SPOT Scripts kse

2010-02-19T16:42:00.000-08:00

# FAUJI FERTILIEZER LTD. Spot from 12-2-10
32.5% Dividend
Book Closure Date 19-2-10

# INTERNATIONAL INDUSTRIES LTD Spot from 12-2-10
15% Dividend
Book Closure Date 19-2-10

# ENGRO POLYMER CHEMICAL LTD Spot from 16-2-10
27.5% Right
Book Closure Date 23-2-10

# BERGER PAINTS PAKISTAN LTD. Spot from 22-2-10
122% Right
Book Closure Date 27-2-10

# LOTTE PAKISTAN PTA Spot from 24-2-10
5% Dividend
Book Closure Date 3-3-10

# MASOOD TEXTILE MILLS LTD. Spot from 24-2-10
100% Right
Book Closure Date 3-3-10

# KOHINOOR ENERGY Spot from 25-2-10
10% Dividend
Book Closure Date 4-3-10

# Pakistan Petroleum Ltd Spot from 25-2-10
40% Dividend
Book Closure Date 4-3-10

# ATTOCK CEMENT Spot from 26-2-10
17.5% Dividend
Book Closure Date 5-3-10

# ABBOT LABORATORIES PAKISTAN LTD Spot from 1-3-10
30% Dividend
Book Closure Date 6-3-10

# Attock Petroleum Limited Spot from 1-3-10
100% Dividend
Book Closure Date 6-3-10

2009-04-13T10:13:00.000-07:00

STOCK EXCHANGE:
A stock exchange, (formerly a securities exchange) is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks

A vibrant market

2009-03-22T11:30:00.000-07:00

On improving volume, the benchmark index rose 74.99 points or 1.24 percent to settle at 6,138.53 levels --extending gains for the fourth consecutive sessions. The daily turnover increased 32.68 percent to 177.53mn shares, as compared with 133.80mn shares traded a day earlier. The buying forces were seen dominant throughout the session which enabled the index to test intra-day high at 6,194 levels. NIB with turnover of 21.32mn shares, maintained its lead among the top volume leaders for the day, followed by NBP (17.21mn), OGDC (14.5mn), PTC (11.34mn) and FFBL (10.29mn). The index is trading 28.36 percent higher from a recent low tested on Jan 27 (4782.26 points) --trading 33.18 percent lower since the removal of price floor. Sustainability above the upper trend-line and bullish crossovers on the moving averages system, keeps the outlook positive. Investors are advised to take any temporary oscillation around 6,060~6,025 levels as an opportunity to BUY. For today, penetration below 6,108 levels is likely to induce minor pressure towards 6,070 levels, with further probability for a test of 6,025~6,030 levels. On the flipside, a break past 6,173 points should invite interest towards prior high (Feb 9) of 6,243 levels. A successful breakthrough will be seen as a healthy sign for a move towards 6,405~6,440 levels.

Preferred Stocks: OGDC, PTC, PSO, POL, DGKC, FFC, ENGRO, NML, ABL, AICL, BAFL, UBL, MCB and NBP

Top scripts in KSE in coming days

2009-03-19T04:58:00.000-07:00

HUB Power company
Safe bet interlaced with growth: Fundamentally speaking, PkR depreciation of 28% against the US$ in CY08 augers well for IPPs, including the Hub Power Company Ltd (Hubco), as revenues are indexed to the US$ and hedged against movements in the US CPI. With the second semiannual indexation under the Power Purchase Agreement (PPA) set for late December '08, we can expect a sequential impact on earnings growth in 2HFY09 as the PkR depreciated by 17% versus the US$ during 1HFY09. Hubco is also expected to show sequential improvement in earnings going forward due to the inbuilt higher project company equity (PCE) payments which are likely to increase Hubco's dividend yield from FY10 onwards. In this regard, the PCE component of the pre-determined tariff will show a US$ based growth of 12%YoY in FY10 backed by an average 18% depreciation in the PkR/US$ parity during FY09-FY10. As a result, earnings in FY10 are expected to rise by 51%YoY. With a power shortfall estimated in excess of 3000MW at present, IPPs such as Hubco are also entitled to generation bonuses from Wapda when electricity dispatched exceeds specified load factors.
Other growth avenues: The Narowal Power Plant (225MW) expected to be streamed online by March '10. In this regard, industry sources have indicated that generators have been procured from MANN of Germany while SDV International is currently handling the logistics. Furthermore, Hubco has recently ventured into hydel-based generation by acquiring a 75% stake in the 84MW Laraib hydropower project, as part of its strategy to become a large, diversified energy player. .
On its existing balance sheet, we believe that Hubco has the potential to bring online up to 726MW (current debt adjusted) of additional thermal generation capacity. Other potential future value triggers will be dependent upon the acquisition of energy assets as the company executes its strategy to become a large, diversified energy player. We are holding off on pricing the potential upsides from these projects until public dissemination of material information.
Valuations: Since the power sector companies receive a fixed return on equity (ROE) guaranteed by the Government of Pakistan (GoP), they operate as quasi-sovereign bond instruments. At current market price, Hubco offers a FY09 dividend yield of 12.3%. However, dividend yield for Hubco is expected to increase from FY10 onwards based on higher project company equity (PCE) payments inline with its tariff structure. In this regard, Hubco is offering a FY10 dividend yield of 18.5% and a 3-year dividend CAGR of 19% (CY09 - CY11). With a target price of PkR33.6/share, we maintain our Buy stance on the scrip in view of favorable demand-supply dynamics and potential upward re-rating triggers ahead.

