PakStox Outlook

OGDC has risen by more than 90% this year, yet it still hasn't reached the $1 per share price at which it sold for back in 2019. Some consolation. At its current price, the trailing dividend yield is under 5%, with stagnating production. Even after doubling its price within a year, the PE is just around 5. This highlights the stark mismatch between the replacement cost of capacity and the income stream it generates in the current distorted economic environment. The upheaval we have experienced in recent years has been tremendous. Replacing or expanding the country’s industrial capacity would now cost five to six times more than it did just five years ago. Inflation and the depreciation of the currency have created significant barriers to entry, limiting production increases, thereby stifling both growth and competition. Meanwhile, existing units are struggling to recover gains both for the current year and the years lost - this limiting income from investment. This mismatch between...

Despite investment activity at the Pakistan Stock Exchange now being dominated by institutions rather than individual investors, their presence and influence remain largely absent at the board level of listed companies. In smaller markets, institutions with a longer-term presence often exert significant influence on company boards, particularly regarding dividend policy. Pension funds, which dominate some markets more than mutual funds, typically require a consistent income stream and therefore play a substantial role in shaping a company’s dividend policy. This influence, however, is entirely absent in Pakistan. Aside from large companies in basic industries—which often belong to corporate groups and require dividend streams for other investments or to manage intra-group cash flow—most listed companies continue to build asset bases in both listed and unlisted equities, showing little regard for the interests of small shareholders. In fact, why should any listed corporate entity, prima...