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Gold climbs up by Rs1,700 to close at Rs119,700...

October 18, 2021 (MLN): The yellow metal witnessed a significant surge in its demand as the price of 24-karat gold in the domestic bullion soared by Rs1,700 to close at Rs119,700 per tola on Monday.

According to data provided by Karachi Sarafa and Jewellers Association, the price of 10-gram of 24k gold also increased by Rs1,457 and was traded at Rs102,623 while the 10gm 22k gold was valued at Rs94,072.

On the other hand, the price of 24-karat silver and 10-gram of 24-karat silver remained unchanged at Rs1,430 and Rs1,226 respectively.

In the international market, the demand for gold scratched by $4 to $1,763 an ounce as the uptick in U.S. bond yields dulled bullion’s appeal while the silver was traded at $23.26 per ounce.

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FFBL to benefit the most from record high DAP...

October 18, 2021 (MLN): Covid-19 has proved to be a blessing in disguise for country’s sole DAP producer Fauji Fertilizer Bin Qasim Limited (FFBL), providing much needed improvement in company’s core business profitability and enabling it to enjoy better primary margins this year.

Over the past few years, FFBL’s earnings remained subdued where higher input costs and financial charges kept profitability muted. However, recently earnings have witnessed impressive turnaround in CY20 where improved DAP margins coupled with reduced interest rates lifted unconsolidated profit of Rs2.2 bn, a 5-Yr high. The company surpassed that number in 1HCY21 (PAT of Rs3.9bn), and in the light of recent development, the company is expected to continue to show strong business performance for the rest of the year.

A report by JS Global projected that the company will post a 5ppt YoY increase in gross margins in the upcoming 3QCY21 result, which is scheduled to be announced on October 25, 2021.

The increase in gross margins will primarily be attributed to higher retention prices, leading to unconsolidated earnings of Rs5.86bn (EPS of Rs4.54, up by 77% YoY).

According to the report, with the arrival of Rabi season, demand for DAP has risen and most countries are facing serious shortage of the product. On top of that, China which is a major DAP exporter, has reportedly decided to enforce customs inspections on phosphate fertilizer cargoes from Friday where this move is expected to magnify the issue and further impact DAP shipments.

On the regional front, Indian government has increased subsidies on DAP by 2.4x to INR1,200/bag from INR500/bag announced previously, in light of the rising global prices.

The GoP on the other hand hasn't been able to finalize a mechanism of the subsidy on DAP announced last year while DAP retail prices in the local market have reached around Rs7,000/bag.

DAP off-takes in the upcoming Rabi season may be impacted to some extent if any announcement on subsidy is not made by the government in the coming days, the report said.

According to latest data, International DAP suppliers are offering the product at US$750/ton CFR (landed cost: nearly Rs6,925/bag) to Pakistan.

The rally in DAP prices since May-20 does not seem to be ending anytime soon. Supply chain disruptions started by Covid-19 led stringent lockdowns in Hubei province (Accounts for 25% of China’s DAP production) in China during 1HCY20 coincided with series of other factors which have contributed in this price frenzy.

“With DAP prices at all-time high levels, the sole manufacturer of the product in Pakistan, FFBL, will benefit the most from the said development as it will be selling majority of its production at higher rates in the coming quarter,” report underlined.

The report further stated that the company has been able to enjoy better primary margins recently and has shown strong core business performance. At the moment, despite higher phos prices and rupee devaluation, company has healthy primary margins of around $215/ton.

With regards to subsidiary, Fauji Foods Limited (FFL) has a positive EBITDA now and has been showing gross profit for the last four quarters, thanks to the new management.

Currently, FFBL is focusing on improving the group level performance and get rid of loss-making businesses, the proceeds from sale of Foundation Wind Energy I and II will also provide a breather to the company’s cash position.

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PSX Closing Bell: The Valley of Fear

Ocotober 18, 2021 (MLN): The stock market turned bearish on Monday, as it surrendered to the profit-taking activity owing to hike in petroleum prices by upto Rs10.95/ litre coupled with a delay in IMF negotiations for the resumption of the EFF.

Furthermore, weak macro cues stemming from fresh battering of Rupee against USD also hampered investors’ sentiments as the rupee broke all the record for all-time low, to close the day's trade at PKR 172.78, depreciating by 1.6 rupees against the US dollar in today's interbank session.

However, E&P sector saw renewed investor interest after international oil prices hoit their highest level in years, with Brent trading at $85.97/barrel at the time of writing, a closing note by Topline Securitied cited.

The Index traded in a range of 561.34 points or 1.25 percent of previous close, showing an intraday high of 44,993.66 and a low of 44,432.32.

Of the 95 traded companies in the KSE100 Index 30 closed up 64 closed down, while 1 remained unchanged. Total volume traded for the index was 102.25 million shares.

Sector wise, the index was let down by Technology & Communication with 146 points, Cement with 47 points, Engineering with 27 points, Food & Personal Care Products with 25 points and Textile Composite with 24 points.

The most points taken off the index was by TRG which stripped the index of 88 points followed by SYS with 47 points, BAHL with 42 points, FFC with 22 points and UNITY with 17 points.

