Morning Buzz Bank Alfalah – MR Securities

Karachi, June 05, 2013 (PPI-OT): joins hands with WWF

As part of Bank Alfalah’s commitment towards environmental protection and its ‘Go-green’ initiatives, the Bank recently joined hands with WWF for a tree plantation drive.

According to MR Securities with a volunteer turnout of approximately 200 Bank Alfalah employees, saplings were planted to beautify Lahore airport.

EPZA, KESC to build power plant in Karachi
To ensure continuous and uninterrupted power supply to the Karachi Export Processing Zone (KEPZ), the Export Processing Zones Authority (EPZA) is working with the Karachi Electric Supply Company to establish a 25-megawatt power plant.

LSE to open think tank to assist in policymaking
As the new government is about to take over, hopes of business community, particularly of Punjab, are flying high. Revival of economy, reining in the energy crisis, investment by domestic and foreign investors and job creation are what they expect to see in coming months or years.

‘Cash flows to flood energy system soon’
The cash-starved energy system will soon be flush with funds, official sources close to the policymaking circles told The News on Tuesday.

Need for hydrocarbons leads gas explorer to Karachi
After a very long time, a petroleum exploration firm will look for natural gas reserves in Karachi, the port city of 20 million people, suggesting how difficult it has become to find much-needed fuel in other prospective parts of the country.

Cement sector: Industry blames weight laws for falling sales
The cement sector is complaining that due to strict laws and implementation by authorities of axle load limit – the total weight felt by the roadway for all wheels connected to a given axle – cement dispatches registered a decline of 1% in May to 2.888 million tons compared with 2.918 million tons in May.

Interim petroleum minister upbeat about country’s future
Caretaker Minister for Petroleum and Natural Resources Sohail Wajahat Hussain Siddiqui on Tuesday said that Pakistan had a bright future because of its huge potential of human and natural resources.

Aisha Steel puts $70m expansion on back burner
Aisha Steel Mills Limited (ASML) has put on hold its decision to invest fresh equity of up to $70 million till there is greater clarity on the new government’s national steel policy, said ASML CEO Kashif Shah.

Substantial drop in oil smuggling from Iran witnessed
Substantial decrease has been witnessed in oil smuggling to Pakistan from Iran via Balochistan during last two years as subsidy has been slashed on oil in Iran, an official of Federal Board of Revenue informed the Senate Standing on Rules of Procedure and Privileges on Tuesday.

Nawaz summons meeting to overcome power crisis
PMLN President and the prime minister-designate, Nawaz Sharif, has convened a key meeting of his close aides and experts on Wednesday to discuss ways and means to overcome power crisis.

Traders in dire straits: FBR begins rolling back RPOs
Financial problems of business fraternity are going to be more severe as Federal Board of Revenue (FBR) has started rolling back sales tax ‘Refund Pay Orders (RPOs) to meet its annual revenue budgetary target.

Summer family package for Visa cardholders launched
Visa, one of the world’s leading payment solutions providers, and Atlantis, The Palm, the ultimate entertainment resort destination, have launched a fun-filled summer family package exclusively for Visa cardholders. The package runs from May to September 2013.

Agriculture income tax complicated issue: Sartaj
Pakistan Muslim League-Nawaz (PML-N) supports imposition of Agriculture Income Tax (AIT) and reforms in the existing laws to improve documentation and increase provincial revenue collection.

Inter-corporate dividend: FBR suggests change in taxation
The Federal Board of Revenue has proposed change in the taxation of inter-corporate dividend at the normal rate of 35 percent tax in Budget (2013-14). Sources told Business Recorder on Tuesday that it is merely a budget proposal drafted at the level of the Board, but yet to be approved by the policymakers.

SRO.1125(I)/2011: FBR asks MoF to curtail list of items
FBR has proposed to restrict items of the SRO.1125(I)/2011 to those exclusively used in the five export-oriented sectors – textile, leather, surgical, carpets and sports – from next fiscal year (2013-14).

