Saturday, 14 September 2013

Pak Suzuki Motor Company Limited Overview and Outlook

Pak Suzuki Motor Company Ltd.  
CY13 earnings to remain robust! 

Karachi Stock Exchange: Pak Suzuki Motor Company Limited (PSMC) reported 1HCY13 PAT of PKR1.2bn (EPS PKR: 14.05) showing a decline of 16%YoY, due to decline in volumetric sales (absence of Punjab taxi shceme & discontinuation of Alto). However on a QoQ basis, 2q earnings showed a remarkable growth of 120% due to Yen weakening, one off land sale gain & lower tax rate booked by the company. Going forward in 2HCY13, while volumes will remain subdued, we are foreseeing earnings to remain robust due to improvement in gross margins. Since Yen deterioration impact comes with a lag of 6 months and steel prices have also remained subdued, we reiterate our stance of 130% earnings growth in CY13. Trading at CY13 P/E of 5.2x, we maintain our “Buy” stance.

Margins augmentation & one off gain boosted QoQ earnings!   
Karachi Stock Exchange: QoQ decline of 4% in volumetric sales has been witnessed in 2QCY13, with major decrease observed in S. Bolan, Cultus, Liana & Swift by 6% to 21%. S. Ravi sales on the other hand increased by 8% QoQ. The real highlight of 2q was gross margins a ugmentation from 4.7% to 7.0% which was due to lagged impact of Yen wakening and full quarter inpact of last prioce riase (done in Jan 2013). In addition to above, the company has recorded one-off gain of PKR274 mn in 2QCY13 against the sale of old motorcycle plant which further boosted the earnings by PKR3.33/share. The above factors have resulted in QoQ earnings rising by 120%. YoY earnings during 1 HCY13 dipped by 16%, due to higher volumetric base effect (absence of Punjab Taxi Scheme & discontunuation of Alto).

Future outlook  
Karachi Stock Exchange: Going forward in 2HCY13, even though volumes will remain subdued, we are foreseeing earnings to remain robust due to improvement in gross margins. Since Yen deterioration impact comes with a lag of 6 months and steel prices have alsi remained subdued, CY13 earnings growth will remain robust. Based on prelimin ary estimates (July & August volumetric data), in Karachi Stock Exchange we project 3QCY13 EPS to click in around PKR 8-10/share. The recent uptick in Yen will aggect Pak Suzuki Motor Company PSMC earnings in CY14 as around 50% of its purchases are Yen based and the company will have to pass on the cost hike in order to maintain its margins. PSMC is panning to introduce a new car which is rumoted to be Suzuki Wagon R 1.0, later this year with a more efficient 3-cylinder998 cc K10Bengine which looks like an ideal replacement of Suzuki Alto.

About the Company 
Pak Suzuki Motor Company PSMC is a public limited company with its shares are quoted on Karachi and Lahore Stock Exchanges in Pakistan. The company has 82.30mn shares outstanding. Presently the company having a production capacity of 150,000 units perannum for cars and 44,000 units for motorcycles. The company was formed in August 1983 in accordance with the terms if a joint venture agreement between Pakistan Automobile Corporation Limited (PACO) and Suzuki Motor Corporation (SMC)- the holding company maintaining 73.09% shareholding in PSMC. The company is engaged in the assembling, progressive manufacturing and marketing of Suzuki cars, pickups, vans, 4*4s, motorcycle and related spare parts. The company has discontinued the production of Alto a populer car in the 1,000 cc category form July 2012. The plant and Registered office of the company are situated at DSU-13. Pakistan Steel Inductrial Estate, Bin Qasim, Karachi.

Thursday, 12 September 2013

Government to take decision on PIA | Government borrows Rs 600 billion | Services trade deficit falls by 42 percent

Government to take decision on PIA's future today
Karachi Stock Exchange: The  government  would  decide  about  the  future  of  Pakistan  International Airlines (PIA)  in the light of a  presentation by the management of  national flag carrier to the Prime Minister today. The management of the PIA would be  presenting  various  options  to  the  Prime  Minister.  These  include  a  plan aimed at reducing the losses of national flag carrier by Rs 400 million to Rs 500  million  by  the  end  of  December  2013  and  then  to  achieve  the  break even in a year's time if everything goes according to the plan. They said that the PIA has been incurring around 3 billion losses which would be reduced to  Rs  2.5  billion  by  the  end-December  2013.  Addition  of  some  new  planes  to  the  fleet  would  also  help  achieve  fuel  efficiency. Management plan involves considerable reduction in losses by operating flights on profitable routes, inducting new planes and by checking pilferage in ticketing and catering. The Prime Minister would decide whether it should give the PIA business plan a chance or privatize it.

