Karachi Stock Exchange Weekly Analysis 30 November, 2014

The Karachi Stock Exchange (KSE) market index remained in the red zone. KSE-100 index lost -297 points (-0.94%) to close at 31,198 points. KSE – 30 index reached on 20,333 by losing -277 points or -1.35% percent.

Trading activity turned weak in bearish market with average daily turnover of 129.6mn, down 23% WoW. Foreigners turned sellers during the week, selling 4.47mn worth of shares relative to buying of USD4.8mn last week. Market participants would likely track Nov-14 CPI scheduled to be announced early next week while investors would also be watchful of foreign flows.

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

  • Uncertainty regarding outcome of the political showdown between the Government of Pakistan and PTI took its toll on the market this week
  • Receding oil prices drag KSE-100 index. KSE-100 index shed by 296 points (0.9% WoW) during the week owing to weakening international oil prices
  • Index heavy weight oil stocks primarily OGDC, PPL and POL fell by 8%, 6% and 6% respectively primarily on the back of falling oil prices cumulatively dragging index by ~400 points. Weakness in oil stocks was offset by rally in ENGRO which contributed ~71 points as index gains
  • Prime Minister Nawaz Sharif defers gas tariff hike
  • Pakistan receives $734.5m under CSF
  • Sukuk five times oversubscribed. Pakistan has successfully returned to the international Sukuk market, with the issuance of US dollardenominated Sukuk Notes under Reg‐S/144a format. The last international Sukuk was issued nine years ago. GoP was seeking to raise only USD500mn. However, the issue received a very high response from investors who made a subscription of USD2.3bn, which was nearly 5‐ times of the target amount
  • IPPs send govt notices for Rs42bn dues
  • Saudis block Opec output cut, sending oil price plunging
  • NML – Improving textile outlook strengthens investment case: We have revised up our FY15/16 EPS estimates for NML by 4%/8% to PKR17.4/PKR23.4 respectively. We maintain BUY call on NML as it offers 30% upside to our Jun-15 PT of PKR152/sh
  • EFERT – Materialization of key triggers to lure investor interest: We have tweaked our estimates for EFERT. We maintain BUY on the stock as it offers 14% upside coupled with 2% dividend yield
  • Fertilizers: 10MCY14 urea offtake declines by 2% YoY: Urea offtake in Pakistan declined by 14% YoY and 2% MoM in Oct-14.
  • Widening of current account deficit to US$1.7bn for 4MFY15, up 31%YoY
  • T‐bill yields easing off by 51bps in the latest auction while a 30‐40bps increase was seen in the recent PIB auction
  • OPEC’s decision not to cut petroleum production, despite the plunge in prices in recent months
  • OGRA forwarded a summary to MoP & MoF, recommending a reduction in prices of almost all petroleum products for Dec’14. Which is accepted by government of Pakistan
  • International oil price volatility is expected to keep the Oil & Gas sector under‐pressure, which can create an overall drag on the market
  • Nov’14 inflation figures are also likely to invigorate investors’ interest in the market
  • Expectation of another rate cut (Jan’15) by market participants on the back of macro‐economic improvements is likely to keep leveraged sectors high on investors’ radar where we believe sharp capital gains can be earned in medium to smaller cement players
  • JSCL and MLCF were at the top of the volume leader‐board in the week garnering a total turnover of 156mn shares in the week
  • Leveraged plays such as ENGRO and MLCF were amongst the top gainers during the week, driven by anticipation of finance cost savings in the wake of the recent 50bps DR cut. And Leveraged plays such as ENGRO, EFERT and MLCF are likely to witness another round of price appreciation
  • News flow regarding the materialization of Sukuk issue worth USD1bn and the likely inflow of USD1.1bn tranche propelled expectations of an improved FX position in the coming weeks
  • CDC of Pakistan is taking additional measures to facilitate the account holders of KASB Securities during its current suspension period. CDC has handled 126 Transfer of Holding Cases while 24,921,101 Securities worth around PKR1bn have been transferred from KASB Securities into respective accounts
  • The Chinese government and banks will finance Chinese companies to build USD45.6bn worth of energy and infrastructure projects in Pakistan over the next 6‐years, according to new details of the deal seen by Reuters
  • FFBL, the only fertilizer complex in the country producing DAP fertilizer and granular urea, plans to make the first foray in the food processing industry. The company announced that it was considering buying out NOPK – the listed company engaged in the manufacture and sale of Nurpur brand of dairy products
  • At the time when Pakistan’s overall exports are falling because of energy outages and exchange rate appreciation, its exports to European Union increased 18% to USD5.01bn during the 8MCY14 of this year after the GSP. The exports to EU were recorded at USD4.24bn in the same period a year earlier
  • Japan’s Mizuho Bank Limited will open offices in Pakistan under its expansion plan, said Hisanori Matsubayashi, senior manager, Asia and Oceania Division
  • Government to divest shares in ABL by December
  • Islamic banking profitability up by 57.5pc
  • Urea sales drop by 14pc
  • Banks NPLs rose by 2.2pc
  • LSM shows paltry growth of 1.86 pc for jul-sep
  • Imports rose from 16pc
  • Nepra has decreased the power tariff by PRs0.47/KWh for the month of October 2014 in the head of monthly fuel adjustment due to which PRs4bn relief will be provided to the masses in the electricity bills they will be receiving in the month of December
  • Fertilizer volumes: Slow start to the Rabi season
  • Forex reserves declined 0.06% to US$13.2bn as of November 21, 2014

