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LATEST ARTICLES
Earning Review: EFUG’s profitability declines on account of 100% rise in Net insurance claims
August 26, 2019 (MLN): The EFU General Insurance Limited (EFUG) has announced its financial results for the half year ended on June 30th 2019, wherein the company reported its net profits after tax (PAT) declined significantly by 56% to Rs 646.4 million from Rs 1.48 billion earned in the same period last year.
The financial results announced today were also accompanied with an interim cash dividend of Rs 1.5 per share i.e. 15% in addition to first interim cash dividend already paid at Rs 1.5 per share for the first Quarter ended March 31, 2019.
The decline in company’s profits is primarily due to increase in several cost generating streams of the company.
During the period, the company’s net insurance claims increased by 100%, net commission surged by 70%, insurance claims and acquisition expenses mounted by 90.6% and management expenses rose by 50%, all of these contributed in declining company’s profitability.
Furthermore, a considerable increase in income taxes of about 748% further helped in declining company’s profitability.
The Earnings per share of the company reported a decline of 68% to Rs 2.05 for the period mentioned above.
Profit and Loss Account for the half year ended June 30th 2019 (Rupees in '000) | |||
|---|---|---|---|
| Jun-19 | Jun-18 | % Change |
Net insurance premium | 18,491,395 | 10,522,762 | 75.73% |
Net insurance claims | (9,635,655) | (4,813,835) | 100.17% |
Net commission | (3,814,275) | (2,240,232) | 70.26% |
Insurance claims and acquisition expenses | (13,449,930) | (7,054,067) | 90.67% |
Management expenses | (2,279,340) | (1,515,035) | 50.45% |
Investment income - statutory fund | 4,819,975 | 1,636,771 | 194.48% |
Net realized fair value losses on financial assets | (5,567,340) | (496,676) | 1020.92% |
Net fair value loss on financial assets at fair value through profit and loss | 1,019,971 | (3,284,842) | - |
Net change in insurance liabilities (other than outstanding claims) | (2,171,030) | 1,158,369 | -
|
Underwriting results | 863,701 | 967,282 | -10.71% |
Investment income | 348,282 | 368,834 | -5.57% |
Rental income | 53,351 | 49,995 | 6.71% |
Other income | 153,915 | 74,463 | 106.70% |
Other expenses | (49,615) | (39,390) | 25.96% |
Results of operating activities | 1,369,634 | 1,421,184 | -3.63% |
Finance cost | (8,412) | - | - |
share of profit associate | - | 103,952 | - |
Profit from window takaful operations - Operator's fund | 88,216 | 53,230 | 65.73% |
Profit before tax | 1,449,438 | 1,578,366 | -8.17% |
Income tax expenses | (803,005) | (94,671) | 748.21% |
Profit after tax | 646,433 | 1,483,695 | -56.43% |
Earnings per share - basic and diluted (Rupees) | 2.05 | 6.47 | -68.32% |
Copyright Mettis Link News
Equities, yuan plunge as Trump escalates trade war with China
Aug 26, 2019: Asian equity markets tanked and the yuan hit an 11-year low Monday after Donald Trump ramped up his trade war with China by imposing more tariffs on more than half-a-trillion dollars worth of imports.
The decision on Friday stunned investors, who ran for the hills, hammering European and Wall Street stocks, while safe havens such as the yen and gold -- go-to assets in times of turmoil and uncertainty -- surged.
The move, which also came with an outburst against China by the American president and a call for US firms to leave the country, overshadowed a broadly dovish speech by Federal Reserve boss Jerome Powell but one that fell short of Trump's demand for deep interest rate cuts.
Friday's tariffs hike was in response to Beijing's decision to raise levies on $75 billion of US goods.
Tariffs on $250 billion Chinese goods will go to 30 percent and those planned on $300 billion in Chinese goods go to 15 percent from October 1.
On Monday, China's yuan currency fell to 7.1487 to the dollar, its weakest level since early 2008 at the height of the global financial crisis. The drop is likely to ire Trump, who has labelled Beijing a currency manipulator.
