Pakistan State Oil Company (PSO) is expected to record an EPS of Rs15.76 for 9MFY19, down 53.4%YoY due to high inventory and exchange losses take a toll on the profitability. Sales volume also plays a significant role in the decline, decreasing by 42%YoY on the back of FO sales posting a decline of 73%YoY followed by HSD declining by 30%YoY. Profitability for 3QFY19 is expected to improve significantly on sequential basis, after a heavy inventory loss of Rs4.9 billion in 2QFY19 resulted in a dismal EPS of Rs0.17/share, while exchange losses exacerbated the injury. Analysts expect PSO to record inventory loss of Rs3.3 billion for 3QFY19 as average decline in ex-refinery prices of 18.9%MoM in January 2019 across three major products (MS, HSD and FO) will outweigh the gains made over the next two months. However, analysts highlight the risk of inventory losses surpassing the estimates—further depressing the profitability. Finance cost is expected to ease up a bit (down 17.9%QoQ) after PSO received Rs60 billion after clearance of circular debt. The story remains depressing with net profit down by 59.2% to Rs1.9 billion (EPS: Rs4.90). After skipping the half yearly payout, analysts expect the Company to announce a dividend of Rs5/share as cash flow situation eases up.