Urea Subsidy: MoF pays Rs 3.3 billion to TCP
The Ministry of Finance (MoF) is reported to have released Rs 3.3 billion to Trading Corporation of Pakistan (TCP) on account of urea subsidy. Sources told Business Recorder on Tuesday that the ministry has moved another summary for the payment of more than Rs 3 billion on account of urea subsidy. This payment is likely to be released by the end of this month after formal approval by the new finance minister.

AKD Quotidian about — NML – Best of both worlds

Karachi, June 05, 2013 (PPI-OT): AKD Securities rolls forward financial model for NML to FYI4F and raise AKD Securities TP by 21.3% to PkRI3I/share.

According to AKD Securities goings forward, continued demand for yarn from China will reduce sales risk in the spinning segment and bolster sales, while NML.’s attempts at improving supply chain management by increased direct contact with leading retail brands in the international market and expanding retail outlets of the Nishat Linen brand will likely add value to the higher value added segments of NML.

The expansion and modernization plans along with attempts to mitigate the impact of the energy crisis and the focus on higher value added products should be value accretive in the long run, in AKD Securities views. In this regard, AKD Securities Jun’14 TP of PkRl3lIshare provides an upside of 26% from current levels, Buy!

Demand from China: China is expected to continue providing demand for yarn on relatively high domestic cotton prices and a secular shift towards higher value added products. In this regard, cotton prices, which fell in late May recovered recently to Usd91.5/lb as fears of a slowdown in demand from China eased. This continued demand for yarn will likely reduce sales risk in the spinning segment.

Improving supply chain: The company in a bid to cut out middle men and increase business in the EU and US in the high end retail segment is now doing business directly with retail outlets. Moreover, regarding the Nishat Linen brand, Nishat Group Chairman Mr. Mian Muhammad Mansha in a recent interview stated that the company is planning to expand retail outlets from 60 to 200 to cater to increased demand. The coiripany is positioning itself to reap significant benefits from the EU GSP Plus status, expected to be granted in Jan’14.

Expansion and Modernization Plans: NML is in the process of up gradation and capacity expansions in the higher value added divisions. In this regard, the company is already in the process of migrating to newer looms in the weaving division and also plans to increase capacity by adding an additional 100 looms.

Moreover, the company also plans on increasing capacity in the stitching and processing segments to be able to cater to increasing demand for the Home Textiles and Processing segments as well as expected increase in demand from the Garments segment. The Combined Heat Power (CHP) Plant project is in the second stage where NML is planning to double the capacity of the CHP Plant. The fuel cost saving will lead to margin expansion in the long run.

Portfolio Income: The recent price performance of portfolio companies is likely to provide liripetus for further upside in NML’s price in AKD Securities views. However, in this regard AKD Securities would advise caution as valuations for MCB (forms -50% of NML’s listed porllolio value) seem stretched.

That said, dividend income from portfolio companies will continue to provide additional support to the bottom-line. Furthermore, the expected IPO for Lalpir Power Ltd. will increase the value of the publicly traded portfolio of NML, where the book value of Lalpir Power on NMLs books is PkR1 6/share.

Valuation: AKD Securities rolls forward AKD Securities financials model for NML to FY14F and raise AKD Securities TP by 21.3% to PkR1 31/share. In this regard, AKD Securities has reduced AKD Securities expectations for FY13F slightly (EPS: PkR14.5) given the below line result for 3QFY13.

However, the expansion and modernization plans along with the attempts to mitigate the impact of the energy crisis and the focus on higher value added products will be value accretive in the long run, in AKD Securities views. In this regard AKD Securities Jun14 TP of PkR1 31/share provides an upside of 26% from current levels, Buy!


