STOCK MARKET UPDATE: 03.04.2013

STOCKS

Karachi Stocks Up 60.77 Points:
KARACHI, Apr 02: At the close of trading, the KSE-100 index was at 18332.88, up 60.77 points.

 (Today Market is 163.92 Up@ 11.21 am)

April 2, 2013

 5 TOP GAINERS  &  LOOSERS:

UniLever Pak	Rs 634.45	Rafhan Maize	Rs (180.00)
Colgate Palmolive	Rs 89.00	Indus Dyeing	Rs (21.30)
Bata (Pak)	Rs 43.50	Philip Morris Pak.	Rs (15.36)
National Foods	Rs 16.03	Wyeth Pak Ltd	Rs (6.65)
Clariant PaK	Rs 11.35	Mithchells Fruit	Rs (6.00)

Bullish trend continues on stock market

KARACHI, April 2: Shares maintained the bullish momentum at the Karachi stock market on Tuesday with the KSE-100 index adding another 73.63 points to close at new record best at 18,345.74 points.
The early morning news of firm trend in the global equity markets was helpful. Investor sentiments were also upbeat over what looked like smooth sailing in the election process. The confidence was fortified by the outlook of healthy results and payout in the upcoming corporate results.
Cement stocks were in the forefront with good gains on the basis of higher volumetric sales and possibility of rise in prices. On Tuesday, like the earlier day, the trading started on a firm note on Monday closing at 18,272 points, which also was the day’s lowest for the stocks did not look back once on a rising course.
Volatility of around 160 points with the day’s high seen at 18,434.74 points, enabled days traders to make quick gains particularly in the second and third tier stocks. Those accounted for almost half of the ten-top volume leaders for the day.
The KSE-30 index was up by 12.65 points to 14,395.17 points. Volume in terms of shares rose sharply by 32 per cent to 225 million shares on Tuesday, from 171 million shares traded the earlier day. Trading value increased by 13 per cent to Rs8.210 billion, from Rs7.281 billion on Monday. The market capitalsiation was up by Rs7 billion to Rs4.492 trillion on Tuesday from Rs4.485 trillion the day ago.
Foreign inflow in equities on Tuesday stood at $1.38 million. Among the local participant, banks bought $0.78 million worth shares and individuals $2.73 million worth equity. ‘Companies’ were net sellers of $1.99 million and mutual funds $3.93 million.
Ahsan Mehanti at Arif Habib Corporation stated that the CPI Inflation at 6.57pc MoM for March ‘13 and strong data on urea and cement sales played a catalyst role in bullish sentiments amid late session selling in fertilizer stocks on reports of CCP levy of 8.64bn on collusion and increasing urea prices.
Hasnain Asghar Ali at Escorts Capital stated that following the international trends the upward momentum at the local equity market could be termed as a pre election run-up. Positive sentiments and renewed buyers however restricted negativity.
On the contrary intra-day adjustment led to major volumetric shuffling thus allowing the volumes to stay on rise, as the third tier stocks mainly from cement sector poured in hefty volumes.
In all, 350 shares came up for trading on Tuesday, of which 144 were on the plus side, 182 on minus and 24 remained unchanged.
The two biggest gainers for the day were UniLever Pakistan, up by Rs634.45 to Rs13,323.45 and Colgate Palmolive higher by Rs89 to Rs1869.00. On the declining side, Rafhan Maize was down by Rs180 to Rs3610 and Indus Dyeing was lower by Rs21.30 to Rs405.50.On the ten-top volume leaders list, Fauji Cement rose by 28 paisa to Rs8.77 on 36m shares. Maple Leaf Cement was up by 92 paisa to Rs 19.68 on 29m shares; Lafarge Pakistan gained 42 paisa to Rs7 on 25m shares; Bank of Punjab slipped by 9 paisa to Rs9.13 on 11m shares and Engro Corporation added 89 paisa to Rs135.29 on 11m shares.
DG Khan Cement jumped by Rs1.03 to Rs72.16 on 8m shares; Jah Sidd Co lost 39 paisa to Rs13.09 on 7m shares, Engro Foods rose by Rs2.71 to Rs130.85 on 7m shares, Lotte PakPTA shed 9 paisa to Rs7.32 on 5m shares and Dawood Hercules was up by Rs1.12 to Rs53.98 on 5m shares.
Cement stocks help KSE scale an all-time high: KARACHI: On the concrete trading foundation laid by cementmakers, Karachi Stock Exchange (KSE) built a rally to consolidate yet another all-time high here on Tuesday, Geo News reported said.
The recordmaking KSE-100 Index grew by 0.40 percent, or 73.63 points, to close at 18,345.74 points at the end of the trading day.
Tuesday’s star performers were Fauji Cement Company Ltd, which rose by 4 percent to close at 8.83 rupees and Maple Leaf Cement Factory Ltd, which gained 5.33 percent to reach Rs19.76.
Analysts said the investors remained sold to the cement stocks on hopes of better than expected earnings in March.

