Updated Oct 23, 2004


The KSE-100 index remained extremely volatile during the week. The intra day movement of the index was also full of surges but the market mostly closed either on positive note or with a marginal decline. Declaration of good results often led to profit taking. The index failed to hold on above the 5500 level and became a major psychological resistance level for the market. High COT rates became a serious concern for the weak holders. At the same time, persistent depreciation in rupee value against dollar also became a concern for the equity players. It been observed that high index levels only prove fatal attraction luring punters into building excessive long positions.






The largest IPP of the country has announced its first quarter results and posted Rs 1,370 million profit after tax (EPS: PKR1.18). The results show a 7% improvement when compared to the results for the same period last year. According to the details provided by the company, the load factor for the year was higher at 19% as compared to last year, which resulted in a 31% YoY increase in net sales of the company. High fuel oil cost was another reason for high net sales as all costs are built into the tariff of the company, and hence revenue. Another factor responsible for improved bottom line was the reduction in financial charges.


The company is due to announce first quarter results on October 25th. It is expected to post Rs 121 million after tax profits for the period as opposed to Rs 104 million reported during the same period last year. The growth in earnings is likely to accrue from: (I) a 10% increase in sales volume, (II) a 20% reduction in financial charges, and (III) healthy price retentions for exports. However, it is not expected to come up with any payout announcement with the results. Its capacity utilization is expected to improve to 110% as against 100% for the same period. The increase in sales volume to 0.216 million tons was driven by (I) an 18% rise in exports to Afghanistan; and (II) a 7.8% rise in local dispatches. While addressing the issues of limited growth the management announced its expansion plan to upgrade its plant capacity by 800 tons per day by second half of 2005. The capacity expansion is likely to be fully implemented owing to the fact that Cherat can sell its entire extra capacity in the export market owing to its better location. Despite the negative impact of increasing coal prices on gross margins, Cherat is still relatively well placed compared to its competitors owing to management's prudent procurement policy. The management has entered into a forward contract for coal import which minimizes the impact of any short term upsurge in international coal prices. Cherat cement is also likely to report a drop in financial.




The company has reported earnings of Rs 147 million (EPS 0.82) for the first quarter of current financial year. It also announced a 50% rights issue at Rs 8/share premium and a 30% preference shares at face value. The results were broadly in line with market expectation. The highlights were: 1) a 22% increase in revenue due to an estimated 16% rise in volumetric sales, 2) a 39% rise in production cost due to a rise in fuel costs and 3) higher tax liability from a deferred tax non-cash charge of Rs 80 million. Main reason for the variance between market expectation and actual numbers is 29% lower than estimated financial charges. The company will also be raising Rs 2.17 billion in cash from the rights and preference issue. The likely reason for the rights/preference issue is financing for the Rs 8 billion expansion plan, which will raise its installed capacity from current 1.5 million tons per annum (mtpa) to 3.7 mtpa by FY08.


The company has announced third quarter results posting net profits of Rs 1,021 million. This translates into an EPS of Rs 76.8 and includes a one-time gain from its Dalda sell off amounting to Rs 945 million (EPS: Rs 71.05). This translates in nine months earnings of Rs 1,664 million (EPS: Rs125). This was 16% higher than market expectations of Rs 1,434 million (EPS: PKR108). The third quarter earnings are 29% higher than the expectations of Rs 790 million (EPS: PKR59.5) mainly due to differences in other income, and restructuring costs.


The oil and gas exploration and production company has announced its first quarter results. These were close to market expectations of Rs 660 million (EPS: Rs 5.02) but 7.9% lower on YoY basis. The decline in profits was mainly due to (I) reduction in overall production of oil and gas, (II) higher exploration cost and (III) increase in operating cost due to higher amortization cost. The company is expected to be the major beneficiary of persistently increasing international oil prices.