Daily Times

KARACHI: Pakistan stocks slipped below the 49,000 level amid pressure in energy and fertilizer stocks. The benchmark KSE 100 index closed at 48,929 level, declining by 446 points. SECP’s stringent compliance measures and future rollover week commenced on Monday which also added to the downslide.

“Stocks closed bearish amid pressure in energy and fertilizer stocks post major earning announcements at PSX. Weak earning announcement by HUBCO, OGDCL invited late session pressure in the futures rollover week”, stated senior analyst, Ahsan Mehanti.

Stocks traded listless in the morning and struggled for direction thereafter resulting in the benchmark KSE100 Index trading in a narrow range and hopping between green and red for the most part of the day. Notable index names succumbed to selling pressure and dragged the KSE100 Index below 49,000 level. Declines were led by Engro Corp as the management’s attempt over the weekend to clarify its position on possible future investments following payout curtailment on Friday failed to counter investors disappointment, said analysts at Elixir Securities.

HUBC announced it EPS of Rs2.25/share along with a cash dividend of Rs 1.5/share which was in line with expectations. The stock price declined by 1.9%. HUBC’s consolidated turnover grew 4% YoY, in the outgoing quarter. This was mainly due to higher Furnace Oil (FO), which increased 15% QoQ during 2QFY17 on the back of rising international crude oil prices. Operating expenses witnessed an increment of 7% YoY. “We attribute this to augmented repair and maintenance expenses due to ongoing major overhauling at the Narowal Plant. However, cost savings through in house O&M activities by Hub Power Services Ltd. (HPSL) would have partially offset the increasing expense, we believe”, analysts at Topline Securities observed.

NML announced EPS of Rs 8.84 per share which was below expectations. NML revenues posted a growth of only 7% YoY, which was below expectations as they believe subsidiaries of NML failed to support the topline. On the core business front, NML revenues also grew by 7%, which was below expectations as a higher pick up in textile sales was estimated. Further, gross margins for the textile segment dropped by 2ppts YoY for 2QFY17 to reach 11%, depicting higher input cost (cotton price pressure in local market).

Further to decline in gross profit margins, higher distribution cost during 2QFY17 (up 35% YoY) dented operating profits which posted a decline of 32% YoY. The stock price also declined by 4.2%.

PTC announced its results for 2016; the Company posted a net turnover of Rs 44,867 million and earnings per share of Rs 40.55. PTC says it contributed Rs. 89 billion to National Exchequer in 2016, volumes decline as illicit cigarette trade grows to 40.6% of the total market in December 2016. The company complained that illegal cigarette trade is currently the biggest challenge facing the legitimate industry, with a massive share of the total market. Not only does illicit cigarette trade negatively affect the legitimate industry but also negatively impacts government revenues in the form of losses in potential revenues which, for the year 2015/16, went up to the tune of Rs. 47 billion.

Overall, volumes decreased by 7.8% to 344 million shares, while value declined by 27.5% Rs14.7 billion/ $140 million.

“We see choppy trading to continue in the near-term with participants looking for institutional flows to gauge market direction while earnings season will keep investors’ interest in the wider market alive”, analysts at Elixir Securities predicted.