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Taurus Securities Limited Market Overview

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by August 11, 2011 Brokerage

Karachi: The market staged a moderate recovery on Wednesday due to buying activity at lower levels.

According to Taurus Securities Limited, the KSE-100 Index jumped by 276 points to close at 11,311 on the back of 67m shares transacted. Most of the activity was concentrated in the Chemicals, Banks, Personal goods, and Oil & gas sectors. The top gainers according to Index points were OGDC, MCB and PTCLA; likewise the top decliners were NJI, PKGS and PAKT.

Taurus Securities Limited advises investors to accumulate on dips.

Oil & Gas Development Co. (OGDC) 4QFY11 and FY11 Preview

OGDC’s BoD is expected to meet tomorrow to announce theFY11 results and so Taurus Securities Limited is presenting its forecast.

Taurus Securities Limited forecasts 4QFY11 PAT to be PKR 14.87bn (EPS: PKR 3.46), a decline of 10% from PKR 16.57bn (EPS: PKR 3.85) in 4QFY10. Given Taurus Securities Limited’s 4QFY11 estimate, the FY11 PAT is projected to be PKR 64.05bn (EPS: PKR 14.89), an increase of 8.2% YoY.

The major driver for the growth in the bottom line for FY11is the jump in revenues due to higher prices for both crude oil and natural gas. Taurus Securities Limited expects crude oil production to be 39.5k barrels per day and gas production of 958 mmcfd during 4QFY11. The average Arab Light Crude price during 4QFY11 was US$ 105.03 a barrel as compared to US$ 77.36 during the 4QFY10. The top line is forecast to increase by 14.2% YoY to PKR 38.79bn. The main factor in the YoY drop in the bottom line during 4QFY11 is the tax as we have taken the 15% flood surcharge into consideration while last year the effective tax rate during 4QFY10 was only 13.5%. Taurus Securities Limited feels that the company could declare a final cash dividend of PKR 2 per share.

News Snapshot

First month of fiscal year 12: workers’ remittances surge by 38.57 percent: Remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $1,096.31 million was received in the country in the first month (July 2011) of the current fiscal year 2011-12 (FY12), showing an impressive growth of 38.57 percent or $305.13 million when compared with $791.18 million received during the same period of last fiscal year (i.e. July 2010).

Yields on govt papers come down, Rs181bn borrowed: The government borrowed Rs181.198 billion on Wednesday in an auction of market treasury bills of three-, six- and 12-month maturities. The target for the T-bills was set at Rs170 billion. The cut-off yield for three-, six-, and 12-month bills reduced to 13.06 percent, 13.27 percent and 13.37 percent, respectively against 13.53 percent, 13.78 percent and 13.92 percent in the previous auction held on July 27.

Cabinet grants tax relief to OGDC exchange bonds: Finance told to release Rs 11 billion for Railways: The Cabinet on Wednesday granted tax exemption to OGDC Exchange Bond (EB), and directed the Finance Ministry to immediately release Rs 11 billion to Pakistan Railways. The Minister for Information and Broadcasting, Dr Firdous Ashiq Awan, told media after the Cabinet meeting that Prime Minister Yousaf Raza Gilani directed all stakeholders to hold meetings on daily basis to resolve energy sector issues.

Clearance of Pepco’s Rs 150 billion dues: meeting to discuss roadmap: The government has decided to invite heads of loss-making distribution companies (discos) for explanation of high losses as well as independent power producers (IPPs) to discuss a roadmap for clearance of their Rs 150 billion dues against Pepco, it is learnt.

Qadirpur gas field to remain closed for one month: The Qadirpur gas field which supplies up to 460 MMCFD gas to Sui Southern Gas Pipeline (SNGPL) and the country’s second largest gas field, covering most areas of the country will remain closed from August 28 for one month. Sources in the Ministry of Petroleum and Natural Resources told Business Recorder that due to annual maintenance work of the gas field the management has decided to close it from August 28 to September 27.

Increase in OMCs’ margins, dealers’: The government move to increase the dealers’ commission and the rate of margins of oil marketing companies (OMCs) on petroleum products by Re0.41 to Re0.70 per litre is likely to push the prices of petroleum products further up.

Meezan Bank advises short-term Sukuk: Meezan Bank has become the first Islamic bank in Pakistan as an adviser and lead arranger for the first-ever short-term Sukuk for Kot Addu Power Company Limited (KAPCO), a statement said on Wednesday. The short-term Sukuk worth Rs1.5 billion, which can be termed an Islamic alternative to commercial paper, was issued by KAPCO to meet its working capital requirements, it said.

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