Equity market gained 1.8pc on robust earnings

(Nation (Pakistan) Via Acquire Media NewsEdge) The equity market closed a remunerative week up 1.8 per cent WoW, driven by a slew of positive earnings announcements as Oct-Dec 2012 result season unfolded and continued foreign interest at the local bourse.

Relative calm on the political front after recent volatility also played a supporting role, where the Swiss government declined to re-open cases against President Zardari and the Supreme Court threw out firebrand Dr Qadri’s case against the Election Commission.

Trading volumes however dipped by 7.4per cent WoW to 270m shares. Investor focus was skewed towards the telecom (+9 per cent WoW), auto (+6.1 per cent WoW) and oil & gas (+4.7 per cent WoW) sectors, on account of (1) anticipation of robust Dec-12 results from telecom giant PTC, on which the company delivered; (2) sharp 52per cent MoM recovery in domestic auto sales in Jan 2013; and (3) rumors of an increase in marketing margins for OMCs as well as higher international oil prices.

Concerns on Pak Rupee exchange rate (Pakistan made a $146m repayment to the IMF this week) and high DPS (Rs2.0) announcement by its subsidiary Nishat Chunian Power Ltd, put Nishat Chunian Ltd in a sweet spot. NCL was the top performer in our coverage universe this week (+15 per cent).

Experts said that amid local institutions and foreign fund managers support local bourse continued its upsurge. Market increased by 1.8 per cent to close to an all time high of 17797 points mark with value increased by 19per cent to Rs.6.8 billion. PTCL’s result announcement brought telecom sector remained in the limelight after PTCL realized international call revenue.

Engro Corp and DGKC result remained below expectations while OGDC share price closed well above 200 rupees mark for the first time ever. Going forward, foreign interest, result announcements are likely to continue supporting the bull-run while any news on political front can affect the investors’ sentiments.

According to experts, Attock Petroleum Limited (APL) booked 3 per cent YoY lower profits of Rs 2.16 billion (EPS of Rs31.18) in 1HFY13 as against earnings of Rs 2.22 billion (EPS of Rs32.08) in the corresponding period last year.

However to the market’s surprise, the company did not announce any cash payout with the result (consensus between Rs17.5-Rs20/share). Experts believe, potential acquisition of Chevron petroleum marketing affiliates in both Pakistan and Egypt (for which the company is conducting due diligence) is the reason for the no payout.

In 2QFY13, APL booked revenues of Rs42 billion (up 8per cent YoY), mainly on the back of increase in sale of Furnace Oil (FO).

However due to likely inventory losses, gross profits declined by 12per cent YoY. At the same time, income on bank deposits and short-term investments increased by 20per cent YoY mainly owing to a higher cash balance. Experts said that the telecom sector has outperformed the market by a phenomenal 15% in a span of just ten days. And that’s not it, as they believe the rally will continue.

They attribute the recent activity in the sectors as a pre-result phenomenon where the entire sector is anticipated to out-do its previous profitability on the back of increase in international call rates. According to industry sources, an average 750m mins/month have been recorded by the entire sector in Oct-Dec 2012; higher than initial expectations of 500m mins/month for FY13.

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