"The gloves are coming off on both sides and as such yuan depreciation is an obvious cushion against US tariffs," Mitul Kotecha, a senior emerging markets economist at Toronto-Dominion Bank, told Bloomberg News.
"As long as China can ensure that yuan weakness is well controlled i.e. it does not provoke strong outflows, expect to see further depreciation in the currency."
On equity markets, Hong Kong led losses, slumping more than three percent, with investors also spooked by fresh violent protests in the city that saw police use water cannon for the first time.
Shanghai lost 1.3 percent and Tokyo ended the morning more than two percent off.
Sydney, Seoul, Wellington, Jakarta and Taipei all sank more than one percent.
AFP/APP
Asian equity markets tank as Trump escalates trade war with China
August 26, 2019: Asian equity markets tanked and the yuan hit an 11-year low Monday after Donald Trump ramped up his trade war with China by imposing more tariffs on more than half-a-trillion dollars worth of imports.
The decision on Friday stunned investors, who ran for the hills, hammering European and Wall Street stocks, while safe havens such as the yen and gold -- go-to assets in times of turmoil and uncertainty -- surged.
The move, which also came with an outburst against China by the American president and a call for US firms to leave the country, overshadowed a broadly dovish speech by Federal Reserve boss Jerome Powell but one that fell short of Trump's demand for deep interest rate cuts.
Friday's tariffs hike was in response to Beijing's decision to raise levies on $75 billion of US goods.
Tariffs on $250 billion Chinese goods will go to 30 percent and those planned on $300 billion in Chinese goods go to 15 percent from October 1.
On Monday, China's yuan currency fell to 7.1487 to the dollar, its weakest level since early 2008 at the height of the global financial crisis. The drop is likely to ire Trump, who has labelled Beijing a currency manipulator.
"The gloves are coming off on both sides and as such yuan depreciation is an obvious cushion against US tariffs," Mitul Kotecha, a senior emerging markets economist at Toronto-Dominion Bank, told Bloomberg News.
"As long as China can ensure that yuan weakness is well controlled i.e. it does not provoke strong outflows, expect to see further depreciation in the currency."
On equity markets, Hong Kong led losses, slumping more than three percent, with investors also spooked by fresh violent protests in the city that saw police use water cannon for the first time.
Shanghai lost 1.3 percent and Tokyo ended the morning more than two percent off.
Sydney, Seoul, Wellington, Jakarta and Taipei all sank more than one percent.
APP
China’s yuan sinks to lowest in 11 years amid trade tension
August 26, 2019: China's currency on Monday slid to its lowest point in more than 11 years as concerns over the US trade war and the potential for global recession weighed on markets.
The onshore yuan fell to 7.1487 to the US dollar, its weakest point since early 2008, in Asian trading.
Global economic tensions have intensified in recent days with the US and China raising tariffs on each other's imports, and President Donald Trump calling on US businesses to pull out of China.
The yuan is not freely convertible and the Chinese government limits its movement against the dollar to a two percent range on either side of a figure that the central bank sets each day to reflect market trends and control volatility.
The People's Bank of China has set that rate steadily weaker in recent weeks and set it on Monday at 7.057 to the dollar.
Allowing the yuan to depreciate makes Chinese exports cheaper and offsets some of the burden of punitive US tariffs.
The yuan breached the key 7.0 threshold against the dollar earlier in August, days after the US announced plans to impose fresh tariffs on Chinese imports from September 1.
The plunge past 7.0 prompted Washington to officially brand Beijing a "currency manipulator".
China's central bank has "resolutely opposed" the label.
APP
Earning Review: LOTCHEM achieves 126% growth in net earnings
August 26, 2019 (MLN): The Board of Directors of Lotte Chemical, in its meeting held on August 26, 2019, has approved the audited financial statements of the company for the period ended June 30, 2019.
Going by these financial statements, the company has earned net profits of Rs. 3 billion (EPS: Rs. 2.01) for the half year ended June 30, 2019, which signifies a growth of massive 126% as compared to the figures reported in same period of last year.