Company News:

Increasing urea prices: Engro, Fauji fined Rs8.64 billion: ISLAMABAD, April 2: The Competition Commission of Pakistan (CCP) has imposed a major penalty of Rs8.64 billion on Engro Fertiliser Limited (EFL) and the Fauji Fertiliser Company (FFC) for increasing urea prices to an unreasonable level, which led to a rise in food inflation in the country.
The CCP conducted a thorough inquiry into the matter after taking notice of rising trend in urea pries in December 2010.
The order has been conveyed to the two urea manufacturers over their abuse of dominant position in the market.
During the year of inquiry, the urea bag price surged by around 86pc from Rs850 to Rs1,580 and local urea production also increased.
The inquiry included an analysis of factors that could lead to increase in urea prices.
“These factors are gas curtailment – the most important issue as always raised by the urea manufacturers,” said Rahat Kaunain Hassan, CCP chairperson on Tuesday.
The other factors considered by the CCP inquiry committee were input costs, profit margins, subsidies given by the government and other policy issues etc.
“After the inquiry, show-cause notices were issued to all urea manufacturers and many hearings were held so that their point of view could be obtained,” she said, adding, “during the course of hearings, Fauji Fertiliser Company (FFC) acknowledged that the price rise was initiated by Engro Fertilisers Ltd (EFL) and the FFC was only price follower.”
The CCP bench comprised CCP Chairperson and senior member Abdul Ghaffar.
The order noted that urea is an essential item, and the increase in urea prices directly hits food inflation which has gone up by around 45pc in five years. Incidentally the two companies — FFC and the EFL — had obtained Rs77bn subsidies in the past three years from the government to keep the prices at a reasonable level.
In 2011, the Fauji Fertiliser received Rs11bn in terms of subsidy while Engro Fertiliser obtained Rs4.5bn from the government.
The detailed order highlights that despite concerns of gas shortage, the profit of FFC increased from around Rs11bn in 2010 to Rs22.5bn in 2011.
Its return on investment (ROE) after a tax of 97.5pc was above the ROE after tax enjoyed by the undertakings in agro-based economies similar to Pakistan.
The ROE in urea business in India is capped at 12pc, whereas in the case of EFL, the CCP bench referred to a case of excessive pricing in Turkey.
The Turkish authorities had ruled in the case that dropping profits or even loss registered by any company does not imply that it cannot abuse its dominant position.
However, in 2011 the gross profits of EFL went up by more than 80pc from that in 2010. The CCP bench after hearing the urea companies decided to impose a maximum penalty on both EFL and FFC under the Competition Act.
This is 10pc of their individual turnover which comes to Rs3.14bn for EFL and Rs5.5bn for FFC.
The CCP also advised the Securities and Exchange Commission of Pakistan (SECP) that it is critical to conduct forensic cost audit of all urea companies by independent auditors in the interest of transparency.
Jubilee Life: KARACHI, April 2: Jubilee Life is set to launch a loyalty programme for its customers in collaboration with ORIX Leasing Pakistan Limited as its partner, a press release said.
In this regard, an agreement was signed by the Managing Director & CEO Jubilee Life Javed Ahmed and CEO ORIX Leasing Pakistan Teizoon Kisat.

