Morning Call about – FFBL, ENGRO to post recovery in earnings in 1HCY13 – Arif Habib Limited

Karachi, June 28, 2013 (PPI-OT): As per 26-days provisional fertilizer off take available with us, extrapolated to 30 days, urea sales were meagrely up 2% MoM to stand at 493k tons in Jun’13.

According to Arif Habib Limited however, this figure is down 52% on a YoY basis due to high-base of Jun’12 sales. During 1HCY13, the cumulative sales declined 4% YoY. FFC and FFBL’s urea off take plunged by 20% MoM to stand at 212k tons, while ENGRO sales were down 15% MoM to 104k tons. On the other hand, FATIMA’s sales doubled MoM to 60k tons in Jun’13. NFML’s sales in the month of Jun-13 also recovered and clocked in at 90k tons, surging by a huge 185% MoM.

The decline in the urea off take is due to high-base effect of Jun’12, which was due to piled up inventories by all the manufacturers, and they offloaded it in Jun`12 with some discounts as well. Currently, as there is no massive pile-up inventory of urea with the local producers, they only managed to sell at their maximum operational capacities for a month. Closing inventory of urea available with the local producers, as of 26-Jun- 13, stood at 99k tons while total urea closing inventory (both local and imported) was recorded at 227k tons.


Fertilizer off take (Ktons)   Jun-13   Jun-12   YoY   May-13  MoM   1HCY13  1HCY12  YoY
Urea                            493     1,029  -52%    485     2%    2,633   2,747  -4%
DAP                             104        96    8%     80    30%      377     269  40%
CAN                              60       117  -48%     62    -3%      244     248  -1%
NP                               22        52  -58%     40   -46%      161     174  -8%

Company off take (Ktons)      Jun-13   Jun-12   YoY   May-13  MoM   1HCY13  1HCY12  YoY
Urea 
FFC and FFBL                     212      587  -64%    266   -20%    1,295   1,274   2%
ENGRO                            104      223  -53%    123   -15%      575     397  45%
FATIMA                            60      128  -53%     30   100%      170     170   0%
NFML                              90       67   34%     32   185%      491     770 -36%
DAP
FFBL                              63       42   50%     54    18%      244     110 122%
ENGRO                             20       22   -9%     13    51%       66     101 -35%
Source: AHL Research
 

DAP sales up 30% MoM, 40% YoY in 1HCY13
DAP’s sales surged 30% MoM to stand at 104k tons in Jun’13, while during 1HCY13, DAP sales jumped 40% YoY. FFBL managed to sell 63k tons of DAP in the month of Jun-13, up 18% MoM and substantial 122% YoY in 1HCY13. ENGRO’s DAP sales also showed enormous improvement with 51% MoM increase to stand at 20k tons whereas cumulative sales during 1HCY13 were still down 35% YoY. As per Arif Habib Limited discussions with industry, DAP sales for Jun`13 were on targets as set by the companies. DAP closing inventory as of 26-Jun-13 recorded at 274k tons (FFBL and ENGRO held ~144k and 24k tons, respectively).

CAN and NP sales slowdown by 3% and 46% MoM, respectively After showing continued positive growth, CAN sales declined with 3% MoM in Jun’13 while 1% YoY in 1HCY13, to stand at 60k tons in Jun’13. NP sales in the month on Jun-13 was recorded 22k tons, huge decline of 46% MoM while the cumulative sales were down 8% YoY during 1HCY13. The closing inventory of CAN as of 26-Jun-13, recorded at 52k tons.

Initial earnings estimates and recommendation
With these provisional off take figures, Arif Habib Limited expects FFC, FFBL and ENGRO to post EPS of PKR 3.75, PKR 2.05 and PKR 0.42, respectively for 2QCY13. However, these estimates are based on provisional off take numbers and are subject to adjustments once the final off take figures become available.


