Stock Smart Weekly ( Feb 26, 2021)
StockSmart
Weekly Review
Equities continue to remain volatile in the outgoing week, with the KSE-100 index closing at 45,865pts, down 0.8%WoW. Expectations surrounding FATF announcement, month-end phenomena, international markets’ performance (10y US treasury yield at one year high level of 1.6% on account of stimulus while unnerving equity investors), and possible improvement in diplomatic relations with India, defined market sentiments in the outgoing week. Feb’21 FATF statement is encouraging in our view with Pakistan in compliance with 24 out of 27 action items. As such, average volumes stood at 589.3mn shares in the current week compared to 595.0mn shares in the previous week. Other major news flows were; i) Pakistan and IMF under discussion to either increase remaining tranche size or extend the time frame beyond Sep’22 under the existing $6 billion Extended Fund Facility (EFF), ii) Govt. raising edible oil prices by 18% or PkR30/kg to PkR200/kg, iii) Jan’21 current account deficit clocking in at US$229mn, taking 7MFY21 current account surplus to US$912mn), iv) Privatization commission planning to conduct three capital market transactions in Apr’21 for divesting 20% shares of PAKRI, 10% of PPL, and 7% of OGDCL, v) Potential NAB investigation against certain IPPs delaying release of first tranche under agreement with IPPs, and lastly vi) Govt. likely to raise ~US$1bn from Eurobonds to be issued next month. Within major sectors, only Cements achieved positive return, +2.2%WoW while OMCs and E&Ps were the major losers, down 4.0%WoW and 2.8%WoW respectively. Amongst other sectors, Automobile Parts and Refineries closed the week with a gain of 8.8%WoW and 2.8%WoW respectively while Glass & Ceramics was down 16.7%WoW. Flow-wise, foreigners turned net buyers, with a net buy of US$0.28mn, together with brokers (net sell: US$10.73mn) which was mainly absorbed by Insurance (net buy: US$4.72mn) and Individuals (net buy: US$6.66mn). Within individual stocks, top performers include, i) BNWM (+8.9%WoW), ii) ILP (+7.5%WoW), iii) LUCK (+6.4%WoW), iv) DCR (+4.9%WoW), and v) FML (+4.5%WoW), while laggards were, i) GATI (down 11.3%WoW), ii) NBP (down 8.9%WoW), iii) NML (down 8.3%WoW), iv) FFBL (down 8.3%WoW), and v) HASCOL (down 8.0%WoW).
Outlook
With the result season in the rearview, market is expected to look forward to Senate elections and macro developments (Feb’21 inflation estimated to stand at 8.7%YoY). Moreover, investors are likely to focus on commodity upcycle related gainers and upbeat demand particularly in Cyclicals (Cements, Steels, and Autos). As such, we continue to like LUCK, MLCF, and DGKC within our universe while an eye should also be kept on banks where higher inflation could pop up expectation of an eventual rate hike.
AKD Research
Fauji Fertilizer Bin Qasim Limited is a Pakistan-based holding company. The Company manufactures, purchases and markets fertilizers. It is involved in meat, dairy and coal based energy generation sectors. It has identified its potential business segments and has undertaken investments in the areas of food, financial, power sector and wind energy projects. Its products include Granular Urea, such as Sona Urea, and Di Ammonium Phosphate (DAP), such as Sona DAP. Sona Urea is a synthetic organic compound containing nitrogen in amide form available in the form of white solid prills. It is applied to soil and also suitable in solution form as spray application. Sona DAP contains nutrient element, phosphorous besides nitrogen available in flowing granular form Granules are stronger, harder and of uniform size. It is suitable for various crops and soils recommended for initial application. It produces over 791,260 metric tons (MT) of DAP and approximately 433,610 MT of Urea.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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