Profit and Ions Account

(In PORmo)              FYIIA      F412A    FYI3F    FYI3F    FYI5F

 Net Sales             48,565     44,924   52,401   59,343   64,393
 COGS                  40,719     38,135   43,420   49,176   53,120
 Gross Profit           7,846      6,789    8,982   10,167   21,273
 Operating Exp          2,847      3,287    3,816    4,322    4,690
 Operating Profit       4,999      3,502    5,165    5,845    6,584
 Other Income           2,445      2,684    2,779    3,067    3,243
 Other Charges            431        344      371      421      456
 Financial Charges      1,601      1,761    1,738    1,409    1,134
 NPBT                   5,412      4,082    5,835    7,083    8,236
 Taxation                 568        553      731      829      895
 NPAT                   4,844      3,529    5,104    6,254    7,341
 EPS(PKR)               13.78      10.04    14.52    17.79    20.88
 PIE )x)                 4.11       4.77     7.16     5.85     4.98
 P/BVS (x)               0.56       0.45     0.72     0.66     0.60

 Source: AKD Research

Morning Call about – It’s all about management! – Arif Habib Limited

Karachi, June 05, 2013 (PPI-OT): As soon as the general elections concluded, the market started expecting a quick solution of torturing hours of load-shedding in the country.

According to Arif Habib Limited this, of course, is not possible without pulling reins of monstrous circular debt standing in the proximity of PKR 700bn. In the local bourse, among the major gainers, power sector is most prominent as the market capitalization of this sector climbed up to PKR 193bn from PKR 164bn just before elections, a massive gain of 18%. In today’s morning call, Arif Habib Limited draws your attention towards possible solution of the aforesaid problems along with impacts upon key listed electricity companies.

Diversion of resources towards more efficient plants!
Lowering the cost of electricity generation should be the first goal, increasing consumer’s propensity to pay the electricity bills. Following table summarizes energy cost of different gas-based Gencos and IPPs. Clearly, the average cost of generation from the same source is 82% higher for Gencos (averaging around PKR 6.94/unit).

On the other hand, the more efficient IPPs are operating at a load factor of as low as 5% due to non availability of gas, a scarce resource indeed. Following the leads, 837 MW of electricity can be generated at an average cost of PKR 3/unit, way lower than the system is already generating.


GENCO            Cost (PKR)    Generation(GWh)   Capacity(MW)   Energy COst Units(PKR)
Guddu CC 11-13     1,271            153              390              8.32 
Jamshoro 1            86             12              205              7.35 
Guddu Steam 1-2      141             20              140              7.24 
Guddu Steam 3-4    1,064            157              340              6.76 
Guddu CC 5-10      1,642            261              530              6.30 
Kotri 3-7            205             33              107              6.15 
Average            4,410            636            1,712              6.94 

CPPA Mar-13 Energy Procurement Report

IPP        Cost(PKR mn)     Generation(GWh)    Capacity(MW)   Energy Cost/Unit(PKR)
Habib Ullah        310              59             129                5.24 
Fauji Kabirwala    430             109             151                3.94 
Rousch             387              94             395                4.14 
UCH              1,084             393             551                2.76 
Altern              95              19              27                5.02 
Foundation Power   622             126             172                4.95 
Orient              35               7             213                4.75 
Saif Power          18               4             205                5.01 
Engro Energy       726             162             214                4.50 
Sapphire Power       6               1             212                5.10 
Halmore             24               5             207                4.84 
Average          3,737             978           2,476                3.82 

CPPA Mar-13 Energy Procurement Report

Plant  Cost(PKR mn)    Generation(GWh)   Capacity(MW)  Energy Cost/Unit(PKR)
IPPs        82             17                  837            4.86 
GENCO    1,703            217                  842            7.84 
Savings                                                       2.98  

Outlook
The market seems to be banking on the expected resolution of energy crisis. The major gainers in power sector include Southern Electric Power Company (SEPCO) and Japan Power Generation Limited (JPGL) yielding 194% and 114% respectively, post elections. Both of these companies have accumulated losses close to PKR 6bn and plant being non operational (efficiency issues).

Any attempt to bring these plants to generation line will also require additional cash flow for improving the efficiency (e.g. steam turbines for JPGL). In the short run, the gov’t may be urged to divert already scarce cash flows to operational and more efficient plants (NCPL, NPL) or the bigger power plants (HUBC, KAPCO, PKGP) while in the longer run, the authorities will be focusing to tilt the generation mix towards low cost hydel and gas-based power plants.