Scrips   2QCY13   1QCY13  QoQ  2QCY12  YoY  1HCY13  1HCY12  YoY   T.P  Upside
FFC       3.75     3.86   -3%   5.08  -26%    7.61   8.12   -6%   129   19%
FFBL      2.05     0.53  287%   1.10   86%    2.58   0.69  274%    46   21%
ENGRO     0.42     0.60  -30% (0.29)   n.m    1.02 (1.61)   n.m   206   69%
Source: AHL Research
 

Currently, Arif Habib Limited has a ‘Buy’ recommendation on FFC, FFBL and ENGRO with Dec-13 price objectives of PKR 129/share, PKR 46/share and PKR 206/share, respectively.

Pakistan Industrial and Traders Associations Front appeals to Prime Minister Nawaz Sharif to convene business community Roundtable to finalize plan for implementation of his government’s recommendations for economic revival

Lahore, June 28, 2013 (PPI-OT): Pakistan Industrial and Traders Associations Front (PIAF) has appealed to the Prime Minister Mian Muhammad Nawaz Sharif to convene a business community Roundtable to finalize plan for implementation of his government’s recommendations for economic revival.

In a press statement issued here Friday, Chairman PIAF Malik Tahir Javed said that the economic challenges were fast increasing with every passing day for want of due attention from the concerned quarters and there was a need to take urgent measures in consultation with concerned sector specialists from the private sector.

He said that the government could get rid off external debt, ensure uninterrupted supply of electricity and expension in industrial activities only with the consultation of the private sector that is the main stakeholder.

The PIAF Chairman was of the view that a consistent liaison between private sector and government circles could help overcome gas and electricity shortage.

He said that country could improve its growth rate without any foreign assistance if unwarranted wastages such as electricity transmission losses and gas losses due to inefficient appliances were controlled.

He said that Pakistan Muslim League – N in its manifesto had promised to bring the country out of economic mire and it would only be possible when the government would be sharing its economic plans with the private sector that is considered engine of growth around the globe.

The PIAF Chairman said that the Finance Minister Ishaq Dar would have to come up with some package of incentives for the businessmen who had suffered heavy losses during the last five years due to shortage of gas, electricity and corruption.

Malik Tahir Javed said that the business community understands and believes that the Prime Minister would make allout efforts to make the country a corruption free land. He said that the business community would extend every possible help to him in this regard.

Therefore, the PIAF Chairman said the Prime Minister should immediately convene a Roundtable of the stakeholders for a solution to the issues.

For more information, Contact:
Khalil-ur-Rehman
Pakistan Industrial and Traders Associations Front
110/s Kot Lakhpat Industrial Estate
Lahore, Pakistan
Phone: (92) 42 5123522
Fax: (92) 42 5123522
Email: Info@piaf.pk

Private sector has vision and expertise to run commercial organizations in professional manner: Zafar Bakhtawari

Islamabad, June 28, 2013 (PPI-OT): Private sector has the vision, capacity and expertise to run the commercial organizations in a true professional manner and it would be a wise decision for government to give the management control of loss making public sector commercial organizations to private sector for turning them into profitable business enterprises. This was stressed by Mr. Zafar Bakhtawari, President, Islamabad Chamber of Commerce and Industry during a visit to Skills Development Council (SDC), Islamabad along with a delegation of ICCI.

He appreciated the role of SDC for developing trainings to people in different fields and providing industry skilled labor. He said running of SDC efficiently and effectively by Mian Akram Farid, former President of ICCI as Chairman Skills Development Council purely on honorary basis is a clear proof of the fact that private sector has the ability to run institutions and public sector enterprises on professional lines.

He said by producing trained and skilled manpower for local and international markets, SDC is rendering valuable contribution to reducing unemployment, generating jobs and earning good foreign exchange for the country as many Pakistanis trained by SDC are performing well in foreign countries. He said ICCI would take up the matter of giving loss making PSEs to private sector professionals with the relevant Minister. He said ICCI would work more closely with SDC to meet the skilled labor needs of industry so that industry could perform more effectively.

Mian Akram Farid, Chairman, Skills Development Council, Islamabad briefed the ICCI delegation about the activities of SDC. He said SDC operates on Public-Private Partnership with active participation of Employers Federation of Pakistan [EFP] and Private Sector Businessmen, who have created the success story of the Skill Development Council, Islamabad. The aim of SDC is to identify, develop and arrange flexible and demand driven vocational, technical/professional and IT training programs.

