CAPITAL MARKETS

 

1- FOREX KERB WATCH

2- COT WEEKLY REVIEW

3- FINEX WEEK

4. STOCK WATCH
5. STOCK MARKET AT A GLANCE


STOCK MARKET AT A GLANCE


By SHABBIR H. KAZMI
Updated Feb 26, 2005

 

 

This week KSE-100 index remained bullish, on the back of oil stocks. On Monday, market maintained its upside momentum, On the expectation of positive results of PTCL, OGDCL and SNGPL. On Tuesday, banking stock picked the momentum. NBP, MCB, Askari bank and BoP all performed, owing to the expectation of good results. On Wednesday market set the record of gaining 255 points in a single trading day. On Thursday, suddenly market has changed its mode and witnessed the wild swings on both extremes, owing to the PTCL results announced. Cement sector were mainly traded under pressure, during the week. On Friday, all eyes were set on OGDCL results, and unexpectedly OGDC overwhelmed despite its result gone against to the market expectations. This week KSE-100 index gained 552 points over last week. Outlook for the Future

We expect market to remain under pressure in next week, on the back of below market consensus results announced for OGDCL. Unlike past two- weeks market is not expecting any major results to be announced next week. However, we advise our investors to restrict themselves in stock specific activity. Fertilizer sector is expected to perform, owing to the rising urea prices. However we are not expecting any stock specific activity in cement sector. In sum, we are expecting market to remain under pressure.

FUNDAMENTAL CHANGES

The major developments this week were:

•Supply shortages resulted in 0.26% YoY drop in Urea Offtake

•According to a report, GoP officials has assured World Bank that the country is set to maintain its 3.2% budget deficit target.

•Maple Leaf Cement announced its 1HFY05 results, the company posted after tax earnings of PkR342mn (EPS: PkR1.26 - adjusted for the rights issue.

•Domestic oil and gas production has increased by almost 5% and 17% respectively during 1HFY05.

•Pakistan has received US$32.6mn worth of Foreign Portfolio Investment in Jan-05 alone.

•Interenational crude oil prices once again soared above the US$50/barrel mark on the back of cold US weather.

•Pioneer Cement announced its 1HFY05 results, the company announced after tax profits of PkR161mn (EPS: PkR1.12 - adjusted for right issue).

•The saving mobilization through National Saving Schemes has declined by PkR2.30bn in 1HFY05

•DG Khan Cement has announced its 1HFY05, the company posted after tax earnings of PkR644mn (EPS: 3.5) during the 1HFY05 as opposed to PkR423mn (EPS: 2.20).

•Fauji Cement has announced its 1HFY05, the company posted after tax earnings of PkR257mn (EPS: 0.69) during the 1HFY05

•Lucky Cement announced its 1HFY05 results, the company posted after tax earnings of PkR404mn (EPS: PkR1.53) for 1HFY05

•Pakistan Petroleum Limited has stated that the offshore well in Makran coast that the company has recently started drilling will cost around US$20-25mn.

 

 

PAKISTAN PTA - A TURNAROUND YEAR

Pakistan PTA Limited announced its FY04 results, posting after tax profits of PkR1,358mn (EPS: PkR0.89) as compared to a net loss of PkR5,760mn (PkR-3.80). This is the first year in which the company has been able to report profit since its inception. Established in 1998 (then a part of ICI Pakistan), the PTA business has been running in to continuous losses owing to higher fixed costs, and poor PTA margins. In FY03, Pakistan PTA took a blood bath by writing off costs amounting to PkR5,292mn, which lead to a reduction in depreciation and amortization cost. In addition, the equity injection in the company also helped in the restructuring of the balance sheet, which led to a reduction in financial charges. We believe that this turnaround has been discounted to a large extent in the stock price. The stock appears a little expensive to us trading at almost 13x FY05E earnings. First year of profits Pakistan PTA Limited announced its FY04 results, posting after tax profits of PkR1,358mn (EPS: PkR0.90) as compared to a net loss of PkR5,760mn (EPS: PkR-3.80) last year. This is the first year in which the company has been able to post profits. Since 1998, PTA plant (which was than a part of ICI Pakistan) had been posting continuous losses. The PTA business was then de-merged from ICI Pakistan and formed into a separate company.

HIGH CONCENTRATION OF DOMESTIC SALES

FY04 has also been different for Pakistan PTA on another count. As opposed a 70:30 mix of domestic sales versus exports in the previous year, Pakistan PTA was able to sell majority of its production in the domestic markets. This has been primarily on account of the increased PSF capacity in the country which touched to almost 630,000 tons in FY04 after the completion of Ibrahim Fibre Limited's expansion plan. Domestic sales are more profitable for Pakistan PTA as it is able to take advantage of the tariff protection available to it. For exports, however, there is no tariff protection and hence is not as much profitable as domestic sales.

BLOOD BATH IN FY03 HAS REDUCED THE FIXED COST

Pakistan PTA took a blood bath in FY03 where wrote off significant costs in one go. Assets were revalued, and the resulting deficit was written off. Deferred cost, which arose after a rights issued at a discount was also written off in one go. This resulted in total write offs amounting to PkR5,292mn in FY03 which were the primary factor leading to huge losses in FY03. However, this resulted in subsequent reduction in fixed costs due to a reduction in depreciation charge and amortization costs. The proceeds realized from the equity injection in FY03 were used to pay off debts, which have reduced the financial charges of the company as well.

MARKET ROUNDUP

..

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

36.19

38.83

7.29%

Avg. Dly T/O (mn. shares)

830.89

862.35

3.79%

Avg. Dly T/O (US$ mn.)

1696.36

1428.60

-15.78%

No. of Trading Sessions

5

5

23

KSE 100 Index

7733.36

8285.40

7.14%

KSE ALL Share Index

5094.33

5467.88

7.33%