 quarter three disclosure
Non-Operating Income 1,669 2,346 2,891
Profit After Tax 1,872 2,064 2,301 JOCL outperformed POCL and MPL on basis of net
Assets 132,043 79,027 65,683 profit margin and growth. On the other hand, MPL
Equity 9,549 9,189 17,546 has the highest ROE among the three followed by
Retained Earnings 8,567 1,602 2,480 POCL and JOCL respectively.
Cash & Cash Equivalent 20,682 24,027 26,025  JOCL earned the highest ROA followed by MPL and
Margin: POCL respectively. So JOCL’s asset utilization
Operating Profit 50.5% 31.3% 28.5%
capability is the best among the three.
Pretax Profit 129.0% 150.8% 263.8%
Net Profit 95.7% 112.2% 198.4%  POCL outperformed MPL and JOCL on core
Growth (YoY): operating performance. POCL earned the highest
Gross Profit 4.6% 31.8% 33.0% operating profit followed by MPL and JOCL
Operating Profit -13.2% 31.6% 0.1% respectively.
Pre Tax Profit 0.8% 10.6% 17.6%  Currently JOCL is trading in the lowest P/E among
Net Profit -0.1% 11.6% 17.5% the three followed by POCL and MPL respectively.
Profitability:
 POCL outstripped JOCL and MPL on last twelve
ROA 1.52% 2.8% 3.9%
ROE 20.00% 23.0% 13.8% months stock market performance. POCL gave
Non-operating Income/PBT 66.10% 84.5% 94.5% 33.9% market return. On the other hand, MPL gave
Valuation Ratio: 10.0% and JOCL gave 9.2% in last twelve months.
Price/Earnings 13.43 10.50 9.94
Price/BV 2.63 2.36 1.30 Price Sensitivity analysis based on projected EPS
EPS (BDT) 19.05 19.08 20.84
NAV per share (BDT) 97.21 84.91 158.90 Projected Price
*Dividend is based on 2015-16 yearend dividend announcement Sensitivity Analysis POCL MPL JOCL
Earning Per Share (EPS) – Quarterly Basis Current Price (27-09-2017) 247.7 199.4 205.1
POCL MPL JOCL EPS (9M’ 2016-17) 14.29 14.31 15.63
7.77

Annualized EPS 19.05 19.08 20.84

6.43
6.32

6.03

Price @8 PE 152.4 152.64 166.72

5.80
5.29

5.14
5.07
5.04
4.91

4.89
4.36

Price @10 PE 190.5 190.8 208.4

4.19
3.82
3.80
3.48

3.35

3.17
3.14

3.09

3.04

Price @12 PE 228.6 228.96 250.08

Price @14 PE 266.7 267.12 291.76

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Concluding Remarks
2015-16 2016-17

Source: Financial Statements & DSE News Petroleum sector is considered the most sensitive sector
Latest 12 Months Market Performance of economy. Macro-economic indicators are highly
sensitive to the price of petroleum products. Thus oil
POCL MPL JOCL
marketing companies should give more priority on
150.00% providing services to the people. Three fuel-oil
140.00% distribution companies are contributing significantly to
130.00%
the total economy of the country by carrying out
uninterrupted supply of petroleum products in all
120.00%
remote areas of the country. Besides, these companies
110.00%
are also contributing to the agricultural based economy
100.00%
though its production and marketing of agrochemical
90.00% products. Government directly controls these three
80.00% companies marketing commission. So their performance
Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17
depends on the petroleum demands in the economy.
Source: DSE & EBLSL Research Increase in petroleum demand can boost up their market
performance in upcoming future.

13 EBL Securities Limited Research

A Comparative Analysis on Fuel-Oil Distribution Companies of Bangladesh Date: October 5, 2017

DISCLAIMER
This document has been prepared by the Research Team of EBL Securities Limited (EBLSL) for information only of its clients
residing both in Bangladesh and abroad, on the basis of the publicly available information in the market and own research.
This document has been prepared for information purpose only and does not solicit any action based on the material contained
herein and should not be taken as an offer or solicitation to buy or sell or subscribe to any security. Neither EBLSL nor any of
its directors, shareholders, member of the management or employee represents or warrants expressly or impliedly that
the information or data of the sources used in the documents are genuine, accurate, complete, authentic and correct.
However all reasonable care has been taken to ensure the accuracy of the contents of this document. EBLSL will not take any
responsibility for any decisions made by investors based on the information herein.

ANALYST DISCLAIMER
The person or persons named as the author(s) of this report hereby certify that the views expressed in the research report
accurately reflect their personal views about the subject matters discussed. No part of their compensation was, is, or will
be, directly or indirectly, related to the specific recommendations or views expressed in the research report. The views of the
author(s) do not necessarily reflect the views of the EBL Securities Limited (EBLSL) and are subject to change without any
notice. All reasonable care has been taken to ensure the accuracy of the contents of this document and the author(s) will not
take any responsibility for any decisions made by investors based on the information herein.

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