Sectors propping up the index were Oil & Gas Exploration Companies with 77 points, Commercial Banks with 42 points, Fertilizer with 19 points, Inv. Banks / Inv. Cos. / Securities Cos. with 8 points and Insurance with 6 points.

The most points added to the index was by HBL which contributed 48 points followed by MCB with 31 points, OGDC with 30 points, PPL with 29 points and ENGRO with 27 points.

All Share Volume decreased by 86.04 Million to 248.29 Million Shares. Market Cap decreased by Rs.29.48 Billion.

Total companies traded were 330 compared to 356 from the previous session. Of the scrips traded 110 closed up, 209 closed down while 11 remained unchanged.

Total trades decreased by 13,087 to 108,216.

Value Traded decreased by 2.97 Billion to Rs.8.82 Billion

CompanyVolume

Top Ten by Volume

Hum Network25,097,500
Worldcall Telecom20,839,500
Hascol Petroleum13,835,098
Unity Foods13,554,483
Dost Steels9,910,000
Service Fabrics8,828,000
Telecard8,608,000
The Bank of Punjab8,402,500
Byco Petroleum Pakistan7,264,500
TRG Pakistan6,620,247

 

SectorVolume

Top Sector by Volume

Technology & Communication72,603,047
Food & Personal Care Products21,566,983
Commercial Banks21,522,938
Oil & Gas Marketing Companies20,002,293
Engineering15,855,244
Chemical11,230,180
Refinery9,940,496
Textile Weaving9,123,500
Oil & Gas Exploration Companies9,014,004
Cement8,739,980

 

 

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Import bill of petroleum products ballooned by 87% YoY...

October 17, 2021 (MLN): Amid the supply bottlenecks and resurgence of demand for energy products after the Covid-19 pandemic, the world is going through a severe energy crisis, wherein petroleum products have become expensive for many.

The economy of Pakistan has also felt the jolt of the global energy crisis which is clearly reflected in the import bill of petroleum products during the month of September’21 which stood at $1.5billion, depicting a colossal surge of 87% YoY, compared to September’20. However, the import of the same group witnessed a meager drop of 14% MoM.

According to the data released by the Pakistan Bureau of Statistics (PBS), the group contributed around 23% to the total imports during the month.

The petroleum products remained the major contributor, inflating the import bill by 69.36% YoY whereas, on a MoM basis, the import bill has declined by28.66% to clock in Rs636.28million.

In addition, the import bill of petroleum crude stood at Rs436mn in September’21, showing an upsurge of 75.15% YoY. On the other hand, the same commodity witnessed a meager drop of 1.46% MoM as compared to August’21.

The import of Natural Liquefied Gas recorded at $373.18mn, depicting a twofold increase on yearly basis. The import bill of the same commodity moved down by 1.73% on the monthly basis.

Cumulatively, the import bill of the petroleum group clocked in at $4.6bn during July-September FY22, showing a massive surge of 97.3% YoY.

On the export front, the total export of Petroleum group & coal increased by 65.79% YoY and 15x MoM to stand at $27.23mn.

Commodity-wise, the main exportable product was petroleum products (EXCL Top Naphta) which stood at $3.16mn, depicting a jump of 78.69% on a monthly basis whereas, the export of the same commodity plunged by 36.83%

During the first quarter of FY22, the export of the petroleum group was $58.406mn, showing an up of 26% YoY, compared to the same period last year.

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PKR hits all-time low, plunged by 1.6 rupee

October 18, 2021 (MLN): Breaking the record for all-time low, the Pakistani rupee (PKR) closed the day's trade at PKR 172.78, depreciating by 1.6 rupees against the US dollar in today's interbank session.

On Friday, the local unit had closed the trade at PKR 171.18 per USD.

The strong dollar demand and rising international crude oil prices have pushed the domestic towards historic depreciation. However, Zafar Paracha, the chairman of the Exchange Companies Association of Pakistan termed the PKR devaluation as a "possible commitment" between Government and IMF.

In addition, no timeframe has been set yet for the conclusion of IMF negotiations, and delay in the release of the committed tranche also created pressure on the home unit.

The rupee endured a highly volatile trading session with quotes being recorded in a range of 2.15 rupees per USD showing an intraday high bid of 173.25 and an intraday Low offer of 171.10.

Within the Open Market, PKR was traded at 172/173 per USD.

The domestic unit has depreciated by 8.82% or PKR 15.23 in the fiscal year-to-date against the USD. Similarly, the rupee has weakened by 7.49% or PKR 12.94 in CY21, with the month-to-date (MTD) position showing a decline of 1.23%, as per the data gathered by Mettis Global.

Meanwhile, the currency lost 2.4 rupees to the Pound Sterling as the day's closing quote stood at PKR 237.34 per GBP, while the previous session closed at PKR 234.89 per GBP.

Similarly, PKR's value weakened by 1.4 rupees against EUR which closed at PKR 200.19 at the interbank today.

On another note, within the money market, the overnight repo rate towards the close of the session was 7.40/7.65 percent, whereas the 1-week rate was 7.45/7.55 percent.

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