IFS: KARACHI: JCR-VIS Credit Rating Company Limited has upgraded the Insurer Financial Strength (IFS) Rating of EFU Life Assurance Ltd (EFU Life) to ‘AA’ from ‘AA-’. Outlook on the assigned rating is ‘stable’, a press release said.

Unilever agrees to pay Rs50bn in stock buy-back: KARACHI, April 2: Unilever Overseas Holding Limited, the parent company of Unilever Pakistan on Tuesday conveyed its acceptance of the repurchase price of Rs15,000 per share of Unilever Pakistan recommended by the Special Committee and fixed by the Karachi Stock Exchange, for holding in the hands of public, a letter sent by the UniLever Overseas Holdings to the stock exchanges said.
For the few small shareholders it could be a big boon. Analysts believe that for the stock market itself, it could mean flush of liquidity. With the parent holding at 75.08 per cent, the rest of one-fourth of total 13.2 million outstanding shares, which is in the hands of small shareholders work out to 3.3 million.
Head of Research, Khurram Schehzad at Arif Habib Corporation says that back of envelope calculation puts the amount to be received by small shareholders at Rs49.8 billion at Rs15,000 per share. That would be nearly the size of assets managed by the country’s largest mutual fund, the National Investment Trust (NIT).
A statement by Unilever Pakistan issued on Tuesday affirmed: “Unilever Plc, through its wholly-owned subsidiary Unilever Overseas Holding Limited on April 2, committed to invest 400 million euros ($514 million, Rs50 billion) in acquiring 24.92 per cent of issued shares in its Pakistan subsidiary, Unilever Pakistan that it does not already own.”
The company stated: “The 400-million-euro is the single largest foreign direct investment in the recent history of Pakistan and underlines Unilever’s commitment to a business established in the country in 1948”.
The letter of acceptance from Unilever Overseas which had arrived at the KSE after the close of trading hours on Tuesday, stated that the Unilver Overseas agreed to the quantum of shares to be purchased as determined by the exchange under Listing Regulation No.30-A(ii) at 199,400 shares of Unilever Pakistan (to qualify for delisting).
Unilever Overseas Holding said that in the meantime, it had requested the Pakistani subsidiary to convene an Extraordinary General Meeting as early as possible to seek shareholders’ approval through a special resolution for the voluntary delisting of the shares of Unilever Pakistan.
In an earlier letter on Monday, the KSE had asked Unilever Pakistan to convey the sponsors’ acceptance or refusal of the minimum purchase price of Rs15,000 per share and minimum quantum of shares, to qualify for Voluntary Delisting.
Market watchers say that two major foreign investors also have an aggregate stake of around 10 per cent in Unilever Pakistan. Acacia Partners, which holds 544,890 shares or 4.1 per cent in the company had already expressed its concern over the delisting.
In another letter to the KSE on Tuesday after the Unilever Overseas approval, Girish Bhakoo, Partner at Acacia Partners through a letter observed: “We would like to make clear that we still think that the only fair price is a price that is negotiated between willing buyers and sellers.”
He wrote that no comparison of valuations with other Unilever or other such precious and preeminent MNC subsidiaries in comparable countries would come up with such a low price of Rs15,000 per share as was recommended by the Special Committee, fixed by the exchange and accepted by Unilever. “We are sad to be forced to part with the company,” Acacia concluded.
The second big foreign shareholder in Unilever Pakistan is ‘Arisaig’ that holds 778,890 shares or 5.86 per cent of the company. Analyst observe that if those funds sell their stake in Unilever Pakistan and do not plough back, the expected liquidity generation in the market would slip by Rs19.8 billion, but still loom at a staggering Rs30 billion.

MOHAMMED SALEEM MANSOORI