Karachi Stock Exchange Weekly Analysis 25 October, 2014

The Karachi Stock Exchange (KSE) market remained almost unchanged closing at 30,098 amid relatively low volumes this week. Average daily volume and value traded rose 24% and 18% WoW, respectively to 165mn shares and US$93mn/day. FIPI outflow picked up pace and clocked in at US$15.2mn vs US$8.9mn last week. KSE – 100 index closed at 30,098 by increasing 215 points or 0.7 percent.

KSE-100 index remained range bound during the week managing to gain 215 points (↑0.7%) against a decline of 275 points (↓1%) in the previous week. Average daily trading volumes remained subdued during the week, decreasing by 9% WoW to 93mn shares. Foreigner remained net sellers during the week as well, selling net USD15.2mn worth of shares (↑68% WoW). According to analysts's expectations trading volume to pick up next week as major companies (IPPS, Textiles, and Cements) are slated to announce their quarterly financial result, while investors will also keep a watchful eye on foreign flows. One analyst at KASB Securities said the triggers, such as results, political issues and oil prices, which affected the market last week, will continue to influence it the next week.

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

  • The showdown of political power by the incumbent ruling party of Sindh over the weekend created a political drama where young political leader of PPP targeted all the political partiers’ and provided the masses with a policy guideline
  • Soon after the event, the minority partner in the provincial government left the ruling elite alone while creating a political deadlock
  • Nestle Pakistan added 64 points to the index on the back of strong 3Q results as the company reported 80% growth in bottom line
  • MLCF traded the highest volume of 53mn owing to strong 1QFY15 earnings expectation
  • Tahir ul Qadri wraps up D-Chowk (Islamabad) sit-in. Investor jubilation was seen on October 22, 2014 where investors celebrated the end of Qadari’s Dharna as they may see a clearer sky
  • LSM posts 5.27pc growth
  • Oil import declines in July-September
  • Forex reserves to improve by December: Dar
  • First quarter: Government breaks ceiling as expenses rise Rs100b
  • Fertilizers: Floods impact volumes in Sept-14: As per statistics released by NFDC today, urea offtake in Pakistan declined by 11% YoY and 33% MoM in Sept-14. Offtake for the local industry fell by 8% YoY while that of NFML declined by 38% YoY
  • ABL: Positives priced in: We re-initiate coverage on Allied Bank Limited (ABL) with a Jun-15 PT of PKR125/sh based on justified PBV of 1.8x. The stock has outperformed KSE-100 index by 35pp since Jan-14 owing to substantial earnings growth during 9MCY14. The stock is currently trading at CY15 PBV of 1.6x and PER of 8.3x and offers an upside of a mere 3% along with a dividend yield of 5%, translating into a total return of 8%
  • Privatization commission announced the OGDC‐GDS book bidding to kickoff probably on November 5, 2014 to November 7, 2014
  • The Supreme Court’s judgment allowing transfer of shares in the secondary public offering of Oil and Gas Development Company Limited (OGDCL) also provided some cushion
  • The results announced in the outgoing week were fairly mixed where major results from cement companies were unable to impress the investors
  • MLCF posted lower profitability on account of higher taxation, LPCL posted a marginal loss for the quarter and DGKC earnings & margins were well below the anticipated levels
  • From the banking space, HBL, FABL and ABL posted better earnings whereas INDU after launch of its new and stylish version of Corolla announced its result which was lower in comparison with market anticipation
  • Falling coal prices, however, rejuvenated buying interest in cement shares ahead of result announcements
  • On the last trading day of the week, strong rumors in circulation about the enhancement of OMC margin pushed the market higher where PSO hit the upper circuit breaker followed by SHEL and APL posting major gains
  • Government of Pakistan decided to keep the electricity tariff unchanged at an average rate of PKR 11.52 unit against a PKR13.81/unit as recommended by Nepra
  • Finance Minister has promised Punjab‐based textile industry that the government would resolve their problem of tax refund and gas supply after the industry expressed inability to take advantage of the GSP Plus status
  • Textile exports recorded a 4% year-on-year decline in the first quarter of the current fiscal year
  • China will provide USD3.5bn soft loan to Pakistan for repair and maintenance of railway infrastructure from Karachi to Peshawar, Pakistan Railways
  • MD Hinopak Motors Limited on October 22 introduced Euro II vehicles at the company’s head office in Karachi which include rigid trucks, prime movers and buses, calling them ‘green range’ of commercial vehicles
  • SBP announced concessional refinance scheme of PKR10bn for the revival of economic activities and to facilitate the flow of fresh credit in the flood‐affected areas as reported by the NDMA
  • The book building exercise for the sale of 10% stake of the OGDCL would start in the first week of November soon after Muharram holidays
  • The money market witnessed the first Ijara Sukuk OMO that was held on October 23, 2014 which witnessed outright purchases of PKR6.175bn in 6M and 12M tenors. The PIB auction conducted on October 22, 2014 saw bids of PKR329bn out of which only PKR49.6bn were accepted
  • Engro Elengy Terminal Private Limited (ETPL) said on Wednesday that it will be ready to receive liquefied natural gas (LNG) consignments at Karachi’s Port Qasim by January 26, 2015. The terminal has a capacity of handling 600mmcfd LNG, while the government would import 200mmcfd in the first year of operation

Top ten gainers of last week were: Hum Network Ltd, Pak.Int.Con., Cherat Cement, J.D.W.Sugar, Meezan Bank, Searle Pak, Pioneer Cement, Nestle Pakistan, Fatima Fert.Co. and Fauji Cement Company.

Top ten losers of last week were: Mari Petroleum, Allied Rental Mod, Grays Of Combridge, TRG Pakistan Ltd, Shezan International Ltd., International Steels Ltd, Century Paper, Bata (Pak) Ltd., National Refinery and Engro Foods Ltd.

Top ten volume leaders: MLCF, KEL, BOP, FCCL, TRG, LPCL, DGKC, AKBL, EFERT, JSCL, and KTML.

Thank you very much for reading this article.

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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