The Privatization Minister has informed that Pakistan will receive payment of US$800 million from Etisalat for its stake in PTCL by March. Etisalat had acquired 26% stake in PTCL in 2006 for US$2.6 billion but has so far paid only US$1.4 billion owing to a dispute pertaining to transfer of 3,000 real estate units. As per the minister, the property issues will also be resolved soon.
Increasing trend in international petroleum product prices is likely to cause an increase in the retail price of motor gasoline and high speed diesel from February 1, 2010. Arab Gulf crude oil price increased by a mere 3.5% in January 2010 as compared to December 2009 but prices of petrol and diesel increased by 8% and 4.6% respectively. Pak rupee depreciation is also likely to play its part in the price increase. The OMCs seem to be suffering from lower margins on HSD in percentage terms as compared to petrol. Despite higher ex-refinery prices of diesel than petrol, Rupee margin on petrol for February is expected to be higher as compared to HSD. Besides the flat margin, OMCs are also losing on diesel due to its poor sales growth in 1HFY10. However, OMCs would benefit from inventory gain with the expected hike in ex refinery prices. But low production from local refineries due to persistent circular debt crisis would limit the inventory gains.
The BoD of Pioneer Cement has approved the revised restructuring package offered by NBP. Restructuring involves issue of 26.2 million ordinary shares at Rs15 each as well as 63.7 million preference shares at Rs10 each to NBP. Total amount issued to NBP would be Rs1.03 billion of which Rs393 million will be from ordinary shares and Rs637 million would be from preferred shares. Based on 1QFY10 financials, the debt to equity ratio of the stood at 1.7x while the company recorded a loss of Rs67 million in 1QFY10 compared to a profit of Rs16.7 million in 1QFY09.
Fauji Fertilizer Bin Qasim (FFBL) announced its financial results for the year ended December 31, 2009. The Company posted record profit after tax of Rs3.782 billion (EPS: Rs4.05) up 30.43% as compared to profit of Rs2.90 billion (EPS: Rs3.10) for the previous year. Investors should have been more than happy to hear about final divided of Rs2.25 per share raising full year payout to Rs4.00 share. The Company posted an outstanding fourth quarter performance earning profit after tax of Rs1.976 billion (EPS: Rs2.12) which completely changed the full year record. Most of the analysts forecasted earning for the quarter ranging from 1.25-1.67 Rupees but actual results surpassed all the estimates. The factor making the difference was PMP Joint venture profit reported at Rs285 million improving bottom line of the Company to a large extent against the loss projected by the analysts.
Lucky Cement announced its half yearly financial result. The Company posted an impressive profit after tax of Rs1.91 billion (EPS: Rs5.9) despite difficult operating conditions, showing flat profits as compared to last year. The profit was higher than projected at Rs1.53 billion (EPS: Rs4.75). The deviation from estimates was mainly on account of higher topline. The Company sold approx. 1.34 million tons cement in the local market and exported 1.84 million tons. This was contrary to an estimate of 1.26 million tons local sales and 1.6 million tons exports. As expected, the Company did not announce any dividend along with the result. Stellar 1HFY10 results are likely to generate improve investors sentiment for the Company.
Pakistan Petroleum announced its 1HFY10 result which fell short of market expectations. The Company reported profit after tax of Rs9.75 billion EPS: R9.79) against earnings of Rs13.78 billion (EPS: RS13.83) for the corresponding period last year, a decline of 29% YoY. The result was below the analysts forecast. The deviation could be attributed to 1) higher field expenditure and 2) higher effective tax rate. Along with the result, the Company announced interim dividend of Rs4.00/share, inline with market expectations.
Following the recent spike in international DAP prices, Engro, the largest importer of DAP has raised its prices by Rs290/bag to Rs2,200/bag. Currently, international DAP prices are at US$405/ton (FoB), whose landed cost is expected to be US$440-450/ton (Rs1,850-1,900/bag). However, as per CRU December report, Engro had scheduled for the arrival of 120,000 tons of DAP in January this year at a landed cost of US$360/ton, implying a huge gain from current levels (US$162/ton). Taking the 120,000 tons import figure and profit of US$160/ton, total trading gains for Eximp amount to Rs1.6 billion and a potential Engro EPS impact of Rs4.70. Phosacid prices have also been finalized at US$630/ton. InvestCap expects FFBL to also follow suit and match its DAP prices to that of Engro which would keep its DAP/phosacid margins at US$210/ton. With demand being more price elastic than urea, InvestCap analyst doesn t expect DAP sales to record YoY increase following a bumper CY09. However analyst still expects FFBL to sell most of its produce. Keeping in view the rising trend in international food prices and with domestic prices generally taking cue from international, farmer income levels are expected to remain healthy in CY10 as well.
Fauji Fertilizer Company announced its full year CY09 result, posting earnings of Rs8.8 billion (EPS: Rs13.0) compared to earnings of Rs6.5 billion (EPS: Rs9.6) for CY08. The result was inline with market expectations. Major reason for the increase in earnings was1) higher effective price of urea (standing at an average of Rs703/bag during the year resulting in higher gross margin at 43.3% compared to 40.4% last year and 2) higher dividend recorded from subsidiary FFBL at Rs1.9 billion compared to just Rs760.4 million last year. Along with the result, the company announced a final cash dividend of Rs3.25 per share taking full year cumulative dividend payout to Rs13.15 per share.
The slow pace of installation of compressors at Qadirpur gas field is delaying production as government will be able to install only ten compressors by June, 2010. The government was to install 14 compressors at the gas field by the end of current financial year to save the third largest gas field of the country whose production is fast declining due to failure in installing the compressors. According to Minister for Petroleum and Natural Resources Syed Naveed Qamar as many as ten compression plants would be installed by June 2010 and the remaining four by mid September 2010. He admitted that all the compressors had not so far been installed at Qadirpur Gas Field but denied that the delay in installation is instrumental in decreasing production.