Government borrows Rs 600 billion in two months
Karachi Stock Exchange: A shortfall in the revenue collection has resulted in massive government borrowing from domestic banking sector  particularly  the State Bank Of Pakistan (SBP). The federal government's borrowing  for budgetary  support from  the central bank has crossed Rs 600  billion mark in first two months of the current fiscal year. Massive borrowing from the banking system clearly reflects that the government is still facing financial difficulties, despite taking several measures to increase its revenue collection and curtail the rising  expenditures.  The  government  had  increased General  Sales  Tax  (GST)  from  16  percent  to  17  percent  in  the  Budget 2014 to enhance its income. In addition, the government has increased power and gas tariff to reduce the burden of subsidies, however, the government steps for the higher revenue generation seems to have failed as the budgetary borrowing is continuously  increasing,  they  pointed out. They said borrowing  of  Rs  500  billion to  the  power sector  to  settle the  circular debt issue is also a reason for higher borrowing during this fiscal year. According to the State Bank of Pakistan the federal government's borrowing  for budgetary support has registered  a notable increase  during two months of current fiscal year (FY14). The federal government budgetary borrowing rose to Rs 637 billion in July-August of FY14 against retirement of Rs 78.393 billion in the same period of last fiscal year.

Services trade deficit falls by 42 percent
Karachi Stock Exchange: Pakistani international services trade deficit stood at $159 million during July 2013 against $274.82 million recorded in the corresponding month last year, representing a decline of 42.16 percent. During the month under review, the economy hired foreign  companies’  services  worth  $543.88  million  while  selling  services abroad  worth  $384.92  million.  The  country’s  services exports (money inflow) stood at $342.89 million and imports (outflow) at $617.71 million in same month last year, representing an increase of 12.26 percent in exports and 11.95 percent decline in imports of the country services, according to the Pakistan’s Bureau of Statistics (PBS). During July 2013, services exports declined by 20 percent and imports by 9.37 percent  when  compared  to  the  previous  month.  During  June  2013,  exports  stood  at  $481.34  million  and  imports  at  $600.12 million. The country is not expected to reverse or break-even in the services trade in the short-term given the comparatively backward services industry. Pakistan’s soaring need for foreign transport, insurance and consultancy services as well as increased expenditure on financial services will also likely contribute to the expected hike in the deficit. Pakistan’s trade deficit fell by 3.07 percent for the first two months of the fiscal year 2013/14.

Pakistan Oil Field Limited Sales Increase 16 Percent | Tameer Bank: Telenor Granted Permission For Due Diligence

Pakistan Oil Field Limited sales increase 16 percent on yearly basis
Karachi Stock Exchange: The  volumetric  sales  of  Petroleum,  Oil  and  Lubricants  (POL) Pakistan Oil Field Limited  products  increased by 16 percent on yearly basis in August 2013 to 1.70 million tonnes as  against  1.46  million  tonnes  in  the  same  month  of  2012  mainly  due  to higher  petrol  (Mogas)  and  furnace  oil  (FO)  sales.  However,  Pakistan Oil Field Limited  (POL ) products sales on monthly basis decreased by 12.28 percent to 1.7 million tonnes in August  2013  as  against  sales  of  1.938  million  tonnes  in  July  2013.  Meanwhile,  during the  month of August 2013  the Mogas imports in the  country stood  at 157,884 tonnes, registering 3.0 percent monthly increase as  compared to 152,714 tonnes in the month of July 2013 while on yearly basis it declined  by  16  percent  to 157,884  tonnes  in August 2013  when  compared to 188,330 tonnes in the corresponding month of last year. According to the Oil Companies Advisory Committee’s (OCAC) data, FO sales grew by 29 percent on yearly basis in August 2013 to 920,000 tonnes over 700,000 tones.

