US Dollar 59.9 60
Bahrain Dinar 158 158.1
Canadian $ 50.85 50.95
Euro 70.75 70.85
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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)



In oC




Today 12 26 38 Sunny
Tomorrow 11 27 38 Sunny
Day after 11 28 38 Sunny
Today 1 20 87 Sunny
Tomorrow 2 20 87 Sunny
Day after 2 21 87 Sunny
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




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







Updated Nov 26, 2005

In the latest Treasury Bills auction the State Bank of Pakistan raised the yields on 6-month Bills by 15bps and 12-month Bills by 2bps. Yields on the 3-month Bill were left intact. An auction of Rs 90 billion was met with demands of Rs 78.24 billon. SBP accepted Rs 3.4 billion for three months, Rs 800 million against six months and Rs 57.745 billion against twelve months tenors. While the hike in six month T-Bills was against the expectations, the longer-term view of marginal downward trend in short-term interest rates remains intact as more indicators are pointing towards this outcome.

In a meeting with the old and used auto parts importers and traders group, Commerce Minister, Humyun Akhtar Khan, has said that the removal of the existing ban on import of used auto parts would be given serious consideration in consultation with the Central Board of Revenue (CBR), Ministry of industries and Engineering Development Board. It is likely that import of used auto parts particularly of those categories, which were not locally manufactured, might be allowed. Illegal import of used auto parts is estimated one billion dollars and this decision is expected to help in curbing illegal import and generate revenue for the used part dealers and the CBR. Analysts do not expect any material impact on the local auto assemblers.

Pakistan State Oil Company faces some concerns due to volumetric decline in consumption of petroleum products. On top of this petroleum prices are expected to remain stable, as the government does not seem to be in favor of raising prices further. A softening in international oil prices can make the case for a decline in petroleum prices stronger. While first quarter earnings depicted a strong growth of 109% YoY, we believe that this growth was largely due to one off inventory gains, which are unlikely to appear in second quarter. Volume data reported for fist quarter shows that demand for petroleum products has declined by 19% YoY. While higher petroleum prices have played a role in restricting demand, the price impact is mainly restricted to motor gasoline consumption. A decline in diesel consumption can be attributed to a delay in the sugar crushing season and slower agriculture demand growth. Another concern in terms of volumetric growth for PSO arises from the growing competition in the sector. Attock Petroleum has been aggressively working on expanding its retail network throughout the country, and in the process capturing market share of PSO. Similarly, Admore Gas is another company which has started its operations, though on a relatively modest scale. There are reportedly two to three more companies that have obtained the license for establishing oil marketing companies, and are likely to commence operations over the next 12-18 months. Currently controlling the largest market share, PSOís market share is likely to be diluted as competition further intensifies in the oil marketing sector. Progress on the privatization of PSO seems to be the immediate trigger on the horizon. The government plans to sell 51% of its stake in the company to a strategic investor. The Privatization Commission has already short-listed the bidders. The progress is reportedly gaining momentum, and the transaction could materialize over the next 6-12 months.

A rally in cement stocks was witnessed after the release of quarterly results where the gross margins of all cement companies shot up as a result of increase in cement retention prices. Further appreciation was witnessed as prospects of higher cement consumption came forward with the rebuilding of the northern areas affected by the earthquake. With this Fauji Cement along with other cement stocks reached new highs. While the prices hike was said to be due to improved gross margins, it was also attributed to speculation. Rumours about a possible sell off of the company are also resonating in the trading halls of the bourses, which havenít been confirmed or denied. Fauji Cement posted profit after tax of Rs 260 million for the first quarter as compared to Rs 136 million for the corresponding period last year. This translates into a growth of 91% YoY. Higher cement prices coupled with higher cement sales are the major reasons for the growth. Local cement prices showed an increase of 20% YoY from Rs 218/bag to Rs 262/bag, while export prices for cement increased by a whopping 60% from $45/ton to $72/ton. This resulted in a substantial improvement in the companyís gross margin, which increased from 39% to 50%. Total sales volume improved slightly from 241,000 tons to 255,000 tons. While most of the cement companies are planning to substantially increase their production capacities, Fauji Cement has decided to remain on the sidelines. Though the de-bottlenecking of the plant has been completed, it has just added 700 tons per day capacity taking the total capacity to 1.10 million tons. Going forward, the limited capacity will seriously hamper the growth potential of the company owing to the following reasons. Firstly, lower capacity of the company would result in lower quota allocation by the cartel because quotas are assigned as a specific percentage of capacity. Secondly, the company will not be able to increase its cement prices as prodigiously as it has up till now owing to supply glut in the next 2-3 years. Thirdly, the opportunity of cement export would also be limited in future, as Iran is planning to almost double its current cement capacity of 35 million tons by 2010. This will affect both the volume and price of exported cement which is currently extraordinarily high.

Telecard announced its first quarter results posting profit after tax of Rs 54.7 million (EPS: Rs 0.18), which represents a slight rise over profit of Rs 48.7 million (Diluted EPS: Rs 0.16) for the corresponding period last year. Revenues have increased by around 18% to Rs 605 million, while operating costs have fallen slightly by 2.5% to Rs 392 million. Gross margin and operating margin improvement to 35% and 26%, respectively have been neutralized by increased financial charges and tax expense. Financial charges have surged to Rs 75 million from around to Rs 11 million on the back of heavy borrowing attributed to Telecardís ëGo CDMAí wireless telephony operations. Going forward the company is likely to bear the burden of increased financial charges, which may hamper profit growth at the after tax level.


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