He said SDC has produced over 25000 semi-skilled and skilled workers for different fields and it also offers tailor-made courses according to the customers needs. He said SDC has signed MoUs with Islamabad, Attock, Chakwal and Jhelum Chambers of Commerce to develop close liaison with these Chambers and for providing skilled manpower to industry. He hoped that collaboration between SDC and ICCI would play a positive role in promoting industrial activities in the region. He said MoU with National Training Bureau has also been signed to train manpower in required fields.

For more information, contact:
Islamabad Chamber of Commerce and Industry
Chamber House, Aiwan-e-Sanat-o-Tijarat Road,
Mauve Area, G-8/1,
Islamabad, Pakistan
Tel: +9251 225 0526 and 225 3145
Fax: +9251 225 2950
Email: icci@brain.net.pk
Website: www.icci.com.pk

Karachi Chamber of Commerce and Industry’s President urges Canadian envoy to invite fresh Canadian investment in Pakistan

Karachi, June 28, 2013 (PPI-OT): Karachi Chamber of Commerce and Industry’s President Muhammad Haroon Agar has urged the High Commissioner of Canada Greg Giokas to invite fresh Canadian investment in Pakistan as the country is the most promising land in the region for investment and many multi-national corporations are operating successfully and expanding their businesses across Pakistan and beyond.

Exchanging views with the Canadian High Commissioner who was accompanied by Behram D. Avari, Hon. Consul General of Canada in Karachi during their visit to KCCI, Haroon Agar apprised that bilateral relations of Pakistan with Canada is based on development cooperation; people-to-people links; regional security and defence; governance and human rights; trade and investment.

The trade volume between the two countries is impressive and there is further room to enhance it to the significant levels. During FY12, Pakistan exported commodities worth $ 225.8Mn while imports from Canada stood at $ 365.1Mn. Both countries are desirous of increasing bilateral trade and investment in Pakistan to boost the economy. Canada and Pakistan held their third round of negotiations on May 28-29, 2012 in Ottawa. Previous negotiations held from October 31 to November 2, 2011 in Islamabad in Pakistan.

Haroon Agar hoped that Pakistan-Canada bilateral Foreign Investment Promotion and Protection Agreement (FIPA) will provide greater predictability and consideration for Canadian investors to invest in Pakistan. He was of the view that FIPA will provide a mechanism to protect investors through the establishment of a legal framework. Key sectors of interest and joint ventures between two countries are minerals, information technology and infrastructure.

The livestock and agriculture are the two areas in which cooperation could lead to a win-win situation for the two countries, he told. Pakistan exports textile articles, knitted or crocheted apparel, woven clothing and apparel articles, leather articles, Cotton, cotton yarns and cotton fabrics, Lac, gums, resins, Cereals, Furniture and stuffed furnishings, Carpets and other textile floor coverings while imports from Canada were oil seeds and fruit, grain, edible vegetables, Iron and steel, wood articles, charcoal, boilers, mechanical appliances, mineral fuels, oils, electrical machinery.

He was of the view that Pakistani exporters should take advantage of the recently implemented tariff cut in Canada. He underscored to frequent exchange of business delegations and organizing of exhibitions to further explore bilateral trade prospects.

High Commissioner of Canada Greg Giokas stated that Canada is supportive to Pakistan and see it as a land of immense natural resources, potential and strength. He was of the view that the world is also well aware about the potentials of Pakistan. Both countries maintain friendly political relations. He articulated that foreign investment was dropping in Pakistan. The concerns of Canadian investors are primarily transparency, legal protection of investment, predictability and security.

Canadian High Commissioner stated that the prime concern for Canadian Investment is the legal protection of investment. He voiced that Canadian company previously involved in Reko-Diq project in exploring gold and copper deposits under contract with the Government worked for years to prepare feasibility invested $ 400 Million is now going to International Arbitration which will likely be held in February next year. He opined that in the International Arbitration there is a high likelihood that arbitration will go against Pakistan.

He said that after Court’s decision in Pakistan the company was stopped to operate. High Commissioner was of the view that the said company invested enormous time, efforts and investment in Reko-Diq. The Federal and Provincial Governments conduct was not appropriate with the company, therefore, Canadian investors have concern on protection of investment.

