CAPITAL MARKETS

 

1- FOREX KERB WATCH

2- COT WEEKLY REVIEW

3- FINEX WEEK

4. STOCK WATCH
5. STOCK MARKET AT A GLANCE


STOCK WATCH


By SHABBIR H. KAZMI
Updated Apr 16, 2005

 

 

The market witnessed highly erratic movement during the week. COT issue continues to haunt the market. However, bargain hunters seems have entered the market. While it may be a positive development, some of the analysts are of the view that it is almost impossible to predict the future movement.

The Karachi Stock exchange has constituted a four-member committee to discuss with the apex regulatory authority, SECP, the ways to end the liquidity crisis at the bourses in the wake of phasing out of COT (badla) system. The proposals put forward are (1) extension in dateline for phasing out COT facility in top nine COT companies covering more than 75% COT investment and volume and (2) The SECP revoke its decision to phase out COT from all 30 COT eligible companies. Analysts do not expect withdrawal of the decision altogether. However, the SECP may consider the first proposal with some adjustment like time-bound action plan to phase out COT from these securities. The unavailability of an alternative to COT financing is the biggest risk faced by the market. In the absence of leverage buying, the volume at the market would dry out leading to problem in basic function of stock market i.e. price discovery. So far only one commercial bank has launched margin-financing products.

Kot Addu Power Company posted a profit after tax of Rs4784 million (EPS: Rs5.39) during first nine months of current financial year, compared to a PAT of Rs3,786 million (EPS: Rs4.28) earned in the comparable period last year. The company also declared a cash dividend of Rs3.50 per share along with the results. Though dividend announcement is very much inline with market expectations, earnings fell short of consensus forecast. As returns of IPPs are determined in US real dollar basis leaving little business and financial risk, the only risk to earnings for IPPs come from (1) failure of maintaining specified capacity and (2) falling short of efficiency benchmarks. With below than expected nine months results, analysts do not rule out downward revision in full year earning forecast.

The government has granted two more exploration licenses to Mari Gas Company covering a total area of 4,818 km. The terms of the two licenses entail a total investment of over US$ 11 million (R656 million) on two blocks in survey and exploration activities. Owing to no history of exploration activity by the company, analysts expect the exploration activity to be outsourced to either a foreign exploration service company or any local company. Mari Gas, the operator of country's second biggest field, Mari, is seeking to diversify its revenues sources and increase its reserve portfolio. Mari Field has gas-pricing mechanism similar to old Sui and Kandkot pricing mechanism, based on cost plus basis. The pricing mechanism does not give any incentive for increase in production.

Shell Pakistan is expected to announce 3QFY05 results on Monday, April 18, 2005. Analysts expect the company to post after tax earnings (3-months) of Rs579 million (EPS: Rs16.51), up 137% YOY. Earnings for the period July- March are expected to increase by 84% YoY to Rs1,495 million (EPS: Rs42.6). Key earnings drivers are expected to be 1) Strong demand for white oil products and lubricants, and 2) domestic oil price hike. The company is expanding retail network, focusing on further improving product mix and has invested in a 26% stake in White Oil Pipeline Project. Since the start of 2005, the Government of Pakistan has made 5 upward revisions to domestic oil prices. The pressure from surge in world oil prices forced the government to 'remove the cap' on domestic POL prices in December 2004 (in place since May 2004). Motor gasoline and High Speed Diesel, the key products for Shell, have witnessed price hikes of 23% and 19% respectively. Major chunk of these upward revisions came during 3QFY05, which should see earnings of Shell surge this quarter in the form of inventory gains and higher margins per unit of oil sold. Strong GDP growth along with buoyant automobile sales (+38% YTD), have been key drivers for the increase in white oil product demand (industry sales for HSD and MOGAS up an estimated 10%) this fiscal. Jet fuel sales have also surged (estimated growth 20%) following a pick-up in air traffic. With an estimated market share of 34% in MOGAS, 26% in HSD and 45% in Jet Fuel (including exports), Shell is a key beneficiary of demand buoyancy. The company has invested in the US$ 480 million and holds a 26% stake in the project. The project commenced operations in December 2004 and will lead to 1) a reduction in transportation cost for the company and 2) increased dividend income on investment. While pipeline could dampen HSD demand to some extent, Shell is expected to remain a net beneficiary. The company is aggressively expanding retail network and adding to its product line.

 

 

Company

High

Low

Closing

Week's Turnover

P.T.C.L.AXD

63.40

58.10

63.40

334,156,500

Fauji Fert Bin

32.35

27.20

32.35

115,399,000

D.G.K.Cement

66.50

59.55

66.50

98,408,400

Pak Oilfields

303.80

262.95

296.40

84,019,900

Pak.PTA Ltd.

12.85

11.25

12.85

75,303,000

B.O.PunjabXB

85.75

74.00

85.75

46,287,000

Pak Petroleum

199.50

182.00

192.95

35,039,600

Kot Addu Power

53.60

48.75

52.80

24,936,000

National BankSPOT

120.00

106.15

106.15

22,178,400

Oil&Gas Dev.SPOT

104.00

95.70

104.00

18,689,200