ENGRO Chemical
The company: With diverse interests ranging from fertilizer to food, polymer to terminal, and automation to energy, Engro can simply be classified as a huge conglomerate. We expect Engro's earnings to grow at a CAGR of 16% during the period CY08F-CY13F.
Expansion - Tapping the right area: Currently, Engro is the second largest urea manufacturer in the country with a market share of 19%. With the commissioning of its new 1.3mn tons urea plant by 2HCY10, Engro's market share is expected to grow to 35%. Moreover, the company will enjoy a cost advantage compared to peers as feedstock gas will be provided to the new plant at a discounted rate of US$0.77 per ton for a period of 10 years (it is provided at US$1.2/ton for the rest of the players in the sector).
Interest rate at its peak; no further downside for Engro: ECPL is one of the highest leveraged companies in Pakistan with Debt / Asset ratio expected to stand at 57% in CY10. Our economist believes interest rates have peaked and that further monetary tightening is unlikely. In such a scenario, the potential for a downward revision in earnings and further cost over-runs on the expansion project seems limited. .
Engro Foods – Growth all the way: Engro Foods, the company’s food arm, commenced operations in CY06 and is expected to become profitable by CY10F, with earnings depicting a CAGR of 29% during the period CY10F-CY14F. The company has already expanded its product portfolio, now comprising of Olpers, Olwell, Olpers cream and the highly successful Tarang. Engro Food’s market share in the processed milk market is estimated to stand at 20%-22%, a commendable performance given the short span of the company’s life.
Further re-rating on the cards: Our valuation for Engro could be in for a potential positive re-rating due to the company's resolve to further expand its already large and diversified investment portfolio. Engro has already won the bid for a joint venture with the state owned Ferphos in Algeria for the construction a DAP complex. Feasibility study for the DAP complex is already in progress. Furthermore, word has been circulating about Engro looking to set up a fruit export company in the near future, however, no confirmation in this regard has been available from management. .
Valuations and Price performance: Engro has outperformed the KSE-100 Index by 47% YTD. Going forward, ENGRO is likely to keep outperforming due to the value the scrip holds in the form of attractive core business, Engro Foods, Engro Energy and other diversified businesses. At current levels, we recommend BUY stance on the scrip.

Bank Alfalah Limited
Price performance and valuations: Since its listing in 2004, BAFL has traded at an average trailing P/B multiple of 3.2x whereas it is currently trading at a trailing P/B multiple of 0.7x (adjusted for recent 50% rights issue). This is only 17% over the historical low P/B multiple of 0.6x (on Jan 26’09). Relative to peer banks (e.g. FABL and AKBL that are now trading 61% and 33%, respectively, over their trough multiples), BAFL has failed to depict meaningful price performance since hitting its low of PkR9.89/share. Since we believe the interest rate cycle has peaked and that equities particularly cyclical stocks will likely come to forefront of investor attention again, we feel BAFL carries more upside relative to other banks (other banks have performed while BAFL has yet to perform).
Concerns have been overplayed
Impairment is of relatively low concerns for BAFL considering relatively low equity market exposure (we estimate total impairment at about PkR250-PkR500mn which is significantly lower than impairment of PkR4.9bn, PkR3.6bn, and PkR1.5bn experienced by MCB, UBL and HBL, respectively). Secondly, earlier concerns about deposit withdrawals (in 2008) were put to rest immediately and the bank recouped lost deposits within 2-3 weeks. We expect growth on a normalized basis in 2008, in contrast to normalized earning declines for other banks. However, we believe BAFL may opt not to pay a cash dividend this year due to capital constraints.
So what should BAFL be worth?
Banks that have performed recently (e.g. MCB, HBL) are now trading above a P/B multiple of 1x. We believe a P/B multiple is both reasonable and conservative at the same time. On this criteria (P/B of 1x), BAFL would be worth about PkR14.5/share, implying an upside of 12% from current levels. Another method would be historical differential between MCB and BAFL (MCB is representative since it has a long trading history). Since its listing, BAFL has on average traded at a discount of 7% to MCB while it is presently at a discount of 41% to MCB. On this basis, BAFL’s target price would be PkR17/share, implying an upside of 34% from current levels.

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SPOT Scripts kse

A vibrant market

Top scripts in KSE in coming days