LAHORE (PPI)- The consistent increase in crude oil prices has kept the whole refinery sector under clouds of uncertainty, overshadowing the improved profitability, besides increasing the capacity to absorb the adverse impact of reduction in deemed duty. Experts believe rising oil prices have pushed deemed duty at 30-months high of $9 per barrel creating a buffer for ATRL to absorb the impact of adverse regulatory change. This 2.5 percent reduction in deemed duty would reduce absolute deemed duty to $7 per barrel which will be still higher than FY10 average. An energy expert Nauman Khan stated that surge in oil prices have reflected positively on domestic RMs on account of surge in deemed duty. With international oil (Arab Light) running-up to currently stand above $110 per barrel, deemed duty have been pushed up in absolute terms to $9 per barrel (Rs4.7 per liter). With deemed duty at 7.5 percent, we have upward revised our ATRLs FY11E earning expectation to Rs31 per share. However, on account heightened chances of reduction in deemed duty, we have already taken the impact in our valuation. We estimate FY11 earning with deemed duty at 5 percent to be at Rs29 per share and maintain our TP of Rs145 per share. As per 1HFY11 accounts, companys cash balance stood at Rs7.7bn (Rs91 per share) up from Rs3.9bn on 30 Jun-10, which signifies companys cash generation ability despite the notorious circular debt. The cash generation capability is expected to augment companys future earnings. Overall, we expect income on cash balance to contribute Rs5.7 per share (tax-adjusted) to ATRLs FY11E earnings, of which 1HFY11 contribution stood at Rs2.7 per share Other inherent strengthen of the company is handsome return from its portfolio companies NRL, APL and Attock Gen whose dividends are growing inline with their earnings. During 1HFY11, dividend income recorded at Rs769mn, up by a massive 196 percent. These are full year dividends of its strategic investment which were realized in 1HFY11. Moreover, the company will also book APLs dividend of Rs10 per share which will contribute Rs1.75 per share in companys 3QFY11 earnings. On the companys major strategic investment, NRL earning is expected to clock above Rs60 per share in FY11, translating into hefty dividend income for ATRLs in FY12F.