According to the projections by spectators, the growth in company’s revenue by 29% was brought about by increase in international PTA margins as well as persistent depreciation of local currency.
The only setback that the company suffered was perhaps the increase in income tax expense by 24%.
Profit and Loss Account for the half year ended June 30, 2019 ('000 Rupees) | |||
|---|---|---|---|
Jun-19 | Jun-18 | % Change | |
Revenue | 33,189,662 | 25,695,282 | 29.17% |
Cost of Sales | (28,709,896) | (22,861,095) | 25.58% |
Gross Profit | 4,479,766 | 2,834,187 | 58.06% |
Distribution and Selling Expenses | (50,321) | (41,319) | 21.79% |
Administrative Expenses | (195,544) | (181,176) | 7.93% |
Other Expenses | (322,427) | (266,470) | 21.00% |
Other Income | 426,736 | 217,271 | 96.41% |
Finance Cost | (117,420) | (276,183) | -57.48% |
Profit/(loss) before Taxation | 4,220,790 | 2,286,310 | 84.61% |
Taxation | (1,170,305) | (940,820) | 24.39% |
Profit after Taxation | 3,050,485 | 1,345,490 | 126.72% |
Earnings per share - Basic and Diluted (Rupees) | 2.01 | 0.89 | 125.84% |
Copyright Mettis Link News
The Weekly Roundup of Pakistan’s Economy
August 25, 2019 (MLN): Of all the events that took place in the departed week, the drastic improvement within the stock market took the limelight as benchmark KSE 100 index recovered a mammoth 3,119 points in the first four days before losing out 534 points on the last day of the week, to panic selling on account of rumors regarding FATF’s decision to place Pakistan in its blacklist.
In truth, an FATF official informed on Friday that the FATF Plenary meeting is expected to hold on October 16-18 at Paris, wherein it will examine Pakistan’s progress on its existing action plan and consider the next steps.
Nevertheless, the benchmark index gained a net of 2,585 points or 9% over the week and stands closed at 31,350 points. Commercial Banks, Oil & Gas Exploration Companies, Fertilizer, Cement and Power Generation & Distribution were among the best performing sectors this week, having jointly contributed over 2,000 points to the index.
In particular, ENGRO (+256 pts), OGDC (+205 pts), HBL (+188 pts) and HUBC (+160 pts) were the key drivers of the index.
Moreover, the Market Cap in PKR grew by 7.16% as it currently stands at Rs.6.34 trillion.
On the other hand, PKR gained 1.4 rupees against the greenback this week, as the previous week was concluded at PKR 158.96 per USD. Friday’s recovery at interbank marked PKR’s 6th day on the rise. This was the first time in last 30 sessions that the currency dipped below 158.
The week's trend eased Pakistan's external debt burden by Rs.121.4 billion which in dollar terms accounts for a $105.84 billion. Pakistan now owes external avenues a total of Rs.16.67 trillion, down from Rs.16.8 trillion recorded until last week.
Apart from this, the major economic and policy-oriented development that took place during the departed week includes:
Securities and Exchange Commission of Pakistan (SECP)’s exemption of applicability of International Financial Reporting Standards (IFRS) 9 in respect of debts due from Government of Pakistan to power supply chain companies for a limited period of three years i.e. till June 30, 2021.
On Thursday, Prime Minister Imran Khan met a delegation of China Power Hub Generation Company (CPHGC) wherein he was apprised that first of the two power plants with a generation capacity of 660 megawatt each, being built in Hub city of Balochistan, has successfully been synchronized with the national grid.
Meanwhile, Adviser to the Prime Minister on Finance and Revenue, Abdul Hafeez Shaikh Thursday said that Pakistan was pursuing a growth-oriented programme for institutional reforms and economic revival.
Furthermore, the Securities and Exchange Commission of Pakistan accorded regulatory approval with respect to Murabaha Share Financing (MSF) and has directed National Clearing Company of Pakistan Limited (NCCPL) to implement MSF System effective from September 2, 2019.
On Wednesday, Federal Cabinet approved Pak-Turkey Strategic Economic Framework to forge stronger cooperation between Pakistan and Turkey.
