CVO Petrochemical Refinery financial analysis: EPS BDT 4.93, naphtha squeeze and a Q4 FY26 loss (Oct 2026)

Investment considerations: EPS rose from BDT 0.46 to 4.93 in three years on naphtha, but one feedstock price decides each quarter

CVO Petrochemical Refinery PLC (CVOPRL) runs a small fractionation plant in Nasirabad, Chattogram. Since 15 September 2022 it has bought naphtha from Eastern Refinery, the state refinery under Bangladesh Petroleum Corporation (BPC), and turned it into special boiling point solvent (SBPS): a 40/115 grade that goes to Padma Oil under BPC, and an industrial grade it markets itself to paint, garment-washing, grease and similar users [1 p.9] [14]. The company was incorporated in 1984 as Chittagong Vegetable Oil Industries, began condensate refining on 2 April 2014, and lost its feedstock when the energy division suspended natural gas condensate supply from 1 July 2020 [1 p.10] [16]. It had no revenue at all in FY2022 [1 p.48].

The naphtha line rebuilt the business. Net turnover went from nil in FY2022 to BDT 390m in FY2023, BDT 613m in FY2024 and BDT 1,153m in FY2025, and profit after tax from a loss of BDT 73.0m to a profit of BDT 106.0m [1 p.48]. The FY2026 annual statements are not yet in our corpus; the board approved them on 24 October 2026 and reported EPS of BDT 4.93, NAV per share of BDT 31.75 and a 15% cash dividend [10]. That EPS on 30.27m shares is about BDT 149m of profit, 41% above FY2025 [20].

Business: one plant, three possible feeds, and only naphtha in use since September 2022

The plant is a fractionation unit: it heats a light hydrocarbon feed and separates it into cuts by boiling range. Under condensate, the products were motor spirit, high-speed diesel and mineral turpentine [15]. Under naphtha the product is SBPS, a solvent used for cleaning and thinning in paint, garment washing, grease, lubricants, sanitisers and insecticides, much of which Bangladesh otherwise imports [14] [1 p.13]. The annual report lists capacity of 50,000 tonnes a year for light condensate, 30,000 tonnes for naphtha and 25,000 tonnes for diesel-rich condensate, and says the design can run two feeds at the same time [1 p.9].

Contracts set the frame. BPC signed a five-year agreement to supply naphtha and a three-year agreement to purchase SBPS, both starting with sales on 15 September 2022 [1 p.13]. The 40/115 grade goes to Padma Oil; the industrial grade is marketed by the company itself [1 p.9]. The product mix moved sharply to the industrial grade: it was 94.0% of gross turnover in FY2025 against 62.2% in FY2024, while 40/115 sales to Padma fell from BDT 266.6m to BDT 62.2m [1 p.94]. The filing does not say why; a three-year purchase agreement from September 2022 would have run to September 2025, and we found no disclosure of its renewal.

Diesel is the option the company has not yet used at scale. BPC supplied one consignment of diesel-rich condensate on 28 January 2024 as a test, the output met BSTI standards and went to Padma Oil, and BPC approved own imports of up to 20,000 tonnes a year [1 p.13]. Management says high international condensate prices and lower domestic product prices make imports uneconomic for now [1 p.13]. Diesel was BDT 16.9m of gross turnover in FY2025, 1.3% of the total [1 p.94].

The condensate years show what the plant earns on thin spreads. Net turnover was BDT 661m-730m a year in FY2018-FY2020 but gross margin only 7.5%-7.2%, and profit after tax ranged from BDT 6.6m to a loss of BDT 12.9m [6 p.46] [5 p.49]. FY2017 was itself a near-shutdown year with turnover of BDT 55.6m and a loss of BDT 84.7m [6 p.46]. The naphtha period is different in two ways: the margin per litre is wider, and the plant now depends on a state refinery rather than on gas-field condensate. In July 2020 the press reported that the suspension of condensate from the gas fields had forced production to stop [16]; the 2025 annual report records the shutdown from 7 July 2020 [1 p.10]. The lesson for an investor is that feedstock access, not demand for the product, has been the binding constraint in every bad year of the last decade.

Line items: naphtha is 73% of turnover, so the naphtha-solvent spread sets the margin

Turnover. The company explains FY2025 growth as 'increase of selling price as well as sales volume' [1 p.94]. Naphtha processed rose 49.88% to 10,214 tonnes and utilisation rose to 34.05% [1 p.14], so most of the 88.1% turnover growth was volume. Net turnover is reported after VAT, which was 13.0% of gross turnover in both FY2024 and FY2025 [1 p.94]. Per litre of naphtha consumed, FY2025 net turnover was BDT 72.5 and gross profit BDT 11.3 [20].

