KazTransOil significantly improved 3Q2017 performance

13.10.2017

Operational results

Name

units

9М2016

9М2017

yoy

2Q2017

3Q2017

qoq

Volume – cons

ths tons

42 405

43 706

3%

14 661

14 782

1%

Volume – non-cons

ths tons

32 817

34 522

5%

11 562

11 790

2%

Turnover – cons

ton*кm

32 479

35 639

10%

11 712

12 541

7%

Turnover – non-cons

ton*кm

26 802

29 306

9%

9 555

10 348

8%

Source: Company data, HF estimates

On Wednesday, KazTransOil reported 9M2017 production results, showing positive dynamics of key indicators.

Separately, KazTransOil has seen an increase in transportation volumes of 2% qoq and 5% yoy. The largest volume of transported oil observed in 3Q2017 and amounted to 11,790 ths tons.

The consolidated volume of oil transportation made 43,706 ths tons, which 3% higher than similar indicator for 9M2016.

At the same time oil turnover shows a stronger increase: in 3Q2017 consolidated and separate volume of oil turnover exceeded the 2Q2017 indicator by 7% and 8%, respectively.

For 9M2017, the Company managed to increase oil turnover by 10% and 9%, respectively.

We view the operational results as positive. The actual average transportation distance was 880 km instead of the expected 850 km, as a result of which the volume of oil turnover in 3Q2017 slightly exceeded our expectations. Thus, we note a noticeable increase in freight turnover in 3Q2017 (+ 10%), in connection with which our expectations for revenue increase remain. Our 12M target price for KTO shares assumes a growth potential of current levels of 22%, and we maintain our "Buy" recommendation.

By Altynay Ibraimova for Halyk Finance.