Tameer Bank: Telenor granted permission for due diligence

Karachi Stock Exchange: The  State  Bank of  Pakistan has  granted  permission  to  Telenor  Pakistan  for due diligence of Tameer Microfinance Bank Limited to acquire its remaining 49  percent  equity.  Tameer  Microfinance  Bank  Limited  (TMBL)  is  a  listed banking company in Karachi Stock Exchange and currently Telenor Pakistan has ownership of some 51 percent  or  majority  stakes  in  this  financial  institution. Norwegian-based telecom  company  has  planned  to  enhance  its  investment  in  Pakistan through  purchasing  100  percent  share  of  the  microfinance  bank.  Accordingly,  the  cellular  phone  company  approached  the  central  bank  to  get  an NOC for due diligence of Tameer Bank to acquire the remaining 49 percent stakes  in  the  bank  with  the  approval  of  its  management,  which  is  already agreed to sell its remaining stakes to Telenor Pakistan. Telenor had already acquired  51  percent  share  worth  of  $12.5  million  (Rs  1  billion)  in  Tameer Bank  back  in  2008  for  launching  branchless  banking  "Easypaisa"  as  part of central bank's mandatory regulatory condition. Tameer Bank's financial position  reached  breakeven  in  2009  as  the  institution made  no  losses  but  it posted Rs 210 million profits in the very next year and gradually enhanced its profits level up to Rs 600 million in 2012.

Karachi Stock Exchange: Market Summary

Karachi Stock Exchange 100-Index  gained 240 points to close at 23,232 yesterday. Addition of 40 mmcfd gas from Latif field to the system, better auto sales numbers and early approval of 3G license lifted specific blue chip and low cap stocks. We anticipate the rally to continue over the next session and advise investors to book short in IPPs and focus on banks in the medium term.

Key Data
Karachi Stock Exchange 30-Index 17959.96 +100.15 +0.56%
Karachi Stock Exchange 100-Index 23231.68 +239.51 +1.04%
USD/PKR 104.93 0 0%
NYMEX Crude Future (USD) 107.62 +0.42 +0.39%
Gold (USD) 1359.4 -7.6 -0.56%
FIPI (USD `000) -80380.76 +3241.07 +3.88%
KIBOR (6 months / %) 9.03% +0.04 +0.44%

Notable Price Movers
Sym                 % Chg             StDev change
HUBC              (5.60)%           5.68
JSCL                11.30%            4.85
FATIMA            3.60%             3.94
PPL                  3.72%             3.63
AHCL              3.62%             3.46

Notable Shares Traded
Sym                 Turnover         StDev change
EFOODS          7,483,000      4.00
PPL                  5,900,000       3.13
PIAA               20,559,500     2.78
 AHCL             3,119,500       2.48
DGKC             7,421,000       2.39

Catalysts & Events

LUCK FY13 result to be announced on Sep 17, 13

MPS announcement on Sep 13, 13

Wednesday, 11 September 2013

Trade deficit narrows to $3.3b | Car sales pick up | Yamaha to invest $150mn | IDB to extend $850mn project assistance to Pakistan

Trade deficit narrows by 3.07pc to $3.3b
Pakistan’s  trade  deficit  narrowed  by  over  3  per  cent  in  first  couple  of months  (July  and  August)  of  the  ongoing  financial  year  2013-2014,  as ex-ports grew at faster pace than imports during the period under review. According  to  the  latest  figures  of  Pakistan  Bureau of  Statistics (PBS)  released on Tuesday, the country’s trade imbalance was recorded at $3.3 billion dur-ing July-August period of the current financial year 2013-14 as against $3.4 billion  of  the  corresponding  period  of  previous  fiscal  year  2012-13  (July-August 2012-13), showing decline of 3.07 percent in one year. The PBS data revealed that exports have grown slightly faster than imports during period under  review.  Exports  rose  3.66  per  cent  to  $4.091  billion  during  the  July-August 2013-14 as compared to $3.946 of the same period of the last year.However, imports marginally enhanced by 0.54 per cent to $7.386 billion in July-August 2013-14 from $7.346 billion a year ago.

