STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Dec 24, 2004

 

The market rallied behind the oil stocks to breach the much-anticipated 6000 level on Thursday but profit-taking by some leading punters as well as the weak holders eroded the gains. The market remained under pressure as mounting selling offers allowed both the current favorites and blue chips clipped gains across a wide front. The index may witness some erosion owing to week-end unloading by the weaker holders. Some analysts fear a technical correction of 400 points has become overdue.

 

 

 

 

 

 

 

 

Kot Addu Power Company, in terms of its installed capacity of 1,600MW with dual-fuel (oil and gas) system, is the largest IPP operating in Pakistan. In KAPCO majority shares are owned by WAPDA, (64% shareholding) with UK-based International Power (also the O&M contractor and key shareholder of Hubco) holding the remaining 36% of the company. International Power (then National Power) had acquired this stake from the government in 1996 for a shade above Rs 9 billion (Rs 28.4/share). Government of Pakistan intends to offer 20% (176 million shares) out of its 64% shareholding in the company. While the Privatization Commission has not finalized the offer price as yet, the much talked about price of Rs 35/share seems a strong possibility. At this price, total offering should be worth Rs 6.2 billion. KAPCO at the anticipated offer price of Rs 35/share appears attractive.

ICI PAKISTAN

ICI Pakistan has announced that the company would be investing a total of US$ 16 million to increase the production capacity of the plant. The company plans to increase its production capacity to 122,000 tons from the current level of 112,000 tons per annum. Out of its existing production capacity, 40,000 tons per annum is contributed through the company's arrangement with Fayzan Manufacturing Modarba. The current expansion plan is to be achieved through debottlenecking, upgrading and modernization of the existing plant of the company. This would increase the capacity of the plant by 10,000 tons per annum. It is believed that ICI will be utilizing the proceeds realized from sale of its holding in PTA for financing this project.

OGDC

Oil and Gas Development Company has announced that it has made an oil and gas discovery at Jhal Magsi in the Balochistan province. OGDCL holds 65% working interest in this particular field while Pakistan Oilfields is the other joint venture partner with a 28.5% working interest in this field. Government Holdings, which oversees government investment in the upstream oil and gas sector, holds 5% working interest in the field. The total expenditure incurred on the fields so far has been estimated at US$ 9 million, while the depth of the well is around 4,000 meters. According to initial testing, the field is expected to produce 11 mmcfd of gas. Analysts are of the view that the production estimates are not very high when compared with production from some other fields like Qadirpur, which is currently producing 500 mmcfd of gas. However, these are just initial estimates based on the production data received from one well. OGDCL will now be working on digging more wells on the field to determine the reserve size of the field.

PAKISTAN TELECOMMUNICATION COMPANY

PTCL has launched the first phase of its wireless service in 9 districts covering 61 cities. PTCL is targeting a countrywide WLL subscriber base of 1.5 million by June 2005. The move to focus initially on rural areas makes good business sense. Rural areas, where emphasis is on provisioning of basic telephony service rather than service quality (rural tele-density estimated at 0.98%), 'can-do' with lower frequencies. What that allows for is wider area coverage of up to 25 kilometers within one base-station, versus 1 kilometer for a city like Karachi that too with high frequency. So while WLL can be perceived as a quasi-cellular in rural areas (with rates that match fixed line), in cities like Karachi, WLL will compete with fixed-line telephony. The main WLL USP of 'limited mobility' is therefore not so much of a charm in urban areas as it is in rural districts.

NATIONAL REFINERY

The euphoria surrounding NRL privatization is gradually losing its steam, at least for the time being. All this sparked when the recent call for EoIs got record response from 29 interested investors. Although, some of these investors would not reach the final stage, the sheer number is a clear indicator of the interest investors have for the only lube refinery in Pakistan. This was further complemented by the market talk of Rs 500 plus per share final offer, providing enough incentives to minority share investors and speculators to jump on the bandwagon. However, the whole process may take another six months. Analysts are optimistic about the transaction and foresee no hitches in the process. Given NRL's unique status, its share is expected to trade at higher multiples compared to its peers. However, the current price also incorporates privatization premium, which may vary with the development on the privatization front.

Company High Low Closing

 Week's Turnover

Oil & Gas Dev.

73.25

67.40

73.25

511,366,700

Fauji Fert BinXD

29.50

28.70

29.05

220,152,000

M.C.B.XD

61.00

56.15

60.00

210,753,000

P.T.C.L.A

42.35

41.45

42.35

192,265,500

Pak Oilfields

232.50

214.90

232.50

127,382,600

Nationai Bank

78.75

76.85

78.70

114,294,100

D.G.K.Cement

54.35

52.85

53.80

108,103,400

PICIC Growth Fund

52.95

52.30

52.70

57,355,000

Nishat MillsSPOT

78.65

72.45

78.10

49,010,300

Fauji Fert.XDXB

131.00

127.05

131.00

21,328,800