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CURRENCY BUYING

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US Dollar 59.9 60
Bahrain Dinar 158 158.1
Canadian $ 50.85 50.95
Euro 70.75 70.85
Hong Kong $ 7.65 7.7
Japanese Yen 0.508 0.51
Kuwaiti Dinar 204 204.1
UK Pound 103.7 103.8
Last updated: Friday 23 Dec, 2005-12.30 P.M (PST)

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3 DAYS FORECAST
In oC

CITIES MIN MAX

HUM%

FOR.

KARACHI
Today 12 26 38 Sunny
Tomorrow 11 27 38 Sunny
Day after 11 28 38 Sunny
LAHORE
Today 1 20 87 Sunny
Tomorrow 2 20 87 Sunny
Day after 2 21 87 Sunny
ISLAMABAD
Today 0 18 59 Sunny
Tomorrow 0 18 59 Sunny
Day after 0 21 59 Sunny
HUM%: Humidity In %
FOR.: Weather Forecast
updated: Fri - Sun 23-25 Dec, 2005

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KARACHI         - 021 LAHORE          - 042 ISLAMABAD    - 051 FAISALABAD   - 041 MULTAN          - 061 PESHAWAR    - 0521 CANADA          - 1 KUWAIT           - 965 INDIA               - 91 IRAN                - 98 U.K                   - 44 U.A.E                - 971 U.S.A                - 1

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  CAPITAL MARKETS
 
 

 

 

 

 
  STOCK MARKET AT A GLANCE

By SHABBIR H. KAZMI
Updated Oct 01, 2005

MARKET THIS WEEK

Market sentiment swayed with the PTCL results and rumors regarding the privatization deal with Etisalat. The market opened on a positive note on Monday based on expectations of a higher dividend payout by PTCL and the SECP's decision to disallow broker-to-broker deals took backstage. However, PTCL's decision to skip the dividend dampened the positive sentiment and downward pressure in the market was seen. On Thursday, rumors regarding a possible back out by Etisalat from the PTCL deal dragged the market down. However, the market reacted positively on Friday to the statement by Etisalat that the PTCL deal is still intact. Overall, the market showed a 0.56% increase (WoW).

OUTLOOK FOR THE FUTURE

The market will remain sensitive to any news regarding the Etisalat-PTCL deal. Some quarters have taken the skipping of PTCL dividend as positive for the privatization deal. However, any statement from either Etisalat or the Privatization commission would drive the market sentiment and a major spill over effect on other stocks is expected. We advise our investors to go long in fundamentally strong scrips. Our top picks remain POL, Callmate Telips, Fauji Bin Qasim, National Bank and Packages.

FUNDAMENTAL CHANGES

The major developments this week were:

•PTCL announced after tax profits of PkR26.6bn (EPS: PkR5.22) 5% lower YoY and skipped the dvidend

•SSGC announced posting Net profits of PkR1,013mn (EPS: PkR1.51) 2% higher (YoY) and declared a dividend of PkR1.5 per share

•Pioneer Cement posted after tax earnings of PkR332mn (EPS: PkR2.30), 22% YoY drop

•SNGPL posted earnings after tax of PkR2.7bn (EPS: PkR5.52) and declared a dividend ofPkR3 per share

•Callmate Telips Telecom Limited announced FY05 results posting after tax profits of PkR432.28mn (EPS: PkR8.60); up 539% YoY and 3.5% higher than our expectations.

•Kohinoor Textile Mills Limited posted EAT of PkR88.5mn (EPS: PkR1.00) unadjusted for the 10% bonus issue also announced with the results.

•Iran has no intention of calling off the gas projects (US$22bn LNG project & US$7bn pipeline project between India, Iran and Pakistan).

•Wateen Telecom, a subsidiary of UAE-based Al Warid Telecom, launched on Monday a US$75 million project to lay an optic fibre backbone across the country. The project is expected to be nation wide, covering 5,000 kilometers.

•The Cabinet Committee on Privatization (CCOP) approved the sale of 73% sta ke, plus management control of the KESC to a reconstituted consortium of Hassan Associates, Al-Jomaih Group of Saudi Arabia and Premier Mercantile at a bid price of PkR1.65 per share (about PkR15bn).

•In a much-awaited development, the European Union (EU) has reduced the anti dumping duty on Pakistani bed linen on average by 3.2% to 9.9%.

•SECP has decided to prohibit stockbrokers to transact business from fellow brokerage houses, starting from October 10, 2005.

•The CEO of MOL group has hinted at an increase in gas production from Tal block in January 2006 to 50MMCFD from its current production of 35MMCFD.