Car sales pick up
Sales  of  locally  produced  cars  slightly  improved  to  18,880  units  in  July-August this fiscal year compared with 18,325 units in the same months last year. The increase in sales of Honda cars and Suzuki Bolan made a positive impact  on  the  overall  sales  figures  as  sales  of  Toyota Corolla,  Suzuki Swift, Liana, Cultus and Mehran remained depressed. The month-on-month sales also rose to 9,592 units in August compared with 9,288 units in July, accord-ing  to  data  released  by  Pakistan  Automotive  Manufacturers  Association (PAMA). As for Honda cars, Civic sales swelled to 1,755 units from 707 units followed  by  City  whose  sales  increased  to  2,334  from  2,184  units.  Suzuki Swift  and  Toyota  Corolla sales  declined  to  907  and  4,995  units  from  1,292 and 5,264 units, while Liana sales remained  flat at 13 units compared with 45 units earlier. In 1,000cc, the sales of Suzuki Cultus marginally dropped to 2,243 from 2,308 units followed by fall in Suzuki Mehran sales to 4,559 from 4,832 units. Bolan sales recovered to 2,074 from 1,624 units.

Yamaha to invest $150m on bike plant in 5 years
Board  of  Investment  Chairman  Muhammad  Zubair  on  Tuesday  announced that the government has granted permission to Yamaha Company to estab-lish motorcycle plant in Karachi and the company would invest $150 million during the next 5 years but would start operations in December 2014. Ishaq Dar took up the matter in Economic Coordination Committee of the Cabinet that  after  detailed  deliberations  and  expediting  the  process,  allowed  the company to setup the plant. Yamaha at the initial stages would produce 25 percent  motorcycles  in Pakistan  that  will  be  increased  with  the  passage of time.  Muhammad  Zubair  said  that  the  government  had  formulated  a  mo-torcycle policy just  in 3 months while taking all the stakeholders on board. He said that government has offered incentives to local and foreign compa-nies for introducing latest technologies. All steps are being taken to attract foreign direct investment and development of local industry. But local industry would have to introduce modern technology to be the beneficiary of new policy formed by the government, he added. Muhammad Zubair said that decision of Yamaha to  establish  its  plant  in  Pakistan  will  encourage  other  famous  brands  to  invest  in  different  sectors  of  the  economy  as  the country offers more lucrative business opportunities as compared to the regional countries.

IDB to extend $850mn project assistance to Pakistan

A  five-member  delegation led  by  Mr.Birama  Boubacar  Sidibe,  Vice  President  (operations) Islamic  Development  Bank (IDB) called on Finance Minister Senator Mohammad Ishaq Dar at his office. Mr Birama who held meetings with senior officials of Economic Affairs Division and Planning Department said that he was impressed with the resolve of the government and was optimistic that the initiatives and economic measures taken by the government of Pakistan would put the macro-economic indicators banks to green. He said that IDB not only readily agreed to a loan of 750 million Euros and a trade facility of 150 million but also released the first tranche by August 15, 2013. Mr. Birama also informed the Finance Minister that IDB was prepared to disburse an additional 850 million dollars in the next three years for project assistance to Pakistan. The Finance Minister also thanked IDB for financing Nelum Jhehum Hydropower Project and hoped that the project whose cost had tripled  due  to  neglect  of  the  previous  government  would  be  completed  by  2016  as  Prime  Minister  Nawaz Shraif  was  taking personal  interest.  Similarly,  work  on  Nanidpur  Project  which  had  been delay  for  over  three  years  had  been  started  in  full swing.

Cement exports drop | SBP’s reserves fall to $4.8 billion | Tullow Oil winding up Pakistan operations | Plan prepared to import LNG

Cement exports drop slightly
Total year-on-year cement dispatches in August fell from 2.283 million tonnes to 2.251m tonnes, All Pakistan Cement Manufacturers Association said in  a  statement.  Exports  from  the  north  declined  from  0.512m  tonnes  to 0.438m  tonnes  during  the  month  compared  with  last  year.  However,  domestic cement market in the region registered a little increase, dispatching 1.312m  tonnes  against  1.287m  tonnes  during  the  same  month  last  year. Local  cement  dispatches  from  the  south  dropped  by  11.65  per  cent  while exports increased by 15.48 per cent. The exports from South in August last year were 0.188m tonnes that  increased to 0.239m tonnes this year. Local sales  declined  from  0.296m  tonnes  to  0.239m  tonnes.  The  statement  said the  manufacturers  came  under  pressure  because  of  recent  hike  in  power tariff  and  fuel  prices  which,  in  turn,  raised  the  input  and  transportation costs.