On Tuesday, the Federal Board of Revenue (FBR) set the target to mount Sales Tax Registration (STN) upto 400,000 people in next three years to eventually boost revenue collection and documentation of economy.
On Monday, the Economic Intelligence Unit (EIU) revised its inflation forecast for 2019, predicting that the consumer prices will increase by 9.1% on average while the producer price will increase by 12.1% on average.
Meanwhile, the following data releases sketched a financial snapshot of the economy:
- Pakistan’s paid USD 11.588 Billion in external debt servicing in FY19, compared to USD 7.495 Billion in FY18.
- Total external debt liabilities increased only by USD 505 million in the final quarter of FY19, showing the smallest increase in the last 10 quarters.
- The Weekly Sensitive Price Indicator (SPI) for the Combined Group decreased by 0.08% during the week ended Aug 22, 2019 while the SPI increased by 18.91% compared to the corresponding period from last year.
- Pakistan acquired around $321.25 million as foreign economic assistance in the first month of FY-2020, from multiple bilateral and multilateral sources.
- Pakistan's Forex Reserves increased by USD 27.20 Million or 0.17% and the total liquid foreign reserves held by the country stood at USD 15,604.70 Million on Aug 17, 2019.
- The government of Pakistan has retired a net sum of Rs.40.44 billion during the week ended August 09, 2019, which brings its total net retirement for ongoing fiscal year FY2020 to Rs.24.66 billion. As of prior week, the government had borrowed a net sum of Rs.15.78 billion.
- Pakistan's outstanding debts as of July 31, 2019 stand at Rs.20.1 trillion whereas total debt at the end of prior month was Rs.20.23 trillion, meaning that around Rs.121.82 billion or 0.6% were retired during this month alone.
- The non-government sector borrowed a net sum of Rs.29.51 billion during the week ended August 09, 2019, which brings the cumulative net retirment for ongoing fiscal year FY2020 to Rs.105.04 billion. The net retirement as of prior week was recorded at Rs.134.55 billion.
- Foreign Investment during July 2019 jumped from $105.8 million to $107.2 million in a month, recorded the State Bank of Pakistan.
- Pakistan’s current account deficit (CAD) for the first month of FY20 stood at only USD 579 Million, a decrease of over 72 percent compared to the same period of FY19.
- The overall output of Large Scale Manufacturing Industries (LSMI) decreased by 3.64%, in Fiscal Year 2019. Meanwhile, the output in June 2019 decreased by 5.05% on a year-on-year basis, and by 8.5Y one a month-on-month basis.
- As many as 10.9 thousand passenger cars were sold during the month of July 2019 against the production of 16.4 thousand units, a report issued by Pakistan Automotive Manufacturer’s Association (PAMA) revealed on Monday.
- The total disbursements from various financial sources were recorded $10,186 million during the fiscal year 2018-19, including loans of $9,856 million and grants of $330 million, official sources said.