Among these circumstances, Arif Habib Limited recommends strong fundamental plays to investors, and maintain Arif Habib Limited likeness towards Arif Habib Limited power sector universe (HUBC, KAPCO, NPL, NCPL) recommending a HOLD!

Students of Hailey College of Banking and Finance visit Lahore Stock Exchange

Lahore, June 05, 2013 (PPI-OT): Students of Hailey College of Banking and Finance from Punjab University visited the Lahore Stock Exchange as part of the Campus Outreach Program under Financial Literacy Initiative in collaboration with South Asian Federation of Exchange (SAFE). Here, they were given an insight about practical aspects of various financial institutions and investment avenues by industry professionals. Managing Director and Chief Executive Officer of the Lahore Stock Exchange Mr. Aftab Ahmed Chaudhry was the chief guest.

The panel of professionals included Mr. Ahmed Shakeel, Senior Investment Advisor from Al Meezan Investment Management Limited along with LSE officials. Mr. Ahmed addressed the students and informed them about local mutual funds industry and products being offered.

He informed the students that Islamic mutual funds could be an effective approach for people to start investments offering risk diversification and good returns through proficient fund management. While interacting with the students, Ms. Madiha Abrahim from Investor Relations Department-LSE briefed the students on the need for setting up CDC and various facilities being offered by CDC not only to add efficiency but also for increased transparency and investors confidence.

She explained as to how investors can use various CDC services for protecting their portfolios. Later, the students visited various banks and brokerage houses where they were given synopsis on the functioning of these institutions such as live market trading, banking products and services, lending and borrowing services, clearing and local as well as international remittances, etc.

The purpose of visit was to allow the students to interact with various financial industry practitioners in a stock exchange setting and get a chance to visit different financial institutions all at one location. The Program is part of the Financial Literacy Initiative for the promotion of youngsters’ understanding of financial products and concepts, their ability and confidence to appreciate financial risks and opportunities to make informed choices, to know where to go for help, and to prepare today’s youth for better understanding of the economic/financial affairs affecting them. Educational institutions are joining hands with LSE to participate in series of sessions on financial literacy.

As part of the Campus Outreach Program, Lahore Stock Exchange has already held two sessions at Hailey College of Banking and Finance. In the first two sessions students were apprised about the savings, investment and investment alternatives, foreign exchange, stock analysis and valuation techniques, financial markets and regulatory environment, market dynamics, market indices, market sensitivity, securities evaluation including fundamental as well as technical analysis, banking services, leasing, insurance and various corporate matters as applicable in Pakistan.

The “Campus Outreach Program” has received an overwhelming acclamation from various blocs of the societies. The Program is launched under the broader Financial Literacy Initiative by the LSE in collaboration with South Asian Federation of Exchange (SAFE). Campus Outreach Program – FLI is neither intended to promote or publicize any particular type of investment or product, nor is it aimed to endorse any specific kind of financial institution or market.

For more information, contact:
Lahore Stock Exchange (LSE)
19, Khayaban-e-Aiwan-e-Iqbal,
P.O. Box: 1315,
Lahore-54000, Pakistan
Tel: +9242 636 8000
FAX: +9242 636 484 -85
E-mail Address: info@LahoreStock.com
Web Site: http://www.lse.com.pk

Gold inch up as investors hope of United States bond-buying programme staying intact

Karachi, June 05, 2013 (PPI-OT): Gold inched up on Wednesday as investors hope of the U.S. bond-buying program staying intact for some more time overshadowed their fears of slowing bullion demand in India, the world’s top consumer, on account of new rules set by central bank. Generally, Appetite for gold from India and China is a major factor in international gold prices. The two countries account for more than a third of global demand, according to the World Gold Council.

