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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
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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 15, 2005

MARKET THIS WEEK

The correction that many quarters have been expecting has not come in as yet. Pakistan was hit by the worst natural disaster in its 58-year history on 8th October 2005 and there were expectations that it would jolt the market. The market did show a 0.25% decrease on Monday; however, it remained strong during the rest of the week barring the minor correction on Thursday. The surge was led by the cement sector on the back of expectations of phenomenal construction activity that is expected after the earthquake. PTCL showed some interest in light of rumors that that a top-level delegation of Etisalat is in the country, which is expected to resolve all outstanding issues. Overall, the market showed a 3.76% increase (WoW).

OUTLOOK FOR THE FUTURE

The State Bank has raised the limit of banks' exposure to the equity market up to 30 per cent and asked them to invest 10 per cent in futures market. This is expected to improv e market sentiment. Next week should see some stock specific activity as the result season sets in again. We advise our investors to go long in fundamentally strong scrips. Our top picks are Fauji Bin Qasim, KAPCO, ICI Pakistan, Nishat Chunian, Packages, Pak Suzuki and POL.

FUNDAMENTAL CHANGES

The major developments this week were:

•Union Bank announced its 9M05 results posting after tax profits of PRs1,250mn (EPS: PRs5.09), 109% higher YoY.

•Worldcall Broadband, posted earnings after tax of PRs117mn, which translates into EPS of PRs0.78 compared to EPS of PRs0.21 during FY04 (Nov to June).

•Worldcall Telecom, the recently listed WLL and LDI company posted an after tax loss of PRs19mn. ???Worldcall Multimedia, the Lahore based equivalent of Worldcall Broadband pos ted earnings of PRs68mn (EPS: PRs1.28) compared to a loss of PRs4mn in FY04. The company has already announced an interim 10% bonus issue.

•Worldcall Communications, posted after tax earnings of PRs439mn (EPS: PRs2.75); 80% up YoY. ???Kot Addu Power Company (Kapco) announced 1QFY06 results posting profits after tax of PRs2,067mn (EPS: PRs2.36), 3% higher YoY.

•Privatization Commission and Ministry of Water & Power Resources are seeking approval for US$240mn Karachi Electric Supply Corp.'s extension plan of Korangi Thermal Power Station in Karachi.

•Supreme Court of Pakistan has asked for an explanation of government's decision of entrusting price stetting authority to a private entity, Oil Companies Advisory Committee(OCAC).

•As per newspaper reports, an American equity fund, Amaranth Advisors LLC (a multi strategy investment fund with assets under management of US$6.5bn) has committed to investing US$25mn in Worldcall Group of companies.

•The SBP auctioned all three maturities of Treasury Bills. Total bids of PRs16. 85 billion were tendered, out of which the SBP picked up PRs4.4 billion.

•Dewan Farooque Motors Limited announced its FY05 results posting earnings after tax of PRs306mn (EPS: PRs3.97) as against PRs223mn (EPS: PRs2.90) in the corresponding period last year

•Following a meeting of the BOD of Karachi Stock Exchange (KSE) yesterday, it is reported that the KSE intends to start futures trading from December this year.

•Islamabad Chamber of Commerce and Industry (ICCI) has demanded that the government immediately allow duty -free import of cement from neighboring countries (Iran and India) through land route.

•Pakistan was hit by the worst natural disaster in its 58-year history on Saturday, 8th October 2005.

THIS WEEK'S TOP STORIES

WORST EVER QUAKE TO HIT PAKISTAN!

Pakistan was hit by the worst natural disaster in its 58-year history on Saturday. The earthquake, measuring 7.6 on the Richter scale, is believed to have claimed thousands of lives - official estimates at 20,000 casualties. Muzaffarabad (Capital of Azad Kashmir) is said to be the most affected area in this entire happening. According to the presidential spokesman, almost 70% of the buildings in Muzaffarabad have been destroyed or damaged, whilst, damages have also been witnessed in NWFP and adjoining areas. The economy is unlikely to escape unscathed from an event of such magnitude. We are revising our GDP forecast to 6.0% (from 6.5%) for current fiscal year. We also believe that the government would reallocate bulk of its Public Sector Development Fund (PSDP) in infrastructural development as the entire communication system (road network) has been destroyed. We also expect budget deficit to widen further to 4.2% (from 4.0%) during the current fiscal year, as government has already allocated PRs5.0bn for relief fund. We believe, both industrial and agriculture activities will be least impacted in this incident as bulk of the industrial estates and agriculture land are concentrated in center of Punjab and Sind province. However, we expect services sector activities to witness a slow down owing to the infrastructural loss. In the long run, we expect industrial sector to receive a real boost once the reconstruction activities start. KASB Research Team (research@kasb.com)