SBP’s reserves fall to five-year low at $4.8 billion
Foreign exchange reserves  of  the  State Bank of Pakistan  (SBP) went  below $5 billion – their lowest level in five years - for the week ended August 30, the  SBP’s  data said on  Thursday. Reserves held by  the State  Bank declined to $4.822 billion from $5.203 billion, while country’s total liquid foreign reserves fell to $9.998 billion from  $10.390 billion during the  previous week. Economists  said  the  major  reason  for  the  decline  is  the  country’s  need  to fulfill  its  external  debt  servicing  obligations.  Pakistan  paid  the  19th  installment  of  $393  million  to  the  International  Monetary  (IMF)  as  part  of  loan repayment on  August 26th. The  central  bank’s forex holdings are  now one of  the  lowest  since  2008.  This  was  the  year  (November,  2008)  when  Pakistan signed $7.6 billion worth of stand-by arrangement loan program agreement with the IMF to overcome its severe balance of payments difficulties. The Fund said at that time that the loan was given with a view to strengthen Pakistan’s sharply diminishing foreign exchange reserves.

Tullow Oil winding up Pakistan operations
Ireland based oil/gas Exploration and Production (E&P) company Tullow Oil Plc  is to wind up its Pakistan operations. In March 2012 the company took the  decision  to  commence  a  process  to  sell  its  Asian assets  to  focus  on  its core African and Atlantic margin strategy. British Petroleum (BP) and Malaysian-based firm Petronas have already wrapped up their operations in Pakistan.  Tullow  Oil  is  the  third  foreign  firm  seeking  to  liquidate  its  assets  and leave  the  country. Pakistan Petroleum  Limited (PPL) had  shown  interest  in acquiring the  assets of  Tullow in Pakistan  and  Bangladesh  but  later  it  gave up  on  its  plan  as  Tullow  sold  its  Bangladesh  assets  to  a  Singapore-based company,  Kris  Energy. A  PPL  official  said  the  state-owned  company  is  no more  interested  in  Tullow  Oil's  remaining  assets.  In  December  2012,  after receiving formal approval from the federal government, PPL appointed consultants to evaluate Tullow Oil's assets in Pakistan and Bangladesh to determine hydrocarbon potential and the possible advantage of each block. Tullow has been active in Pakistan since 1991 and has exploration, development and production interests across seven licenses  covering 13,171 sq kms. Early in 2010, Tullow successfully  completed  the Shekhan-1 exploration well encountering 45 meters of net gas pay.

Plan prepared to import LNG under $490 million projects

The government has prepared a plan to import LNG under $490 million short, medium and long-term projects. LNG import projects are expected to be implemented within the next two to three years with the objective of enabling the country to import 1.7mmcfd LNG to alleviate the gas crisis in the country. The government intends to import 200mmcfd gas through a fast track Engro terminal Project in the next six to eight months at a cost of $30 million to $40 million. The Engro Vopak Terminal Limited (EVTL) would provide the project cost. The project activities include retrofitting of existing Engro LPG terminal, provision of Floating Storage and Re-gasification Unit (FSRU), dredging and laying of 8 kilometres pipeline from terminal to SSGC receiving point. The EVTL will be the terminal operator under a tolling arrangement. A fixed per mmbtu tolling fee and annual  throughput  guarantee  will  be  negotiated.  The  timeline  for  completion  of  the  project  is  six  to  eight  months  from award of  contract. The supply will be  intermittent and twice  a  month for 5-6 days  each  of 200  mmcfd LNG each  day.  The ship movement and night navigation issues would be resolved with Port Qasim Authority. The plan also envisages import of 500mmcfd LNG through SSGC LPG Retrofit Project within the next 18 to 22 months. The financing cost of the project $175 million to $200 million would be provided by the successful bidder.

