and political sectors kept the movement of the
market between a narrow band throughout the week, with the greatest
variation being a 1 percent gain realized on Thursday. This led to the
closing of the index at a new all time high of 4,769.31. Friday's
session, however, gave back some of these gains and the index ended
the week at a slightly lower level.
OUTLOOK FOR THE FUTURE
After a long drought of news from the corporate
sector, next week will start witnessing increased activity from this
front. Various companies are expected to report their quarterly
earnings during the coming days.
However, we do not expect this increase in activity
to translate into an increase in the volatility of the index, since
the market has already taken into account the expectations for these
results. Thus, barring any surprises, the index is likely to remain
The major developments this week were:
•The President addressed a joint session of
parliament on Saturday.
•Remittances jumped by a record 52% during Dec-03
to $385.7mn from the $253.1mn received during Nov-03. On a YoY basis
however, the jump was only 6% higher from the $363mn received last
•The SBP carried out the first auction of 15 and
20-year bonds during the week. These bonds will serve as a benchmark
for mortgage and other long-term lending.
•The PCGA revealed that cotton production was
reported at 8.87mn bales as on January 15 as compared to 9.19mn bales
during the corresponding period last year.
•The State Bank released the monetary policy
statement for January-June 2004.
•In a bid to control non-performing loans, most
nationalized and private banks decided to discontinue the extension of
loans without collateral to small and medium enterprises in
•The Privatization Commission held a road show in
Lahore for SSGC's upcoming public offering. The dates for the public
subscription have finally been decided to be Feb. 9-11, where the
government will be divesting up to 10% of its stake in the gas
•Hubco announced that it would hold a meeting of
the board of directors on the 28th of January to consider half-yearly
accounts for FY2004.
•Reports indicated that the WorldCALL Broadband
issue was oversubscribed six times with total applications received
•SBP auctioned 3 and 12-month T-bills worth
PkR60bn on Wednesday.
•Reports indicated that the government is likely
to issue bonds against Allied Bank's non-performing loans and advance
income tax payment within a short period to facilitate the
privatization process of the bank.
•Senior State Bank officials and heads of all
banks took a decision on Wednesday to use the Karachi inter-bank
offered rate (KIBOR) as a valid reference for corporate lending by
banks from February 1.
•Reports revealed that Dewan Motors, not Dewan
Farooque Motors, will be selling BMWs in Pakistan. Dewan Motors, part
of the Dewan Mushtaq Group, is a private limited company.
•Al-Abbas Group, which had submitted a bid of
PkR9.95/share for Thatta Cement, announced that it will be buying out
the government stake in the cement company.
•The SECP issued new prudential regulations for
non-banking finance companies under which, up to 80 percent of credit
could be extended against equity of 20 per cent.
•The Pakistan Telecom Regulatory Authority
received 33 expressions of interests for 2 cellular licenses.
•Foreign Direct Investment fell 49% YoY to
US$277.1mn during 1HFY04.
•The State Bank carried out a repo of one-week
and four-week T-bills on Thursday and managed to collect PkR37.5bn
through the process.
•Reports indicated that the government is
considering the offer from Reliance Group to import diesel from India.
HONDA ATLAS CARS LIMITED — 3RD QUARTER REVIEW
Honda Atlas seems to be having quite a volatile
year. On the one hand, sales of the newly launched City, after a slow
start, seem to be picking up strongly. We maintain our HOLD call on
the stock, which is trading at a slight discount to our DCF based fair
value of PkR83.
HIGHER YOY UNIT SALES
During 3QFY04, sales of the Civic on a QoQ basis
continued declining slowly to 1335units from 1350units recorded in the
During 3QFY04 the company also recorded an
improvement in its margins. The continued strength of the rupee
ensured that the cost of imported materials did not rise, as is
apparent from the improving gross margin.
The Pakistani public has taken longer than expected
to get used to the radical new design of the 2003 City. As is apparent
however, the model is quickly gaining acceptance and may be expected
to continue selling strongly. At the same time, the Civic is losing
Honda is the only car company in Pakistan to
operate in a single segment. This brings with it some risk, since the
1300cc+ segment is highly competitive and is dominated by the
high-flying Corolla. The stock is currently trading at a slight
discount to our fair value of PkR83/share, therefore we issue a HOLD
on the stock.
Mkt. Cap (US $ bn)
Avg. Dly T/O (mn. shares)
Avg. Dly T/O (US$ mn.)
No. of Trading Sessions
KSE 100 Index
KSE ALL Share Index