PAK SUZUKI: STRONGLY PLACED!

We recently visited Pak Suzuki Motor Company to meet the management and discuss the company's plans. The company is undergoing an expansion of its production facilities and is increasing its capacity from 80,000 units at present to 100,000 units. The expansion is in line with the growing consumer demand. As Pak Suzuki caters mainly to the 800cc & 1000cc segment, it is insulated from the infl ux of new and old imported cars to a greater extent. We continue our liking for the stock, which is trading at 5.5x 2005E earnings and offers an upside of 31% to our DCF based Price Objective of PRs213. Buy PSMC!

INFLATION TO SETTLE LOWER DESPITE HIGH OIL PRICES!

We expect inflation to settle at 8.21% YoY in Sep-05 (compared to 8.41% in Aug-05). We expect core inflation to stay higher at 9.5% (from 9.2% in Aug-05), mainly on account of higher transport inflation. Oil Companies Advisory Committee (OCAC) had revised oil prices by +7% on September 1st. This translates into higher transport inflation. We expect transport inflation to be recorded at 20% YOY (from 16.3% in Aug05) and fuel inflation at 6.8% YoY in Sep-05. Going forward, we expect transport inflation to stay higher in the remaining part of 1HFY06 owing to low base effect. However, we expect core inflation will start to taper off from 2HFY06 owing to the fuel prices cap removed by government since Jan-05. Focusing on today's T-bill auction, we expect SBP to marginally reduce T-bill yields by 5-10bps as both credit off take and inflation is tapering off. This would be the first cut since Aug-03.

PTCL- FY05 DETAILED ACCOUNTS

Pakistan Telecommunication Company Limited (PTCL) released detailed accounts for the year ended June 30 2005. While the dividend or lack of thereof hogged all the limelight in the pre and post result days, detailed accounts enable us to analyze the other part of the equation, the decline in earnings during FY05. Tracing back the reasons that led to 8.8% decline in bottom line during FY05, deregulation and privatization seem to be the main culprits. Like all incumbents the heat of deregulation has started taking its toll on PTCL as it has lost considerable ground in the Long Distance and International (LDI) segment to competition. Specifically so, the international incoming revenue segment which witnessed 22% decline YoY. Decline in revenues was on the cards but the quantum of decline has been surprising. The other factor contributing to decline in profits was provision for part of the attractive employee package (PRs1.26bn in lieu of encashment of earned leaves). This has contributed around 700 bps to the decline in operating margins during 4QFY05. Imtiaz Gadar (imtiaz.gadar@kasb.com)

ICI PAKISTAN: PLAY THE THEME, PLAY ICI!

We are re-initiating our coverage on ICI Pakistan with a Buy recommendation. At current levels, the scrip offers a potential 38% upside to our DCF based Price Objective of PRs144. Our bullish sentiment on the stock is driven by a strong turnaround in profitability of the company driven by i) management's bottom line centric focus to cut costs and improve operational efficiencies, ii) 22% enhancement of the Soda Ash capacity and iii) Asset Modernization and de-bottlenecking of the PSF plant iv) Prospective 6-year Top line and bottom line CAGR of 8% and 13% respectively.

MARKET ROUNDUP

 

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

41.02

42.36

3.27%

Avg. Dly T/O (mn. shares)

399.63

351.61

-12.02%

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

730.93

577.45

-21.00%

No. of Trading Sessions

5

5

-

KSE 100 Index

8542.40

8863.87

3.76%

KSE ALL Share Index

5648.50

5851.38

3.59%

 
 

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