High Commissioner stated that Canada can offer its expertise in agriculture and railways. The Canada Pacific Railway can tender for locomotives required by Pakistan Railway. He informed that the Canadian High Commission hosted a roundtable with the faculty of Faisalabad Agriculture University to explore possibilities of cooperation in agriculture, dairy and livestock. He opined that regional trade is crucial to uplift economy and to explore market access in the countries worldwide, Pakistan has to achieve a quantum leap in regional trade.

He appreciated smooth and peaceful transition of government through elections and was of the view that the new Government should accord priority to economic development and revise its policies as per their commitments. He apprised that Canada gave financial assistance of $20 Mn for Polio campaign, $170 Million for Educational Reforms and $8 Million to support electoral process in the recent elections.

Commenting on possibilities of Preferential or Free Trade Agreement between two countries he stated that such arrangements cannot be possible in the absence of vibrant reciprocal trade. The recent negotiations on Pakistan-Canada Bilateral Foreign Investment Promotion and Protection Agreement (FIPA) were not much meaningful. Energy, Infrastructure and Transportation need deserving attention by the new Government. To enhance two-way trade the business communities on both sides have to play their productive role, he concluded.

Ather Moin Khan, Canadian Trade Commissioner in Karachi, Majyd Aziz, Former President KCCI, Shamim Firpo, Senior Vice President, Nasir Mehmood, Vice President and Managing Committee Members also participated in the meeting and exchanged views.

For more information, contact:
M. Shafiq Baig
Public Relations Officer
Karachi Chamber of Commerce and Industry (KCCI)
Aiwan-e-Tijarat Road,
Shahrah-e-Liaquat, Karachi-74000
Tel: +9221 9921 8001 -09
Fax: +9221 9921 8010
Email: pro@kcci.com.pk, pro2@kcci.com.pk
Website: http://www.kcci.com.pk/

Executive Director United States-Pakistan Women’s Council says her country taking keen interest in expanding relations with Pakistan and to promote women entrepreneurs

Islamabad, June 28, 2013 (PPI-OT): Sarah C. Peck, Executive Director US-Pakistan Women’s Council, US Department of State on Friday said her country is taking keen interest in expanding relations with Pakistan and promote the women entrepreneurs.

The representative of Pakistan’s most important trading partner said that US is trying to lift the standard of living of people of Pakistan and support the business community.

I have come to Pakistan to review the situation and forward recommendations for increased trade relaxations, she said while speaking to female entrepreneurs.

Founder President Islamabad Women Chamber of Commerce and Industry (IWCCI) Samina Fazil, President Farida Rashid, Secretary General IWCCI Sara Ansari and others were also present on the occasion.

US official Sarah C. Peck, flanked with the staff of US Embassy, said lauded the efforts of IWCCI in supporting women and said that a MOU will be signed to promote cooperation and empower women.

“I will seriously consider the proposal to establish a think-tank for designers from the two countries which will broaden ties between private sectors of both countries,” she said. .

Speaking at the occasion, Samina Fazil and Farida Rashid hoped that there will be a positive outcome of the meeting which will result in quick progress.

Pakistani exporters are facing different barriers hampering the bilateral trade which is already below the potential, they remarked.

Pakistani textiles should gain access to the US market on favourable terms or at least on similar terms as offered to other least developed countries, the IWCCI leaders demanded.

Future cooperation can be ensured through better understanding which can be ensured through frequent exchange of delegations, the said.

Farida Rashid asked the US to hold an investment conference in Pakistan and step forward to resolve energy crisis which has shaken the foundations of economy.

Relationship between two countries is heading towards stability which can improve rapidly if US focus on trade and not just aid to expand bilateral economic engagement.

Farida Rashid lauded the policy of the government, supported by the US, to expand economic cooperation with its neighbours including India, Afghanistan and the Central Asian republics.