PIA’s accord with Sabre | Pakistan competitiveness ranking | Urea reach on Gwadar port

PIA’s accord with Sabre: probe ordered
Secretary Aviation Muhammad Ali Gardezi has ordered an inquiry into an agreement of Pakistan International Airlines with a world’s  leading airline solutions provider Sabre as  it has been  found against the  interest of  PIA. PIA’s  five-year agreement with Sabre expired in 2010 but it was renewed by the management of the airline for another seven years. According to the details, the master agreement was signed between PIA and Sabre in October 2000 and renewed in 2005, while the agreement period was for five years starting from October 11, 2005. As per the agreement, per passenger cost was $0.42 for solutions, including SabreSonic Reservation, ACSI, StadyState and SmartFlow Revenue Integrity systems. The passenger volume was  assumed  at  five  million passengers  per  year  with  the  increase  rate  of  3.5  percent  per  year  whereas the  same  should have  been  on  actual  number of  passengers. ‘In  the  last  year of  the  agreement (from  October 2009  to  October 2010),  the impact in terms of amount was calculated at $3.673 million for the assumed passenger volume of 5.737 million. The malafide intention could be gauged from the fact that in the first year of the extended agreement (2010-11) this impact calculation  reached  to  $8.1  million  with  even  lower  assumed  passenger  volume  of  5.4  million.  It  is  beyond  comprehension  why there is this much increase in passengers’ volume when it is quite clear that PIA is fast losing its share both in international and domestic sphere due to inefficiency, flight delays, shortage of fleet, maintenance issues etc.

Pakistan slips to 133 on competitiveness ranking
At a time when the new government is striving to re-strengthen institutions, Pakistan has slipped down to 133 on competitiveness ranking among 148 countries reflecting weaknesses in its institutions and capacity of the economy to create space for innovation. The competitiveness ranking is part of the Global Competitiveness Report 2013-14, which was released here on  Wednesday  by  Mishal Pakistan,  a  local  partner  institute  of  the  World  Economic  Forum.  Pakistan  was  ranked  at  124  in 2012-13 and 118 in 2011-12. The gradual slipping of Pakistan’s rank shows the areas of public and private partnerships for cooperation for improving competitiveness are also diminishing as well. This indicates increasing mistrust between the public and the private sector due to increase in corruption and policy instability issues. The report for the year 2013-14 also includes  views  of  more  than 14,000  business  leaders  globally to  measure  competitiveness  of  148  countries.  More  than  200 business leaders in Pakistan identified corruption as the most problematic factor for doing business, followed by policy instability, access to financing, inadequate supply of infrastructure, inefficient government bureaucracy and high inflation.

52,000 tons of urea to reach Gwadar port tomorrow

The first shipment of 52,000 tons of urea, imported by the Trading Corporation of Pakistan (TCP), will reach Gwadar port on Friday. In July this year, the Economic Co-ordination Committee (ECC) of the Cabinet had directed the TCP to import urea on an  urgent  basis  aimed  at  ensuring  sufficient  urea  supply  during upcoming  crop  season. As  per  schedule  given  by  the  supplier, the first ship namely "MV Global Brave" carrying about 52,000 tons of urea will reach Gwadar port on Friday evening. The ship has already sailed from China for Pakistan. Another shipment is scheduled to arrive on September 12, 2013 from China. Besides import of urea from international market, the TCP is also importing the commodity from Saudi Basic Industries  Corporation (SABIC)  against $100  million  credit  grant  of  Saudi  Fund  for  Development. Under  the  credit  facility  so  far  some 164,000 tons of urea has reached Pakistan, while remaining some 40,000 will arrive till December 2013.

IMF Loan | 50MW Energy Project | D.G Khan Expansion Plans and T-Bills auction

IMF approves $6.68bn loan for Pakistan
The  Executive  Board  of  the  International  Monetary  Fund  (IMF)  approved today a 3-year arrangement under the Extended Fund Facility (EFF) for Pakistan  in an amount equivalent  to SDR 4.393 billion (US$6.64  billion1, or 425 percent of Pakistan’s quota) to support the country’s economic reform program to promote inclusive growth. The Executive Board’s approval enables an initial disbursement by the IMF of an amount equivalent to SDR 360 million (about US$544.5 million), and the remaining amount will be evenly disbursed over the duration of the program, subject to the completion of quarterly reviews.