•Etisalat has reiterated its commitment to the PTCL transaction ruling out rumors of a back out ???Central Board of Revenue (CBR) has collected PkR129.5bn in 1QFY06 as compared to PkR123.3bn during the same period last year.

THIS WEEK'S TOP STORIES

PTCL- FY05 RESULT PREVIEW

Pakistan Telecommunication Company Limited (PTCL) is expected to announce FY05 results tomorrow, 27th September 2005. We expect the company to post after tax profits of PkR27,613mn (EPS: PkR5.41), 5% lower compared to PkR29,170 (EPS: PkR5.72) last year. (Note: These are only numbers for the fixed line segment because this is what the market keeps track of). We expect the employee strike in the fourth quarter of FY05 to have impacted the company's financial performance during the period. As a result, the outperformance during the first nine months of current fiscal year is likely to be nullified during the last quarter.

The excitement this time however is likely to hover around the dividend payout rather than the earnings figure as punters bet on a skimming dividend. We do not rule out the possibility of such an occurrence and our base case forecast for dividend stands at PkR3.50 per share taking the full year dividend to PkR5.50 per share (pay out ratio greater than 100%).

CALLMATE TELIPS - RESULT PREVIEW FY05

Callmate Telips Telecom Limited (CTTL) is to announce FY05 results today, September 27, 2005. We expect the company to post profit after tax of PkR418mn (EPS: PkR8.31) compared to PkR68mn (EPS: PkR1.35) during FY04. The six-fold jump in profitability is mainly due to the timely acquisition of Long Distance & International (LDI) license that the company acquired in early 2005. Resultantly, we expect the company's gross margin to have surged to around 28.5% for FY05 compared to 19.5% during FY04. Going forward, the company faces a threat from emerging competition and the lurking Etisalat. The company has played its cards well so far and if it can hit the right strategy for last mile connectivity, our positive stance would be further reinforced. Our fair value for the stock stands at PkR68 per share offering a 21% upside at current levels.

PTCL FY05 RESULTS: NO DIVIDENDS - POSITIVE?

Pakistan Telecommunication Company Limited (PTCL) announced FY05 results yesterday posting after tax profit of PkR26,605 (EPS: PkR5.22), 3.6% lower than our expectations (KASB Estimates: EPS PkR5.41). Surprise of the day was however undoubtedly the absence of dividend payout, which meant that shareholders had to suffice with the interim PkR2 per share dividend announced in 1HFY05. We believe that skipping of final dividend carries possible positive implications for the privatization transaction, as the unexpected decision to skip dividend might have been the result of an agreement between the Government and Etisalat. Earnings for the year are 8.8% lower compared to last year. Major reason for decline was lower margins, which were a stupendous 871 basis points lower YoY. We believe that some adjustments have also been incorporated given the difference in operating margins between the 3Q and 4QFY05 (2,000 basis points lower).

SSGC - HIGH UFG DRAGGING DOWN THE BOTTOM-LINE

We expect SSGC to report 6% YoY drop in earnings in FY05 to PkR938mn (EPS: PkR1.40). We also expect the company to announce PkR1.25/share cash dividend for FY05. Despite a significant increase in capex PkR4.6bn additions to fixed assets in FY05 as opposed to PkR1.9bn last year - the company is expected to report 6% drop in earnings owing to high un-accounted for gas losses (UFG). However going forward. we expect SSGC to get hold of its capex plans (PKR40bn capex plans for the next 5 years) and UFG (recently launched a campaign against gas theft and is currently working on rehabilitation plan to replace its ageing distribution pipelines).

SNGPL - COMPARATIVELY BETTER

SNGPL is expected to announce its full year results today. We are expecting SNGPL to post net earnings of PkR2.6bn (EPS: PkR5.32), 16% higher YoY. The growth in earnings is purely driven by 21% higher capex (PkR7.5bn) this year. However the impact could have been 6% higher if the company would have achieved its UFG target. Going forward we expect the capex plans of SNGPL to remain intact at PkR6-7bn every year for the next 5 years while the company is looking to reduce its gas losses to 5.98% in FY06.CAGR 8%) and improvement in margins (fixed feedstock cost for the new plant). Meanwhile we are not ruling out the possibility of dilution of earnings & valuation (Rights expected in 2007) for Engro.

MARKET ROUNDUP

 

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

38.97

39.60

1.62%

Avg. Dly T/O (mn. shares)

386.98

339.28

-12.33%

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

629.42

537.46

-14.61%

No. of Trading Sessions

5

5

 

KSE 100 Index

8179.90

8225.66

0.56%

KSE ALL Share Index

5395.17

5444.32

0.91%

 
 

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