Top ten gainers of last week were: Sui North Gas Pipe., Engro Corp, Maple Leaf Cem., Abbott Lab, Pakgen Power Ltd., Cherat Cement, Kohinoor Textile, Pioneer Cement, Sui South Gas and Nishat Chunian.

Top ten losers of last week were: Hum Network Ltd, Oil and Gas Deve, Jah.Sidd. Co., Pak Oilfields, Rafhan Maize Prod., Pak Petroleum, Pak.Int.Con., Pak Tobacco Co, Century Paper and Packages Limited.


Following are few BUY recommendations:

DG Khan Cement (DGKC)
Current Price: PKR 92.3
Target Price: PKR 127.00

Maple Leaf Cement Factory (MLCF)
Current Price: PKR 36.7
Target Price: PKR 45.5

Engro Polymer Chemicals (EPCL)
Current Price: PKR 11.9
Target Price: PKR 16.5

Oil & Gas Development Co. (OGDC)
Current Price: PKR 213.1
Target Price: PKR 302.1

Pak Oilfields (POL)
Current Price: PKR 446.6
Target Price: PKR 612.6

K-Electric Limited (KEL)
Current Price: PKR 7.6
Target Price: PKR 12.1
United Bank Ltd (UBL)
Current Price: PKR 177.1
Target Price: PKR 225.0

Fatima Fertilizer Co (FATIMA)
Current Price: PKR 31.54
Target Price: PKR 37.00

Pakistan Petroleum (PPL)
Current Price: PKR 189.62
Target Price: PKR 221.00

Allied Bank Ltd (ABL)
Current Price: PKR 113.47
Target Price: PKR 151.00

Habib Bank Ltd (HBL)
Current Price: PKR 204.75
Target Price: PKR 262.00

Bank Al-Falah (BAFL)
Current Price: PKR 30.25
Target Price: PKR 36.00

Following are few SELL recommendations:

Kot Addu Power Co (KAPCO)
Current Price: PKR 71.03
Target Price: PKR 58.00

Nishat Power Ltd (NPL)
Current Price: PKR 45.98
Target Price: PKR 38.00

National Bank (NBP)
Current Price: PKR 62.54
Target Price: PKR 53.00

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

No comments:

Post a Comment