US ambassador signs agreement for 50MW energy project
United States Ambassador  Richard Olson, signed on Wednesday a $95 million,  ten-year  loan  on  behalf  of  the  Overseas  Private  Investment  Corporation (OPIC) to Sapphire Wind Power Company to build a 50MW wind power plant  in  Sindh. Situated  in  the  Ghoro-Keti  Bandar wind corridor  near  Jhimpir, the plant will be designed to generate 133-gigawatt hours of emissionfree  electricity  annually  using  33  General  Electric  (GE)  turbines.  OPIC  has invested in 123 projects in Pakistan since 1975. Its current Pakistan portfolio includes  14  active  projects  worth  nearly  $300  million  in  key  industries  including  energy,  health  care,  financial  services  for  small  and  medium-sized enterprises, and telecommunications.

D.G Khan Expansion Plans
The DGKC directors also approved plans of setting up a green field cement production line of up to 2.6m tonnes a year at Hub, district Lasbela, on the land already acquired. The board also noted: “On the basis of due diligence we have  decided  to  abandon  the  idea  of  establishing  a  plant  in  Mozam-bique  due  to  lack  of  major  infrastructure  required  to  set  up  a  cement plant.”  Although  several cement manufacturers admitted  that  the  plans of D.G.  Khan  to  go  ahead  with  its  expansion  could  widen  the  rift  among cement producers, no one thought that a price war among producers was imminent.

T-bills auction: banks reluctant to invest

Banks are reluctant to invest in the long-term government securities mainly  due  to  expected  hike  in  the  key  policy  rate.  A  very  thin  participation was witnessed  in  the  auction  of  the  Market  Treasury  Bills  held  on Wednesday and not a single bid was received for the sale of 6-month and 12-month T-bills as banks are expecting some increase in discount rate in the upcoming monetary  policy  to  be  announced  on  September  14, 2013. The State  Bank of Pakistan (SBP) on Wednesday conducted auction of Market Treasury Bills (MTBs) and received bids only for 3-month T-bills, while not a single bid was received  for  6-month  and  12-month  bills.  As  per expectations  high  participation  was witnessed in the 3-month MTBs and bids worth Rs  87.925 billion (realized amount) were received. The  cut-off yield  for  the  three  months  T-bills  continues  to  stay  unchanged  at  8.9583 percent  with  accepted  amount of  Rs  82.145  billion. As per auction calendar a target of Rs 250 billion was set for the 5th auction of MTBs, however against the target only Rs 82.145 billion was borrowed. Overall target for this quarter was Rs 1.6 trillion, while so far government has borrowed Rs 781 billion through five auctions in first quarter of FY14. Economists said the realized amount remained far below the targeted amount as the SBP seems unwilling to increase cut-off yield significantly.

Monday, 2 September 2013

Karachi Stock Exchange: Daily News Update

POL prices move up
The government on Saturday raised the prices of petroleum products by up to Rs4.71 per litre, citing the rising trend in the international market. However,  following  directives  of  Prime  Minister  Nawaz  Sharif,  the  government made  a  partial  increase  of  Rs2.5  per  litre  in  the  price  of  high  speed  diesel (HSD),  which  is  mostly  used in  agriculture  and  transport  sectors. The  summary  sent  to  the  prime  minister  had  proposed  an  increase  of  Rs3.57  per litre  in  the  HSD  price.  The  government  has  given  a  subsidy  of  Rs1.07  per litre  in  the  price  of  HSD  to  facilitate  consumers  following  direction  of  the prime minister. The new price of HSD is Rs112.26 per litre. The price of petrol has gone up by Rs4.64 per litre, from Rs104.50 to Rs109.14 per litre. The price of kerosene, which is used as a fuel for stoves in remote areas where liquefied petroleum  gas (LPG)  is  not readily available,  has seen an increase of Rs4.71 per litre, bringing its price up from Rs101.28 to Rs105.99 per litre.