Copyright Mettis Link News
Key Pakistan Market Stats and Economic Indicators
| Weekly Performance | ||
|---|---|---|
| Aug 23, 2019 | Aug 17, 2019 | |
| PKR InterBank | 157.5215 | 158.6685 |
| KSE100 Index | 31,350.01 | 28,764.63 |
| Avg Daily Volume | 174,414,990 | 65,212,380 |
| Gold (Karachi) Rs/10 gm | 74,674 | 75,789 |
| KIBOR 6M | 14.08 | 14.08 |
| 10Y PIB | 12.93 | 13.50 |
| EUR | 1.1239 | 1.1093 |
| GBP | 1.2277 | 1.215 |
| CHF | 0.9743 | 0.9781 |
| JPY | 105.4 | 106.37 |
| GOLD | 1480.7 | 1512.33 |
| NY Light Crude | 54.16 | 54.82 |
| Open Market Rates | ||
| Aug 23, 2019 | Aug 17, 2019 | |
| USD | 158.20 | 159.50 |
| EUR | 174.75 | 176.70 |
| GBP | 193.00 | 193.00 |
| JPY | 1.4748 | 1.4923 |
| AED | 43.00 | 43.30 |
| SAR | 42.00 | 42.30 |
| SBP Data | ||
| T-Bill Auction Cutoff Yield | Aug 07, 2019 | Jul 31, 2019 |
| 3M | 13.7499 | 13.7499 |
| 6M | 13.9500 | 13.9500 |
| 12M | 14.2499 | 14.2400 |
| PIB Auction Cutoff Yield | Aug 21, 2019 | Jul 24, 2019 |
| 3Y | 14.2500 | 14.2500 |
| 5Y | 13.5500 | 13.8000 |
| 10Y | 13.1495 | 13.5500 |
| 20Y | Bids Rejected | No Bids Received |
| Interest Rate Corridor | Jul 17, 2019 | May 21, 2019 |
| SBP Policy Rate | 13.25 | 12.25 |
| SBP Reverse Repo Rate | 13.75 | 12.75 |
| SBP Repo Rate | 11.75 | 10.75 |
| Weekly Indicators | ||
| Aug 17, 2019 | Aug 09, 2019 | |
| SBP FX Reserves * | 8,238.70 | 8,264.40 |
| Bank FX Reseves * | 7,366.00 | 7,313.10 |
| Total FX Reserves * | 15,604.70 | 15,577.50 |
| Aug 22, 2019 | Aug 16, 2019 | |
| SPI (Combined Group) | 271.83 | 272.05 |
| Change - WoW (pct) | -0.08 | 0.64 |
| Change - YOY (pct) | 18.91 | 19.01 |
| Monthly Indicators | ||
| July | June | |
| Consumer Price Index | 252.46 | 246.82 |
| Change - MOM (pct) | 2.29 | 0.36 |
| Change - YOY (pct) | 10.34 | 8.88 |
| WholeSale Price Index | 272.34 | 264.15 |
| Change - MOM (pct) | 3.10 | 0.33 |
| Change - YOY (pct) | 13.46 | 12.69 |
| Sensitive Price Indicator | 242.54 | 236.50 |
| Change - MOM (pct) | 2.55 | 1.63 |
| Change - YOY (pct) | 12.16 | 10.65 |
| June | May | |
| Exports * | 1,717.00 | 2,102.00 |
| Imports * | 4,364.00 | 5,042.00 |
| Trade Balance * | -2,647.00 | -2,940.00 |
| July | June | |
| Home Remittances * | 2,039.30 | 1,645.71 |
| July | June | |
| Total Foreign Investment * | 107.24 | 105.78 |
| Quarterly Indicators | ||
| Jun 30, 2019 | Mar 31, 2019 | |
| Pakistan's External Debt * | 106,312.11 | 105,807.00 |
| Annual Indicators | ||
| 2018-19 | 2017-18 | |
| GDP Growth Rate | 3.29 | 5.53 |
| Agriculture | 0.85 | 3.94 |
| Manufacturing | -0.27 | 5.43 |
| Commodity Sector | 1.13 | 4.45 |
| Services Sector | 4.71 | 6.25 |
| Trade Balance * (July - June) | -31,820.00 | -37,583.00 |
| Worker Remittances * (July - June) | 21,841.50 | 19,913.55 |
| Foreign Investment * (July - June) | 329.89 | 5,680.93 |
| Annual Inflation Rate % (July - June) | 7.32 | 3.92 |
| * Amount in USD Million | ||
| *** Monthly Trade Data for July 2019 Not Released by PBS | ||
Pakistan’s External Debt Servicing cost increases by 54 percent in FY19
August 23, 2019 (MLN): Pakistan’s paid USD 11.588 Billion in external debt servicing in FY19, compared to USD 7.495 Billion in FY18.
According to data released by the State Bank of Pakistan, total debt servicing in FY19 increased by over 54 percent.
Out of the amount paid, USD 8.654 billion was principal amount while USD 2.933 billion was in the form of interest.
Earlier data released by the SBP showed that Pakistan’s total external debt and liabilities increased to USD 106.312 billion at the end of June 30, 2019.