Cost of goods sold. Naphtha is the cost: BDT 844.1m in FY2025, 73.2% of net turnover, for 15.90m litres, or BDT 53.08 a litre [1 p.95] [20]. The price follows international benchmarks [1 p.14], so the margin is the spread between a world-priced input and a domestically priced solvent. Factory overhead rose from BDT 59.6m to BDT 103.8m mainly because carriage moved onto the company's books: lorry carriage of BDT 24.5m and oil-tanker carriage of BDT 16.6m, after the sales agent's agreement to bear carriage expired on 30 June 2024 [1 p.95]. That is why gross margin fell from 18.9% to 15.6% in FY2025 even as volume rose [1 p.14] [20].

FY2026: lower naphtha cost. In 9M FY2026 net turnover rose 11.5% to BDT 1,017.0m while cost of goods sold fell 1.7%, lifting gross profit from BDT 120.9m to BDT 239.4m [2 p.3]. The Q1 and Q2 disclosures name 'higher sales volume and a reduction in raw material costs' and the Q3 one 'higher turnover and lower raw material costs' [10].

Overheads, finance cost and tax. General and administrative expense was BDT 37.3m in FY2025 (BDT 19.3m in FY2024) [1 p.69]. Finance cost fell from BDT 24.1m (FY2024) to BDT 21.4m and to BDT 5.0m in 9M FY2026 as loans were repaid [1 p.69] [2 p.3]. The effective tax rate rose from 8.7% in FY2025 to 21.1% in 9M FY2026 [20]; the filings show current tax of BDT 40.1m for the nine months against BDT 5.5m a year earlier [2 p.3]. WPPF is 5% of profit before WPPF [2 p.3].

A history-based sensitivity: in FY2025 each BDT 1 a litre on the naphtha price across 15.90m litres moved cost of goods sold by about BDT 15.9m, which was 14% of that year's profit before tax [20].

Quarters: gross margin peaked at 27% in Q2 FY2026, then the April-May 2026 pause produced an implied Q4 loss

The quarterly path shows the spread at work. Gross margin was 10.6% in Q2 FY2025 and 27.2% in Q2 FY2026 [3 p.3]. Q4 FY2025 is derived as the FY2025 annual less the nine months, and its profit of BDT 34.8m sums with Q1-Q3 to the audited BDT 106.0m [1 p.69] [2 p.3] [20].

Q4 FY2026 (April-June 2026) is the weak point. On 26 April 2026 the company told DSE that production had been 'temporarily interrupted from 1st April 2026' because the price of naphtha was 'significantly higher than the selling price of the finished product (Solvent)', and that it was not lifting naphtha to avoid losses; it also said Eastern Refinery's own production was suspended but more than 10 million litres of naphtha were in stock [11]. It bought naphtha again on 20 May and restarted on 23 May 2026 [10]. FY2026 EPS of BDT 4.93 against 9M EPS of BDT 5.08 implies a Q4 net loss of about BDT 4.6m (EPS about -0.15) [10] [20]; DSE does not publish a Q4 figure, and the quarter's turnover will be known only from the annual report.

Ratios: ROE of 19%-25% under naphtha against under 2% in the condensate years

Ten years of ratios split into three regimes. In the condensate years (FY2018-FY2020) gross margin was 7.5%-7.2% and ROE never above 2% [20]. FY2021-FY2022 were the shutdown, with losses of BDT 62.9m and 73.0m and NAV per share falling from BDT 13.90 to 7.74 [1 p.48] [5 p.32]; net assets at June 2021 were BDT 291.6m, BDT 11.55 a share [7 p.77]. Under naphtha, ROE on average equity was 25.2% in FY2024, 18.8% in FY2025 and 16.6% in FY2026 [20]. The FY2025-FY2026 figures are computed on equity that includes the BDT 476.6m revaluation surplus; on equity without it, FY2025 ROE would be higher, so the reported trend partly reflects the larger book, not a weaker business.

Efficiency improved with scale. Inventory days on cost of goods sold fell from 148 (Jun-2024) to 42 (Jun-2025) and 9 at March 2026, when stock was run down ahead of the April pause; receivable days were 32, 14 and 30 [20]. The March figure uses nine-month turnover annualised.

Cash conversion was strong while working capital was released: CFO was 2.0x profit in FY2025 and 1.8x in 9M FY2026 [20]. FY2026 NOCF per share of BDT 4.52 is below 9M FY2026's BDT 9.13, so operating cash flow in April-June 2026 was negative by roughly BDT 140m (our inference: restocking after the restart) [10] [20]. Capex has been small: BDT 0.2m in FY2025 and BDT 3.6m in 9M FY2026 [1 p.71] [2 p.5].

