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Stock market at a glance

MARKET REVIEW

Index remained under pressure as political noise, low international oil price and stern action by the regulator kept the sentiments negative. Index closed the week at 48,409pts, down by 1.6%WoW. FIPI registered net outflow of US$11mn. Average volume traded decreased by 21.9%WoW while average value traded decreased by 0.5%WoW.

During the week data released by Pakistan Automotive Manufacturers Association (PAMA) depicted 24%YoY growth in total car sales. Impressive growth was primarily on account of encouraging sales figure for PSMC (up 24%YoY) and HCAR (up 73%YoY). Additionally, Hub power company (HUBC) decided to off-load 40% stake in Thar Energy Limited (TEL). Fauji Fertilizer Company Limited (FFC) has been offered 30% of the stake while the remaining 10% stake has been offered to the EPC contractor. As per our calculation, the earnings impact of this transaction on FFC is positive PKR1.1/sh and that on HUBC is negative PKR1.6/sh. Furthermore, Attock Cement’s subsidiary in Iraq opened a Letter of Credit valuing US$9.75mn in favor of Chinese supplier (M/s Hefei Cement Research and Design Institute) for supply of complete cement grinding mill. The total project is estimated to cost US$40mn for 900k grinding capacity. As per our calculations, the project with a capacity of 900k tons will add PKR8.5/sh to the bottom-line of the company. On the last session of the week, Fatima fertilizer announced its CY16 result where PAT clocked in at PKR9.8bn (EPS: PKR4.7) up 6%YoY, in line with expectations.

On the macro front, trade deficit rose nearly 35%YoY to US$20.2bn. Pakistan’s total liquid foreign exchange reserves rose by US$122.2mn as SBP received US$200mn under the Coalition Support Fund. Furthermore, World Bank approved an assistance of US$450mn. Also, US Federal Reserve raised its short-term rate by a quarter-point to a range of 0.75% to 1.0%.

OUTLOOK

Moving forward, political noise and international commodity prices can be expected to impact the direction of the market. Our top picks are PPL, OGDC, BAHL, HBL, EFERT, PSO, PIOC, MUGHAL and DGKC.

NEWS THIS WEEK

ECONOMIC INDICATORS & DATA POINTS

TRADE DEFICIT ROSE NEARLY 35%YOY TO US$20.2BN (DAWN): Country’s trade deficit rose by nearly 35%YoY to US$20.2bn during 8MFY17. Overall import bill rose 15.99%YoY to US$33.5bn, while export proceeds fell 3.90% YoY to US$13.3bn.

REMITTANCES FALLS BY 2.5%YOY TO US$12.36BN DURING 8MFY17 (DAWN): SBP reported on Friday that remittances fell by 2.5%YoY to US$12.36bn during 8MFY17.

FED RAISES ITS BENCHMARK INTEREST RATE FOR THE SECOND TIME IN THREE MONTHS (DAWN): Fed raised its short-term rate by a quarter-point to a still-low range of 0.75% to 1%.

MINISTRY OF FINANCE APPROVES PAYMENT OF PKR6BN (DAWN): Ministry of Finance has approved payment of PKR6bn to PSO on an urgent basis in-order to avoid an international default.

RESERVES INCREASE BY US$122MN (DAWN): Pakistan’s total liquid foreign exchange reserves amounted to US$22.2bn on March 10, up US$122.2mn. SBP received US$200mn under the Coalition Support Fund during the week.

WORLD BANK HAS APPROVED AN ASSISTANCE OF US$450MN (DAWN): World Bank has approved an assistance of US$450mn for Pakistan aimed at providing support for balance of payments and budget financing.

FDI DROPS 21%YOY TO US$123MN IN FEBRUARY (TRIBUNE): Cumulative FDI increased by 6%YoY to US$1.285bn in the 8MFY17. The biggest jump in FDI was recorded in the food sector that attracted US$468mn in the 8MFY17.

SECTOR AND CORPORATE HIGHLIGHTS

CAR SALES DOWN 0.5%YOY TO 121,275 UNITS IN 8MFY17 (DAWN): Sales of locally produced cars were down 0.5% YoY to 121,275 units in 8MFY17. Combined sales of Honda Civic and City climbed nearly 54% to 24,325 units during the eight-month period while Toyota Corolla sales dropped 6.7% to 35,501 units.

CHINESE FIRM ACHIEVES FINANCIAL CLOSE OF KAROT HYDROELECTRIC POWER PROJECT (TRIBUNE):China Three Gorges South Asia Investment Limited on Friday achieved financial close of 720 MW Karot hydroelectric power project. The levellised tariff of Karot hydroelectric power project, costing $1.7 billion, is Rs7.68 per unit.

LUCKY CEMENT INAUGURATES WHR PLANT (DAWN): Lucky cement inaugurated its 5th WHR plant in Pezu. The plant will offer an installed capacity of 10MW.

NEPRA DECIDES TO RE-DETERMINE THAR COAL TARIFF (RECORDER): The authority would determine whether to go for an upfront tariff or competitive bidding in order to re-determine the Thar coal tariff.

ABRAAJ GROUP WILL BE UNABLE TO CONCLUDE DEAL WITHIN THE AGREED TIME (RECORDER): Abraaj Group does not want to pay the interest and sought settlement of payment of principal amount against its receivables. The amount in question is $1.24 billion, which the K-Electric owes to two government entities.

HUBCO TO DIVEST 40% SHARES IN THAR ENERGY (DAWN): FFC has been offered 30% strategic shares in Thar Energy Limited (TEL) by Hub Power Company. The total cost of the TEL project is US$497.7mn with a debt-to-equity ratio of 75:25.

LONDON COURT ORDERS HASCOL TO PAY DAMAGE CLAIMS TO MENA ENERGY (THE NEWS): Hascol Petroleum Limited has to pay more than US$8mn as damage claims by a UAE-based petroleum products supplier as per an order of the London High Court.

STOCK MARKET SYNOPSIS
LAST WEEK
THIS WEEK
% CHANGE
Mkt. Cap (US$bn)
92.5
90.9
-1.7%
Avg. Dly T/O (mn. shares)
237.6
185.6
-21.9%
Avg. Dly T/O (US$ mn.)
109.0
108.5
-0.5%
No. of Trading Sessions
5.0
5.0
KSE 100 Index
49,191.8
48,409.4
-1.6%
KSE ALL Share Index
33,168.0
32,707.8
-1.4%

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