Copyright Mettis Link News
Stock markets reverse gains as China targets US imports
Aug 23, 2019: Global stock markets fell on Friday as trade war worries returned with a vengeance when China said it would target US imports worth $75 billion with new tariffs.
The new round in the bruising trade war between Washington and Beijing caused a sudden trend reversal in European markets which had been showing solid gains in the morning.
"The retaliation will further fuel tensions and add to the uncertainty surrounding the trade war," said analysts at ING Economics.
Shortly before European equity markets closed for the weekend, US President Donald Trump pledged a response to China "this afternoon".
Wall Street extended modest opening opening losses throughout the New York morning, taking stocks "decisively lower", said analysts at Charles Schwab, "with the threat of new tariffs on $75 billion of US goods by China causing trade fears to ramp up".
The DJIA index dropped 1.5 percent, with the tech-heavy Nasdaq, especially vulnerable to trade trouble, giving up more than two percent.
Markets had been in a more buoyant mood before China's move as they looked forward to a key speech by Federal Reserve boss Jerome Powell.
But in the event, nothing Powell said dispelled the end-of-week gloom.
- 'Dangerous assumption' -
There is no "settled rulebook for international trade ... no recent precedents to guide any policy response to the current situation", he said in remarks prepared for delivery at a meeting of central bankers at Jackson Hole.
He also said the Fed would act 'as appropriate' to ensure US growth carries on.
"The Fed chief's remarks appear to be keeping expectations of further rate cuts this year in play," said Schwab analysts, adding this explained why the dollar weakened in response.
Powell stopped short of giving the kind of clear rate cut hints beyond the autumn that some analysts had been hoping for. However, such hopes had always been, in the words of Jeffrey Halley, senior market analyst at OANDA, based on a "dangerous assumption".
US President Donald Trump, for one, seemed disappointed, saying Powell had done "nothing", and wondering aloud whether the Fed chief or China was the "bigger enemy" of the US.
"Tensions between the central bank, the US president, and market expectations are unlikely to be resolved soon," said Jonas Goltermann at Capital Economics.
Traders were also digesting another inversion of the US yield curve seen Thursday, when the return on 10-year notes fell below that of two-year notes, which is often seen as a precursor to recession.
"The yield curve is talking to you ... and it's not saying anything nice," said ING senior rates strategist Antoine Bouvet.
AFP/APP
Pakistan’s External Debt Liabilities increase at the slowest pace in 10 quarters
August 23, 2019 (MLN): Pakistan’s economic indicators continued to show improvement as the total external debt liabilities increased only by USD 505 million in the final quarter of FY19, showing the smallest increase in the last 10 quarters.
However, during the course of FY19, Pakistan’s external debt liabilities increased by USD 11.075 Billion from USD 95.237 Billion to USD 106.312 Billion.
According to data released by the State Bank of Pakistan (SBP) public external debt grew by USD 8.579 billion ending the year at USD 83.936 billion, however, during the final quarter the figure dropped by USD 293 million.
Government External debt grew by USD 3.658 billion to USD 67.800 Billion during the year
Long term debt increased by USD 4.011 Billion, ending FY19 at 66.536 billion, however the figure decreased in the final quarter of FY19 as Pakistan repaid USD 1 Billion at the maturity of a Eurobond.
Short term debt (less than one year) decreased by USD 352 Million in FY19 to USD 1.264 Billion.
Loan from the IMF also decreased by USD 447 million during the year with Pakistan’s debt to the IMF standing at USD 5.648 billion at the conclusion of FY19.
Foreign Exchange liabilities increased throughout the year, showing a net increase of USD 5.367 Billion, which was largely due to deposits received by Saudi Arabia, UAE, Qatar as well as loans received from China.
Additional data posted showed the GDP (Current Market Price) to have decreased from USD 284.832 Billion to USD 236.478 billion, an alarming decrease of 16.98 percent during FY19.
Official liquid reserves decreased from USD9.866 Billion to USD 7.735 Billion.
External debt and liabilities as a percentage of GDP increased from 33.4 percent to 45 percent.
Copyright Mettis Link News
