PakStox Outlook

The upcoming monetary policy meeting of the Pakistan central bank is largely expected to keep the policy rate unchanged at its elevated level. It will be a long streak at that if kept unchanged. But if the central bank does make a cut in the policy rate, even a nominal one, that will substantially fuel this market rally. In my opinion, any rate cut would be at odds with the data stream and would not be taken as a sign of something fundamentally sound by the financial circles. All ills that ail us are still there. The structural issues in our economic and public finances persist, and the only thing that has changed is that the 'default' word is no longer associated with our external obligations. In addition, the positive tone by the IMF is also encouraging, beyond that, nothing solid. Our public finances and resources to meet our external obligations, together with the government's development expenditure, have always been reliant on external resources or space provided by e...

National Refinery Ltd. (PSX: NRL) is currently trading at a market price of Rs. 292.65 as of April 26, 2024. Its 52-week range is Rs. 142.55 to Rs. 383.8. It has a 3-month return of negative, 1%, a 6-month return of 25%, and a 1-year return of 92%. Comparatively, the KSE100 Index has achieved returns of 14%, 42%, and 76% over the same respective time frames. NRL has substantially over past one year despite eroding profitability. NRL reported a trailing twelve-month loss after tax of Rs. 5,962 million in March 2024. The loss per share on a trailing twelve-month basis stood at Rs.75 in March 2024. The company has not issued any cash dividends in the past twelve months. Slow product off-take, reduced demand for furnace oil in winters, and adverse movements in international oil prices typically plague the refineries. Additionally, recent issues with imports, especially higher LC charges and high financial costs, are also impacting the refinery's profitability. Plant shutdowns for maint...

Now the Pakistan Stock Exchange is witnessing an increase in investment from local mutual funds, after having surged on the back of foreign investment, let us see the repeating patterns and compulsions on market participants. Just three days ago, these funds were net sellers, with a combined total of over $2.1 million in sales year to date. However, in the past three days, they have shifted to become net buyers, accumulating over $4.89 million in purchases. This turnaround has placed their cumulative net activity in positive territory for the first time in over three months. This change in behavior is likely attributed to their structured investment approach, which they are forced to follow, which often prompts them to enter the market after a certain level of growth has been reached. Moreover, these funds are influenced by the money flow influenced by market momentum. The market momentum affects new investment flows into the funds as well as redemption activity. Foreign investors wie...

Oil & Gas Development Corp Ltd (PSX:OGDC) is currently trading at a market price of Rs. 134.86, within its 52-week range of Rs. 73.1 to Rs. 158.59. It has shown a six-month return of 33.2% and a one-year return of 53.9%. The company's price-to-earning ratio stands at 2.3, while its price-to-book ratio is 0.5. With 15% free float and 4,301 million issued shares, OGDC commands a market capitalization of Rs. 580 billion. Comparatively, the KSE100 Index has achieved a year-to-date return of 11.68% and a one-year return of 75.70%. OGDC, holds significant weightings within several key Pakistani Stock Exchange (PSX) indices. Notably, it comprises 3.78% of the KSE100 Index, 5.41% of the KSE30 Index, and 7.61% of the KMI30 Index, highlighting its considerable influence within the Pakistani stock market. OGDC holds 20% stake in Mari Petroleum Company Limited, that trades on Pakistan Stock Exchange under the ticker 'MARI'. OGDC has also invested in Reko Diq Mining Company (Private...

FCCL: Earnings Report Analysis 9 Months Ending March 2024 Fauji Cement Company Limited (FCCL) recently released its earnings report for the nine months ending March 2024. While EPS (earnings per share) showed a slight decrease compared to the same period last year (Rs. 0.72 vs Rs. 0.77), sales remained relatively stable. Overall, the report suggests stagnation in earnings growth. Gross profit margin also declined slightly compared to the previous quarter and last year, sitting at 28%. Similarly, EBIT in this quartet (earnings before interest and taxes) was substantially lower than the 2nd quarter of 2024 and slightly lower than the same quarter last year. Company Notes and Positive Signs However, the company's earnings release included some positive notes. The cement industry as a whole saw a 3% increase in dispatches for the nine months of FY24, reaching 34.50 million tons. This indicates continued growth in the market. FCCL itself also experienced some growth. The company's d...

Today's market behavior was typical of a certain group of investors taking new positions in reaction to a strong market surge, while another section of investors seized the opportunity to exit. The PSX opened in the green, with the KSE100 Index gaining over 400 points intraday, but closed in the red, losing some nominal points. Who bought and who sold paints an interesting picture. The main driver of the recent market surge, foreign corporates, were almost absent from the market. They were replaced by overseas Pakistanis and local mutual funds. Today, 'Overseas Pakistanis' were net buyers of close to $1.2 million at PSX. Despite the KSE100 ending the day down around 70 points after having opened in the green. Normally, ‘overseas Pakistanis’ activity is not significant, and most of the time they are net sellers. Year to date, they are still net sellers, with a cumulative net sale of close to $3.9 million. However, such is the momentum created by 'foreign corporates' ...

EPCL: Engro Polymer & Chemicals Limited First Quarter Mar 2024 EPCL reported a loss of Rs. 1.16 billion before tax for the first quarter ending in March 2024. However, the loss after tax was mitigated by some tax reversals. The primary reason for the significant decline in profitability is the drastic reduction in gross margin, plummeting from 20% in the first quarter of last year to just 6% this year. Additionally, sales declined by 8% compared to the same quarter last year. Furthermore, financial charges also saw an increase of over 40% compared to the first quarter of last year. Unfortunately, the management has not provided any details or reasons for the decline in sales and profitability alongside the announcement of financial results. This lack of transparency is a significant concern regarding listed corporates behavior at PSX, as disclosures often conceal more than they reveal. EPCL has a commendable and consistent dividend payout history. Its paid-up capital has remained u...

Today, PSX continued its bullish trend, with the KSE100 Index gaining close to 1000 points intraday, nearing the 71k level before closing at 71,433, adding 523 points (+0.74%). As anticipated, local investors—both those adhering to weighted strategies (i.e., mutual funds) and those seeking to capitalize on the momentum—will likely be drawn into the market whirlwind fueled by persistent foreign investor buying. Today, activity from 'Foreign Corporates' was subdued, with only $1.25 million in net buying, a stark contrast to the whopping over $28 million in net buying witnessed over the last two days. Conversely, local investors demonstrated significant activity today. Mutual funds, adhering to their fund structures, were net buyers of $2.4 million. Notably, this one-day net buying by mutual funds exceeds their entire year-to-date net buying as of yesterday by over 70%. Individuals' net buying today slightly surpassed that of Mutual Funds, totaling $2.67 million.  Individuals ...

KAPCO: Kot Addu Power Co Ltd 3rd Quarter - Mar 2024 In the third quarter of the current financial year, the earnings per share (EPS) for KAPCO stood at Rs. 1.3, with a cumulative EPS of Rs. 4.07 for the nine-month period. Comparatively, in the same quarter last year, the EPS was Rs. 0.78, and for the nine-month period, it was Rs. 4.4. This quarter did not see any dividend distribution , as KAPCO had already disbursed Rs. 4.5 per share as an interim dividend in the second quarter of this financial year. The electricity sector in Pakistan is undergoing significant changes. The true value of KAPCO will only become apparent in this evolving landscape and how it adapts to it. KAPCO's primary source of income is interest earned on PIB/Sukuk. Its financial charges remain substantial, accounting for over 35% of earnings before interest and taxes for the third quarter, although they are showing a declining trend. The tax rate stands close to 30% for the nine-month period of this year. KAPC...