Earnings quality: operating profit, cash-backed, but tied to utilisation and a doubled tax rate

What drives returns to shareholders here is simple to state: the naphtha-to-solvent spread times the litres processed, less a small fixed cost base. Fixed costs are modest. Factory salaries were BDT 15.0m, depreciation BDT 29.4m and general and administrative expense BDT 37.3m in FY2025, about BDT 82m in all against gross profit of BDT 179.9m [1 p.95] [1 p.69]. That makes profit very sensitive to utilisation: at 34% of capacity in FY2025 [1 p.14], each extra tonne processed carries little added overhead, and each idle week still carries the full fixed cost, as April-May 2026 showed.

Earnings quality is good on the measures the filings allow. Profit is operating, non-operating income is negligible, and operating cash flow exceeded profit in FY2024, FY2025 and 9M FY2026 [20]. Two items need watching. First, the effective tax rate roughly doubled in FY2026 to about a fifth of profit before tax [20], so pre-tax growth of 151% in 9M FY2026 became after-tax growth of 116% [2 p.3]. Second, FY2025 cash flow was helped by an inventory release of BDT 88.3m (inventory fell from BDT 200.8m to 112.5m) [1 p.68], and FY2026 cash flow fell back once the plant restocked, as NOCF per share dropped from BDT 7.01 (restated) to BDT 4.52 [10].

Capital allocation has been conservative: free cash flow first repaid the BDT 28.9m director loan and cut bank borrowing, then went into FDRs of BDT 160.8m in 9M FY2026 [2 p.5]. Cash payouts were 43%, 29% and 30% of reported EPS for FY2024-FY2026 [20], leaving most profit in the company while no capex has been approved [10]. The 9% stock dividend for FY2025 was tied to the BDT 30 crore minimum paid-up capital rule rather than to an investment need [10].

Peers: in a three-company set, CVOPRL is the one whose profit is operating, not interest

There is no other listed refiner, so the peer set is the two listed companies closest in product: Eastern Lubricants Blenders (lubricant blending, also a BPC-linked company) and Padma Oil (state fuel marketer, and the customer for CVOPRL's 40/115 grade). All three use a July-June year and file standalone statements; the table compares the same nine months (July 2025 to March 2026) and quotes each company's own line labels. Padma's top line is 'Net Earnings on petroleum Products', a margin, not sales, so top lines and margins are not comparable; the like-for-like measure is how much of profit before WPPF comes from non-operating income.

Of the three, CVOPRL alone earns essentially all its profit from operations: non-operating items were -0.3% of profit before WPPF, against 50.3% at Eastern Lubricants and 81.2% at Padma Oil [20]. That cuts both ways: Padma and Eastern Lubricants have deposit income to cushion a bad spread quarter; CVOPRL had BDT 300m of cash and FDRs in March 2026 and only began building an FDR book in FY2026 [2 p.2] [2 p.5].

Balance sheet: net cash of BDT 85m at March 2026, half of equity is revalued land, and a qualified audit

Total assets rose from BDT 820.8m (Jun-2024) to BDT 1,503.1m (Mar-2026) [1 p.68] [2 p.2]. Most of the increase (about 82%) is the land revaluation: the board approved revaluing land and land development on 29 April 2025 at shareholders' request at the December 2024 AGM, and the valuer (Ashraf Uddin & Co.) put the 95.90 decimals at BDT 575.4m against a book value of BDT 14.6m, a surplus of BDT 560.8m (BDT 476.6m after BDT 84.1m deferred tax) [10] [1 p.63] [1 p.69]. The surplus is 49.4% of March 2026 equity [20]; it adds nothing to cash or earnings.

Debt is short-term bank borrowing: BDT 153.1m at June 2025 and BDT 203.7m at March 2026, plus small leases (right-of-use assets rose to BDT 21.0m in FY2026) [1 p.68] [2 p.2]. Against that, cash was BDT 135.3m and FDRs BDT 164.9m, so the company was net cash by BDT 85m [20]. The filings we read do not name the banks behind the FDRs, which the F25 format asks for; CRAB rated the company BBB1/ST-3 (stable) in February 2026 [10].

Audit. K.M. Hasan & Co. issued a qualified opinion on FY2025 for two items with Sylhet Gas Fields: a BDT 4.5m security deposit and a BDT 1.75m advance against raw materials, both outstanding for more than five years after the condensate agreement expired on 30 June 2020, with no provision [1 p.62]. Together they are BDT 6.3m, 5.9% of FY2025 profit [20]. DSE disseminated the qualification on 19 October 2025 [12] [10]. A separate BDT 4.9m naphtha loss from a pipeline leak during unloading was claimed from Synthetic Resin Products (Pvt.) Ltd and booked as a receivable [1 p.95].

