According to a research report, published by the investment banking division of bank muscat, the estimated revenues of all three companies is expected to grow by ten per cent to RO996mn in 2012 compared to the previous year, while total revenues are estimated to grow to RO1.09bn in 2013. Total net profit of the sector is estimated to be around RO30.9mn in 2012 which is expected to grow by 18.4 per cent to reach RO36.6mn in 2013.
According to the report, the retail segment continues to dominate the sector, accounting for around 70 per cent of the total volumes over the last five years. “On the back of continued higher government spending towards infrastructure, favourable demographics and thrust for new job creation, we maintain our positive stance on the sector’s growth in the near term. Al Maha Petroleum remains our favourite pick amongst the three,” the report said.
It added that with improving demand and stable margins, retail contribution to bottom lines is expected to improve. “We expect retail volumes to grow by ten per cent annually over next three years. Strong imports of vehicles, creation of new jobs, continued investment in new roads and strong inflow of expatriates are to support volume growth.” Referring to the non-retail segment of the sector, which includes catering to aviation sector and supply of bulk fuel and lubricants to industries, the report said that tourism initiatives and new airport projects would help the growth in demand.
“We estimate the overall non-retail sector to grow by eight per cent over the next three years. As the sector is highly competitive, we expect low margins to continue,” the report added. On a year-to-date basis, the sector stocks rallied 16 per cent with Al Maha gaining by 35 per cent followed by Oman Oil with 20 per cent, even as Shell Oman prices remained flattish.
The report expects potential dividend payouts to improve going forward in the sector, which has maintained a healthy track record of an average dividend payout ratio of 73 per cent over the last five years.
According to bank muscat estimates, Shell Oman is expected to report a 30 per cent growth in net profit in 2013 to RO15.5mn, while Al Maha and Oman Oil are expected to post net profits of around RO11.5mn and RO9.6mn in 2013, respectively.