Ampol Limited (ALD)
BUY

Easy first base

 27 Apr 2023
Sector: Energy

1Q23 TRADING UPDATE

Need To Know

  • Group RCOP EBIT $345.4m, +82% on pcp
  • Fuel sales volumes strong across the group
  • Refinery repair on schedule

Ampol’s group EBIT was close to a record and reflects the strength across its non-Lytton F&I business despite a wobbly result reported in the third quarter last year. As fuel sales volumes keep increasing and the higher margin non-fuel business keeps improving, ALD could comfortably beat current consensus forecasts for the year.

Fuels and Infrastructure (ex-Lytton) benefitted from the higher fuel sales volumes. Retail volumes increased 5.4% on a like-for-like comparison to last year while wholesale volumes jumped 19%. Australian fuel sales increased 14% on pcp boosted by generally more economic activity, including aviation – a similar story to what Viva Energy reported this week. Total sales volumes were up 50% on 1Q22.

Convenience Retail continues to respond to the Ampol brand with modest improvement in shop sales.

The Lytton Refinery repair is on schedule for a May return to production. There was no update to the estimated $30-50m EBIT impact.

Refining margins were US$14.90/bbl for the quarter, up from US$10.59/bbl in 1Q22. Even with the comfort of the Government protection to refinery earnings on the downside, it seems unlikely this will be needed. Consensus refining margins are still below US$12/bbl for 2H23.

Investment View

ALD continues to look cheap on a sub-12x PE ratio and a ~6% fully franked dividend yield. The Board has room for further capital management initiatives with approximately $750m returnable over FY23f on a conservative balance sheet.

The implicit strength in non-Lytton F&I earnings should provide confidence that full year group earnings will comfortably beat the timid consensus forecasts.

Figure 1: GROUP RCOP EBIT

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Stock Overview

Share Price

Company Overview

Ampol Australia is an independent transport fuel company. It owns and operates the Lytton Refinery in Queensland. ALD has acquired Z Energy in New Zealand for NZ$2bn. In total, ALD will have approximately 2,400 sites supplying ~23.5 BL of fuel pa.

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