Karachi Stock Exchange Weekly Analysis 8 July, 2012

The Karachi Stock Exchange (KSE) market has witnessed a bullish trend because of improving Pak – US relations over NATO supply. KSE – 100 index has reached 14,310 points by gaining 509 points or 3.7 percent. average volumes surged by 33%WoW to 92mn shares

Following news have played vital role in Karachi Stock Market index movement:

  • NATO supplies have been reopened after the apology of US secretary of state Hillary Clinton
  • Inflation numbers are much better than expected
  • Robust Cement dispatches, cement volumes sales for June-12 is 3.03 million tons
  • Higher International oil prices has stirred interest in E&P sector leading to outperformance of OGDC and POL
  • According to Pakistan Bureau of Statistics (PBS), Consumer Price Index (CPI) clocked in at 11.3% for the month of June-12 as against 12.3% last month. The cumulative CPI figure for FY12 stood at 11% versus the projected target of 11-12%
  • OGRA (Oil & Gas Regulatory Authority) has notified 4 - 7% cut in gas prices effective from 1st July
  • The Government of Pakistan has raised the rates on NSS (National Saving Schemes)
  • As per latest reported numbers by PBS, CPI inflation during the month of Jun came in at 11.26% YoY
  • Media reports suggest that the Ministry of Petroleum & Natural Resources has made a proposal in ECC meeting held on 3rd July to make amendment in gas allocation policy 2005 and give second priority of gas allocation to the Power sector (currently given to Fertilizer sector) after domestic & commercial sectors
  • The sponsors of Aisha Steel Mills Ltd (ASML) have announced an Offer for Sale (OFS) of 10mn shares (3.73% of Ordinary Share Capital) at PKR10/share. Of the total offering, 9.5mn shares will be available to the general public whereas 0.5mn shares have been allocated to ASML employees
  • SBP (State Bank of Pakistan) sees US$ 630 million revenue from the auction for 3G licenses to support external and fiscal deficit
  • Major Kharif crops' production likely to decline due to shortage of water and prolonged power load‐shedding
  • According to official figures, all the collectorates of customs were able to jack up customs duty collection by up to 125% at PKR 347 billion against last fiscal collection of PKR 154 billion
  • Bank of China (BOC), the second Chinese bank after ICBC, is likely to make entry in Pakistan
  • Power ministry seeks release of PKR 10 billion for oil supply to step up production in light of the power crisis
  • Pakistan will receive an amount of USD 1.5 billion of CSF by December 2012
  • Cotton cess increased to PKR50 per bale replacing the current rate of PKR 20 per bale
  • KPT to receive PKR2.2bn from NATO for seven‐month hold‐up
  • The Finance Ministry urged the Ministry of Water and Power to revise the PKR 383 billion subsidy during a Cabinet Committee on Energy
  • The FBR (Federal Board of Revenue) is likely to miss its revenue collection target for tax year 2011‐12 by PKR 37 billion
  • Following the directives of the federal government, TCP has decided to quicken the process of urea import to meet the procurement target
  • With power sector’s payables touching a record PKR477 bn, the government is expecting to bring into use about 1,745MW of power generation capacity before Ramazan by suspending 650MW supply to KESC and re‐renting 185MW from defunct RPPs

K.E.S.C., Indus Motors, NetSol Technologies, Jahangir Siddiqui & Co, Lafrage Pakistan Cement Ltd., Maple Leaf Cement Factory Limited, MCB, Nishat Mills Ltd., PTC, Lucky Cement, Fauji Cement Company Ltd., OGDC, EFOODS, Atlas Honda Ltd., Arif Habib Corp and D.G. Khan Cement were the major gainers while Philip Morris Pak Ltd, Siemens Engineering, Bata Pakistan, Bestway Cement, Pakistan Tobacco, Tri Pak Films, Rafhan Maize Products, Packages Ltd., and E.F.U. Life Assurance were major losers in the benchmark KSE-100 this week.

We eye corporate results to induce some excitement in the market, given June is normally a payout laden quarter. From an investment perspective, we see value in accumulation of fundamentally strong names such as PPL, APL, PSO, OGDC, POL, Hubco and NCPL in the energy sector, and MCB among banks. Other than this, Fatima Fertilizer and EFoods also warrant closer attention given sound business profiles and attractive upsides.

NOTE: The information posted in this blog (forum) is based on current affairs & investors point of view. There may be discrepancy in the ground realities.

Written by: Rana Khurram

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