The remaining week continued the positive trend,
primarily fueled by the announcement of strong results by companies
such as PTCL, which met or beat market expectations. Overall, the
index closed at 4,840.37, a 0.58 percent decline over previous week's
close of 4,869.93.
OUTLOOK FOR THE FUTURE
While next week will witness fewer trading sessions
than normal due to the Ashura holidays, these sessions have the
potential to deliver a strong punch. Hubco is expected to announce
it's interim dividend on the fourth of March. While analysts were
previously expecting a dividend in the range of PkR2-2.1 per share,
our calculations show that it is likely to be significantly lower than
this number. This could have serious repercussions for Hubco's price.
Given the position of Hubco as a key blue chip, any sizeable fall in
the stock price can in turn have an adverse impact on the whole
The KSE-100 index will also be recomposed next
week. The re-composition will be in line with the policy of the KSE
where the index is recomposed quarterly. OGDCL is likely to be
included in the index during this process. Although the inclusion of
any new company in the index requires that the company have a 6-month
trading history at the KSE, it is likely that OGDCL will be treated as
a special case since it will provide a significant boost to the
KSE-100's market capitalization. Although this is an important
development, it will not have an immediate impact on the level of the
The major developments this week were:
•Goldman Sachs and JP Morgan, financial advisors
on the strategic management sale of PTCL, opposed the government's
plans to restructure the state-run telco.
•The World Bank offered Pakistan $10bn in soft
loans over the next few years for the power and water sectors.
•For the first seven months of the current FY,
Foreign Direct Investment fell 43% YoY to $339.5mn from the $596.4mn
received last year.
•The government received 20 proposals from seven
international banks for the swapping of the fixed for floating
Eurobond interest rates. Citibank, ABN Amro and Standard Chartered
bank are reportedly the leaders for getting the contract.
•Hubco announced that its board of directors are
scheduled to meet on March 4, 2004 to approve and announce an interim
cash dividend for FY04.
•According to data released by the State Bank,
banks have started reducing their investments in government securities
and are redirecting their money towards credit disbursement.
•Sui Southern gas Company Limited announced its
1H04 results, posting after tax profits of PkR609mn for the period,
0.5% higher YoY.
•USA proposed a financial package worth US$701mn
for Pakistan for the next fiscal year. The package, the largest ever
offered to Pakistan, is to be presented to Congress for approval and
is US$101mn greater than the amount pledged by President Bush to
President Musharraf at Camp David.
•The Bank of Punjab declared earnings of PkR6.86
per share, a 132 percent gain over the corresponding figure for last
•SBP announced a plan to launch medium term
Islamic bonds in the local market.
•The Indian oil refining and marketing giant,
Indian Oil Corporation indicated that it is looking at the Pakistani
market to export petroleum products. After Reliance, Indian Oil
Corporation (IOC) is the second company that has expressed interest in
exporting petroleum products to Pakistan.
•SNGPL posted after tax profits of PkR1,208mn
(EPS: PkR2.42), a 26% growth over the same period last year.
•Pakistan PTA announced a recurring after tax
loss of PkR528mn for FY02, showing massive improvement over last
year's net loss of PkR2,265mn.
•Lucky Cement earned PkR275mn profits during
1HFY04, about 90% higher YoY.
•Pakistani businessmen expressed interest in
investment from the Reliance group of India to set up a naphtha
cracker in Pakistan.
PAKISTAN OILFIELDS LIMITED- 1H04 RESULT REVIEW
Pakistan Oilfields Limited announced its 1H04
results earlier this week. The company posted after tax profits of
PkR1247mn (EPS: PkR9.49), recording a decline of 6% over the same
period last year.
While the company benefited from higher oil prices,
a lower production rate resulted in the company posting modest growth
of 6% in Net Sales. However, this increase was wiped off by an
increase in royalty payments, increased exploration costs and higher
amortization. The management of the company decided to skip the
interim dividend, which was surprising considering that the company
has been paying out interim dividends regularly over the past four
years. In the past five years, the company has only skipped one
interim dividend in FY1999, which was mainly due to a substantial
decline in earnings. We maintain our liking for the stock. BUY!!
Net Revenue: Net sales of the company showed an
improvement of 6% over the same period last year. The improvement in
sale is however less than expectations. While the company benefited
from the rising oil prices, a decline in production resulted in a
lower than expected improvement in the top line. Royalties. The
company recorded a 50% increase in royalty payments over last year.
Exploration costs: The company recorded a 13%
increase in exploration costs, which is mainly on the back of the
increased exploratory activities of the company. POL has over the past
couple of years started venturing in to exploration in new blocks, and
as a result, the exploration cost of the company has increased.
NO DIVIDEND ANNOUNCEMENT - A SURPRISE
To the surprise of majority of the investors, POL
skipped an interim dividend along with 1H04 results. This is the
second time in the past five years that the company has not paid out
any interim dividend, the first time in 1999. We however believe that
the dividend for the full year will be higher compared to last year
and will compensate for the interim dividend.
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