AKD STOCK SMART, Nov 01, 2019
StockSmart
Weekly Review
KSE-100 index retained momentum this week, gaining 2.14%WoW to close at 34,338pts after remaining under pressure in the backdrop of FATF developments (where deadline to meet compliance was extended till Feb’20) and application of ‘minimum brokerage commission’. Avg. volume also improved to 166.3mn shares, +33.5%WoW. Market cheered, i) resolution of issues between the government and traders, ii) declining PIB bond yields (3y/5y/10y bond yields down 115/90/90bps) that provided juice to market expectation of an early rate cut, iii) deferral by a year of axle load policy (Cements up 7.8%WoW/ Engineering up 7.4%WoW), and iv) possible revision in OMC margins (MS/HSD by PkR0.25/ltr each / OMCs performance: +5.6%WoW). Surprises in the result with PSO (due to higher inventory gains), HUBC (higher capacity payments and share of profit from 47.5% owned CPHGC), and PAEL (due to low inventory costs and manageable debt levels) posting higher than expected results, also reinvigorated sentiment. So much so, the market did not give consideration to the on-going ‘Azadi March’ which has reached to the capital. Participation wise, Companies and Mutual funds (Net Buy of US$4.9mn and US$2.8mn respectively) during the week absorbed selling of Foreigners (US$3.1mn), Banks (US$2.2mn) and Insurance (US$2.2mn). Apart from OMCs and Cements, major performances were witnessed in Power (+2.1%WoW on possible issuance of Power Sukuk by year-end or early part of next year), and Commercial Banks (+1.4%WoW). On the flipside, Textiles lost 2.3%WoW on weak earnings announcements. Top performers in AKD universe were, i) CHCC(+23.99%WoW), ii) PIOC (+22.2%WoW), iii) DGKC (+20.3%WoW), iv) ASTL (+18.66%WoW), and v) PSO (+16.31%WoW) while laggards were, i) HASCOL (down 6.01%WoW), ii) NCL (down 3.73%WoW), iii) FFC (down 2.79%WoW), iv) MEBL (down 1.37%WoW), and v) OGDC (down 1.07%WoW).
Outlook
We believe market performance over the short-term could be dictated by the developments surrounding the ‘Azadi March’ and news flow relating to IMF review whereas keen eye would be kept on inflation release for the month of Oct’19 (we expect a soft reading of 10.68% vs. 11.38% last month) shaping expectation of interest rate outlook (monetary policy announcement due later this month). As a result, we continue prefer macro-driven stocks where we like banks (top picks: HBL, UBL and BAFL on valuations with credit risks not yet visible), HUBC (earnings growth and dividend yield) and NML (diversified income stream, tilt towards value-added products, capacity expansions).
Hascol Petroleum Limited is a Pakistan-based company, which is engaged in procurement, storage and marketing of petroleum and related products. The Company is involved in the sale of petroleum products, such as fuel oil, high speed diesel, gasoline, Jet A-1, liquefied petroleum gas (LPG) and lubricants. The Company offers products, such as Tiger Super, Rocket Diesel and Furnace Oil. The Company offers Fuchs Lubricants products, which include corrosion preventives, quenching oils, industrial lubricants, open gear lubricants, greases, automotive oil and metal working fluids. The Company also markets LPG as an automotive fuel through its retail network. The Company is engaged in owning, leasing and renting oil storage facilities, as well as importing petroleum products. The Company has storage facilities at Machike, Shikarpur and Daulatpur. The Company sells its product to dealers, government agencies and autonomous bodies, independent power project and other corporate customers.
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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