CAPITAL MARKETS

 

1- FOREX KERB WATCH

2- CFS WEEKLY REVIEW

3- FINEX WEEK

4. STOCK WATCH
5. STOCK MARKET AT A GLANCE
6. PAKISTAN WEEKLY REVIEW

7- SAUDI STOCK MARKET INDICATING GROWTH PROSPECTS

 

STOCK WATCH


By SHABBIR H. KAZMI
Updated Sep 17, 2005

BULLETS FOR STOCK WATCH

•Google will price its latest stock sale at $295 (£162.55) a share, more than three times the price of its initial public offering last year. The sale of more than 14 million shares, expected to raise $4.18bn.

•Bestway Cement offered the highest bid of Rs 305 per share (Rs 3.205 billion in total) for Mustekhum Cement Limited's (MCL) 85.29 percent share.

•Ministry of Petroleum in a presentation pointed out that, with the increase in oil prices, the margin of oil marketing companies and dealers rose substantially.

•OCAC has decided to keep the prices of petroleum products unchanged for the next fortnight.

•Forex reserves of the country decreased by $27.2 million to $12.016 billion last week.

The State Bank of Pakistan announced on Thursday last the total liquid foreign exchange reserves held by the country on 10th September. The reserves were reported at 12.016 billion dollars, showing a decline of 27.2 million dollars as compared to its previous level of 12.043 billion on third September 2005. According to details the reserves held by the State Bank of Pakistan stood at 9.358 billion dollars, while net foreign exchange reserves held by banks stood at 2.658 billion dollars, summing up to a grand total of 12.016 billion dollars. The central bank witnessed a decline of 3.5 million dollars in net foreign exchange reserves, while banks also registered a decline of 23.7 million dollars.

Javedan Cement management will be transferred to Haji Usman and Group after the formal approval of its bid by the Cabinet Committee on Privatization. The Group had submitted the highest bid of Rs 4.315 billion for the purchase of 96.34 per cent shares of Javedan Cement, at the rate of Rs 80 per share. The highest bid just meets the minimum floor price fixed by the Privatization Commission. The bid came when Dr. Abdul Hafeez Sheikh, Minister for Privatization, announced that the government could not consider an offer lower than the floor price. At the end of bidding the minister announced that the highest offer was above the floor price and was acceptable to the Privatization Commission. Now the highest offer would be presented before the Privatization Commission Board for recommendation to the Cabinet Committee on Privatization for its approval. As the first right, the former owners were asked to match the highest bid but their representatives declined. The bidding details would also be submitted to the Sindh High Court.

Bestway Cement has offered the highest Rs 305 per share amounting to of Rs 3.2 billion to acquire control of Mustehkam Cement. Federal Minister for Privatization and Investment, Dr. Abdul Hafeez Shaikh, while presiding over the bidding proceedings, expressed satisfaction over the bidding and privatization process. He said it is a matter of great satisfaction that the business community is actively participating in the privatization process initiated by the government, for strengthening economy of the country. Later on, Representative of Bestway, Zamir Chaudhry, while talking to media men expressed satisfaction over the privatization process. He said, "We will make extra efforts to further improve the performance of Mustehkam Cement to overcome shortage of cement in the country". The plant is located at Hattar, District Haripur, and has a rated production capacity of 630, 000 tons per annum.

The Joint Working Group has announced the timeframe for Iran-Pakistan-India gas pipeline. It is expected that all necessary arrangements and formalities of the project would be completed by December this year. Iran's field from where the gas would be supplied has 14 trillion cubic meter reserves (378 trillion cubic feet as compared to 11 TCF total reserves of the Sui field). Pakistan's requirement will begin from 90MMCFD (million cubic feet per day) in 2010 and go up to 540MMCFD by 2015. Similarly, India will have an initial requirement of about 540MMCFD in 2010 and go up to 1080MMCFD by 2015. The total requirement for the pipeline will begin with about 630MMCFD in 2010 and go up to 1620MMCFD by 2015.

Pakistan's economy has grown at an enviable pace over the last couple of years, with GDP growth of 8.4% achieved during last financial year. This is evident from increased capacity utilization of cement, fertilizer and power plants. Taking into account the positive macroeconomic indicators prevailing in the country analysts expect industrial growth to continue in the medium term. The recent surge in international oil prices and resultantly higher fuel prices has forced industrial units to convert to cheaper fuel sources- mostly gas and coal.

Sui Northern Gas Pipeline and Sui Southern Gas Company are expected to benefit from expansion of domestic network. It has guaranteed a 17.5% fixed return at an EBIT level on its net operating assets. Therefore, the bottom line is not directly linked with the sales. However, there is an indirect link between bottom line earnings and sales: higher demand for gas by customers result in expansion projects being undertaken by the company, particularly from Iran-Pakistan gas pipeline project. The increased supply of gas will have to be transmitted to domestic consumers via SNGPL and SSGC, and both will have to scale up their distribution networks accordingly.

Pakistan Oilfields has posted Rs 3.76 billion profit after tax (EPS: Rs 28.63) in 2005 as against Rs 2.49 billion profit (EPS: Rs 18.98) for 2004, registering a growth of 51%. Contrary to market expectations the company only announced Rs 12.50 per share dividend and skipped any Bonus issue. Although, stock dividends do not have any impact on the fundamental valuations of the company it does affect the general sentiment of market players. The scrip seems attractive on current valuation which is complemented by one of the strongest bottom line growth for the current fiscal year. According to some analysts, fundamental investors should take this (only cash and no stock dividend) as a sign of strength for the company, as it implies that the company feels it has sufficient cash flows and does not plan to retain or dilute earnings.

Attock Cement has announced results for year ended 30th June 2005 and reporting Rs 861.7 million profit after tax as against Rs 280.2 million profit for 2004, a growth of 207%. This translates into an EPS of Rs 11.94 for 2005 compared to an EPS of Rs 3.88 for 2004. The top line of the company grew by 37% as a result of 23% increase in sales volume and 5% increase in cement prices. The surge in the company's bottom line was not only due to an increase in the top line but also through a one time boost in the form of other income arising from a net capital gain of Rs 334 million through the sale of 5.92 million shares of Attock Petroleum. The Board of Directors also approved distribution of Rs 1.25 per share dividend.