For more information, contact:
Samina Fazil
President
Islamabad Women’s Chamber of Commerce and Industry
Mobile: +92323 5343199
Tel: +9251 2252256

Pakistan Petroleum Limited signs deal with Orion Energy to study Indus and Makran offshore areas for hydrocarbon potential

Islamabad, June 28, 2013 (PPI-OT): A signing event for Joint Study Agreement for Pakistan Offshore Exploration and a Memorandum of Understanding (MoU) for Kandhkot Gas-to-Power Project between Pakistan Petroleum Limited (PPL) and Orion Energy Plc., an oil and gas exploration company based in UK with offices in Milan, Italy, took place at the Serena Hotel, Islamabad.

MD and CEO PPL Asim Murtaza Khan and Director Orion Energy David M. Thomas signed the documents on behalf of their respective companies. The British High Commissioner to Pakistan Adam Thomson and Executive Director Pakistan-Britain Trade and Investment Forum and Partner at Lewis Silkin Nadim Khan representing Orion Energy were also present on the occasion.

PPL and Orion Energy plan to jointly study Indus and Makran offshore areas in Pakistan for hydrocarbon potential. Both companies will dedicate teams and resources for the study, which is expected to take around four months.

On identification of prospective areas, further exploration may be conducted. At a later stage, technological partners may also be brought in for state-of-the-art data acquisition, processing and identification of potential structures and reservoirs. Subsequent to the study, further exploration and production may require investments of more than USD 100 million.

Orion Energy is also interested in bringing foreign investment into Pakistan for setting up a fast-track gas-based power project with PPL as a joint venture partner to add much needed power to the national grid.

A special purpose company will be incorporated to develop, operate and manage the power project on professional basis with equity participation by both companies. Subject to approval by relevant authorities, initially 5-10 MMscfd gas from PPL’s Kandhkot Gas Field (KGF) will be made available for the project. PPL will sign a Gas Sales Agreement with the power company.

The power project will be installed near KGF with an initial size of between 25 to 50 MW. Additional 40-45 MMscfd gas may be allocated to the project by the government in which case the power plant’s capacity can be enhanced upto 250 MW.

A joint Feasibility Study will be undertaken to work out the economics and other technical aspects of the project, following which a formal shareholders’ agreement will be signed between PPL and Orion Energy. The project is expected to be commissioned on fast-track basis with an investment of around USD 50 million.

For more information, contact:
Pakistan Petroleum Limited (PPL)
PIDC House, Dr. Ziauddin Ahmed Road
P. O. Box No. 3942, Karachi, Pakistan
UAN: +92 21 111-568-568
Tel: +92 21 5651480-89
Fax: +92 21 5680005, +92 21 5652125
Email: info@ppl.com.pk

Interesting trend can be seen between silver, gold and crude

Karachi, June 28, 2013 (PPI-OT): It’s been a downfall if we look back three months. There have been some consecutive drops in gold, which may seem out of the normal trend. A 28% negative for this year may seem that the market is losing its grip.

However, seen from another perspective, a drop like this does provide an opportunity to cross hedge. Sensitivity to bond markets has increased for bullions, after recent announcements from the Fed. Investors would now look forward to other portfolio pockets to stack their funds.

An interesting trend can be seen between silver, gold and crude. Silver tends to show a positive relation, whilst crude’s price path provides the complete opposite. Other than demand and supply factors, these commodities do seem to have a common ground, providing a strong relation with macro-economic measures.

China’s less than expected growth can lead to increased volatility for crude and silver.
Rice exports from India, the world’s second-largest grower, may decline this year from a record as buyers turn to cheaper supplies from Vietnam and Pakistan, according to a traders’ group. Shipments may fall 6 percent to 9.5 million metric tons in the year that started in April from 10.1 million tons a year earlier, said Vijay Setia, a former president and member of the All India Rice Exporters Association.

Settlement Prices at PMEX were as follows with volumes at Rs. 5.38 billion with 23,482 lots traded:

GOLD: USD 1,203.9 /t oz
SILVER: USD 18.803 /t oz
CRUDE OIL: USD 97.3 / barrel
IRRI-6: Rs. 3,741 /100 kg
Palmolein: Rs. 4,419 / Mound
Sugar: Rs. 46.75/kg
Wheat: Rs. 3,392/100 kg
ICotton: US cents/pound 86.45

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