Govt earned Rs595bn from oil, gas in FY13
The  government  collected about  Rs595 billion  in  different taxes on  oil  and gas  in  2012-13,  accounting  for  almost  31  per  cent  of  total  revenues  collected  by  the  Federal Board  of  Revenue at Rs1,936bn.  As  such, the oil  and gas sector has emerged as the single largest  contributor to Pakistan’s total revenue.  According  to  final  financial  data  reconciled  by  the  Accountant General Pakistan Revenue (AGPR), the federal government was able to collect  Rs110bn  as  petroleum  levy  on  sale  of  petroleum  products  during  the outgoing fiscal year against Rs60bn a year before, registering an increase of 83pc.  Likewise,  the  government  also  collected  Rs32.2bn  as  development surcharge on natural gas in 2012-13 compared with Rs23bn collected in the preceding  year,  showing  an  increase  of  39pc.  Similarly,  an  amount  of Rs65.2bn  was  recovered  on  account  of  royalty  on  oil  and  gas  during  the year  under  review  compared  to  Rs62.8bn  a  year  before,  a  4  per  cent  increase. In addition, the government also collected about Rs23.8bn as Windfall Levy against crude oil during the FY13 compared with no collection under this head a year before.

OMV discovers oil, gas at Mehar gas field
The  Austrian  Exploration  and  Production  (E&P)  Company  OMV  has  announced  discovering  of  18  Million  Cubic  Feet  per  Day  (MMCFD)  gas  and 1,550 barrel crude oil from Mehar gas field located in Ranikot area of Sindh. The  presence  of  hydrocarbons  was  proven  through  wire-line  logging  and testing operations. During testing, a total of 18 MMCFD of gas plus an additional  1,550  barrels  of  condensate  (Gross  4500  boe/d)  flowed  from  the Ranikot  formation. The  Sofiya-2  exploration  well  is  located  in  the  Mehar exploration  block  in  the  Sindh,  around  10km  north  of  the  Mehar  gas  and condensate field. OMV Maurice Energy Limited holds a 75 percent share in the exploration license; joint venture partners are Government Holding Private Limited (GHPL, 5  percent),  Ocean Pakistan Limited (15  percent), and Zaver Petroleum Company (5 percent). The new discovery's proximity to the Mehar field provides the opportunity of using the Mehar gas and condensate plant for processing. The Mehar field development is in its mechanical completion phase; production start-up is expected in Q4/13.

SSRL raises investment for Thar projects
Sino-Sindh Resources (Pvt) Limited (SSRL) has reached a  subscription and cooperation agreement with a consortium of investors  consisting of  Global  Mining  (China) Limited (GMC) and  Asiapak Investments  (Asiapak). SSRL  is  planning to  develop coal mine with a capacity of 10 million tonne a year and integrated 1,200 MW mine-mouth power plant in Block 1 of Thar coalfields, in which the company holds a 30-year mining lease. The project cost is estimated at $2.6 billion for which a bankable feasibility has been completed through China Coal Technology and Engineering Group (CCTEG). SSRL was awarded the block,  which covers  around  150  square kilometres, after  a  round of  international  competitive  bidding in  September  2011. The  block  holds  lignite coal  resources of  nearly 3.5bn  tonne  including 600m  tonne of  measured, 1.9bn  tonne  of  indicated and 1bn tonne of inferred resources. Under the terms of the agreement, GMC will provide the equity funding for the project and will also arrange the required debt facilities from a consortium of Chinese banks.

PTA with Indonesia goes effective tomorrow
The Preferential Trade Agreement (PTA) between Pakistan and Indonesia will become operational from September 1, creating new opportunities for mutually beneficial exploration of the huge trade potential that exists between the two countries. The last hurdle in the actualisation of the PTA was affectively removed by the signing of Mutual Recognition Agreement on Plant  Quarantine  and  SPS  Measures  in  Jakarta on  Friday. Pakistan  Ambassador Sanaullah and  Head  of  Indonesian  Agricultural  Quarantine  Agency  (IAQA)  Mrs  Banun  Harpini  signed  the  agreement,  according  to  information  made  available  here. Indonesia has signed MRA with only USA, Australia, New Zealand, Thailand and Canada. From South Asia, Africa, Europe and Middle East, Pakistan has become the first and the only country which will be able to export its fruit to Indonesia without subjecting it to Indonesian Quarantine Rules and Regulations.