Daily Times

KARACHI: Pakistan equities continued winning streak on Monday as benchmark KSE100 Index finished above 43,200 level, up 1.7% in three consecutive sessions. The benchmark KSE 100 index gained 355 points to close at 43,268 index level.

Market had a slow start but later institutional flows in key sectors such as Oils +1.3%, Fertilizers +1.2%, Financials +0.9% and Cements +0.9% helped Index to regain the momentum from last week. The gas utilities, Sui Northern Gas Co SNGP PA +5.0% and Sui Southern Gas Co SSGC PA +5.0%, were in limelight-closing at their respective upper price limits and accounting for around 12 percent of the total market activity- after the Oil & Gas regulator OGRA issued Tariff Regime whereby the Return on Asset (ROA) for the companies would be computed on the basis of Weighted Average Cost of Capital (WACC). As per current data, the pre-tax WACC comes out to 16.28-17.43%, close to current levels of returns but substantially higher than the earlier proposed post-tax around 12%.

From the fertilizers’ front, the reported prevailing water shortage of around 40% coupled with pre-season stock accumulation by dealers/farmers in anticipation of rise in urea price led to Urea sales of 480,000 tons, down by 8% YoY, taking five months Urea sales to 2.1 million tons, up by 28%. Among players, Fauji Fertilizer (FFC) and Fauji Fertilizer Bin Qasim (FFBL) is expected to outperform the industry by posting growth of 14% YoY each in their Urea offtake, clocking in at 254,000 and 60,000 tons respectively. However, Engro Fertilizer (EFERT) is likely to show decline of 4% YoY to 134, 000 tons, according to Topline Securities . Total production during May 2018 is expected to post decline of 23% YoY to 420, 000 tons due to closure of Engro’s Enven plant for about a half month, capping its May 2018 production to around 100,000 tons, down by 40% YoY, and higher RLNG prices and disrupted gas supply to Agritech and Fatima Fertilizers, resulting in suspension of their production for last 9-11 months. Large cap scrips, HBL, ENGRO, UBL, PPL, MCB, OGDC and PSO remained top index contributors in Monday’s session.

Published in Daily Times, June 5^th 2018.