Oil markets will remain largely choppy as investors try and gauge if stimulus measures from the U.S. Fed will continue or not. Crude prices have swung heavily in the past few weeks with the U.S. currency as market participants try to gauge if the Federal Reserve will roll back its monetary stimulus.

Malaysian palm oil futures ended higher on Wednesday, pulling away from an earlier near two-week low, as investors turned more optimistic on stocks data due early next week.

Settlement Prices at PMEX were as follows with volumes at Rs. 4.16 billion with 14,975 lots traded:

GOLD: USD 1,396.40 /t oz
SILVER: USD 22.320 /t oz
CRUDE OIL: USD 93.58 / barrel
IRRI-6: Rs. 3,636 /100 kg
Palmolein: Rs. 4,364 / Mound
Sugar: Rs. 45.12/kg
Wheat: Rs. 3,212/100 kg
ICotton: US cents/pound 84.32

For more information, contact:
Sarang Abbasi
Asst. Manager, Risk and Analytics
Pakistan Mercantile Exchange
9th Floor, PRC Towers, 32-A,
Lalazar Drive M.T.Khan Road,
Karachi, Pakistan.
Cell: +92-03215148905
Fax: +92-35611263
UAN: +92-21-111-623-623, 99210650-61
Web: www.pmex.com.pk

Warid supports World No Tobacco Day 2013

Karachi, June 05, 2013 (PPI-OT): With an aim at bringing a positive change in society and to promote a healthy lifestyle, Warid Telecom in collaboration with ShaukatKhanum Memorial Cancer Hospital and Research Centre marked ‘World No Tobacco Day 2013’ by driving a massive anti-tobacco awareness campaign which highlighted the adverse effects of using tobacco.

Warid also supported ShaukatKhanum Hospital Memorial Cancer Hospital and Research Centre in collecting donations for treatment of poor lung cancer patients.

While appreciating the voluntary role of Warid and its team members Mr. Faisal Sultan, CEO, ShaukatKhanum Memorial Cancer Hospital and Research Centre said

“I would like to extend my sincerest gratitude to Warid Telecom for their support during Anti-Tobacco Campaign 2013. Shaukat Khanum Memorial Cancer Hospital and Research Centre is a unique institution which aims to treat cancer patients irrespective of their ability to pay. This is possible only because of the support of responsible organizations like Warid.”

For more information, contact:
Shahzad Ahmad
Public Relations Department
Warid Telecom (Pvt.) Limited
Phone: +92 322–4257777
Email: pr@waridtel.com
URL: www.waridtel.com

Chinese Premier sends message of felicitation to Nawaz Sharif on assumption of Office of Prime Minister

Islamabad, June 05, 2013 (PPI-OT): Premier of the State Council of the People’s Republic of China H.E. Mr. Li Keqiang has sent a message of felicitation to Mian Mohammad Nawaz Sharif on assumption of the Office of Prime Minister of the Islamic Republic of Pakistan.

In his message Premier Li Keqiang expressed his best wishes and hoped that under the leadership of Mian Mohammad Nawaz Sharif Pakistan would make new progress and achievements in the national development.

The Chinese Premier, in the message, has stated that China and Pakistan have built all-weather friendship and strategic cooperation partnership. This relationship has advanced in a firm and healthy manner in spite of changes of international situations, and set a good example of harmonious co-existence between countries.

While referring to his recent visit to Pakistan, Premier Li Keqiang said that he had a productive meeting with Mian Mohammad Nawaz Sharif in which they had reached extensive consensus on further promoting China-Pakistan relations.

Premier Li Keqiang has also expressed the wish to work together with Prime Minister Nawaz Sharif in preserving and carrying forward the traditional friendship, promoting mutually beneficial cooperation in all areas, so as to raise the China-Pakistan strategic cooperation relations to a new high and bring even greater benefit to the people of the two countries.

For more information, contact:
Mr. Aizaz Ahmad Ch
Spokesman
Ministry of Foreign Affairs
Government of Pakistan
Tell: 051-9205494
Fax: 051-9204202
Cell: 0336-5644459