Governance: sponsors own 43%, no approved capex in 24 months of DSE news, payout around 30%

Ownership. Sponsors and directors owned 45.31% at June 2025, the public 37.52%, institutions 17.01% and non-resident investors 0.16%; no shareholder owned 10% or more [1 p.22]. TBS, citing the September 2026 pattern, reports sponsors at 43.06%, institutions 17.40% and the public 39.45% [13]. The board has ten members including two independent directors [1 p.24]. The chairman is Shamsul Alam Shamim and the managing director AHM Habib Ullah [1 p.68].

Sponsor share movements in the 24-month DSE sweep were transmissions, not market trades: 1,319,049 shares of the late sponsor director Md. Amin (died 29-Sep-2024) went to his nominee (completed 5-Feb-2026), and 681,046 shares held by AHM Habib Ullah as guardian were transferred to the adult heir of the late sponsor Md. Mahmudul Haq Mobin (completed 19-Feb-2026) [10].

Capital actions. The FY2024 dividend was 10% cash, which moved the shares from the B to the A category on 21 January 2025 [10]. For FY2025 the board paid 11% cash and 9% stock; the stock dividend was justified by the regulatory minimum paid-up capital of BDT 30 crore, and BSEC consented on 8 December 2025 [10]. The bonus took share capital to BDT 302.7m [2 p.2]. The board also created a dividend equalisation reserve of 10% of FY2025 profit (BDT 10.6m) [1 p.24]. For FY2026 the board proposed 15% cash, a payout of 30% of EPS [10] [20].

Capex and board decisions. We swept 24 months of DSE company news (old_news.php, criteria=3, 1-Nov-2024 to 31-Oct-2026) for capex, expansion or investment approvals. Besides the land revaluation and dividends, the only board decisions disclosed were the 6-Sep-2026 decision to shut the factory for emergency maintenance and the quarterly and annual approvals; we found no approved capex or expansion budget in that window [10]. Earlier, in January 2022, the company decided to purchase a 2,073-tonne oil tanker for about Tk 12 crore to carry naphtha from Eastern Refinery [15]; FY2025 shows 'Carriage Inward - Oil Tanker' of BDT 16.6m as a factory expense and PPE purchases of only BDT 0.2m [1 p.95] [1 p.71], and we did not find the tanker in the PPE pages we read.

What's next: dividend dates, the shutdown quarter, and the 2027 naphtha contract

Items already disclosed that move the lines (direction only, no forecast):

Passed events, outcome unknown: the three-year BPC purchase agreement for SBPS from September 2022 (passed, renewal not disclosed in the filings we read) [1 p.13].

Risks: the naphtha-solvent spread, one supplier and plant uptime matter most

Each risk is tied to the line it moves. Size them against a profit before tax of BDT 116m in FY2025 and BDT 195m in 9M FY2026 [1 p.69] [2 p.3].

Key questions: the Q4 loss, the September shutdown and the naphtha contract decide the next year

At BDT 146.2 the shares trade at 29.7x FY2026 EPS of BDT 4.93, 4.60x June 2026 NAV of BDT 31.75 (which includes revalued land) and a 1.0% yield on the BDT 1.50 dividend [19] [10] [20]. These are facts about the price, not a view on it.

FAQ

What does CVO Petrochemical Refinery make?

Special boiling point solvent (SBPS) from naphtha bought from Eastern Refinery; a 40/115 grade goes to Padma Oil and an industrial grade to its own customers [1 p.9].

What was CVOPRL's FY2026 EPS and dividend?

EPS BDT 4.93, NAV per share BDT 31.75 and a 15% cash dividend, with record date 17-Nov-2026 and AGM 14-Dec-2026 [10].

Why did CVOPRL stop production in April 2026?

The company said naphtha cost more than the solvent it markets, so it paused purchases from 1-Apr-2026; it restarted on 23-May-2026 [11] [10].

Why was the FY2025 audit opinion qualified?

BDT 4.5m of deposits and BDT 1.75m of advances with Sylhet Gas Fields, outstanding for over five years, have no provision [1 p.62].

Why did NAV per share jump in 2025?

Land was revalued from BDT 14.6m to BDT 575.4m at 30-Jun-2025; NAV per share was BDT 13.12 without the revaluation and 30.29 with it [1 p.68].

Which results does this report use?

Annual reports FY2017-FY2025, quarterly statements to March 2026 and the DSE-announced FY2026 figures. The FY2026 annual report is not yet in our corpus; the model will be updated when it is filed.

Sources

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