Market Wrap Laggards join the run... KSE100 Index 29,595|High 29,652|Low 29,260|Change +335|Value USD86mn|Vol 136mn Pakistan equities opened positive carrying momentum from the previous session as political crisis seems to be heading to a close. The move up was further strengthened when members of the assembly from the protesting PTI participated in the ongoing joint session of upper and lower house hinting towards resolution of the ongoing political crises. Lagging cement sector witnessed sharp recovery with Lucky Cement LUCK PA +5% hitting second consecutive upper price circuit while Kohat Cement KOHC PA +2.9% also gained. On the contrary Pakistan State Oils PSO PA -1.2% closed lower after earnings that were slightly below estimates, possibly on no stock payout, while volumes table remained dominated by small cap retail plays to the likes of Pak Electron PAEL +5%, Maple Leaf Cement MLCF PA +4% and Jahangir Siddiqui & Co JSCL PA +5% on retailers activity. Investors will continue to track foreign flows and most importantly developments on the political front and we see stocks to test 30k before taking a breather barring no surprise on the political front. Recommend buying OGDC, NML, HUBC, UBL, BAFL, EFERT, ENGRO and DGKC. KEY EARNINGS: Pakistan State Oil PSO PA announced FY14 EPS PKR80.31 +72.6% YoY against Elixir estimated PKR83.5/sh and consensus PKR86.16/sh. Company also announced final cash dividend of PKR4/share, taking full year payout to PKR7.6/sh. Variation in earnings emanated from lower than estimated gross profit and other income. Lower gross profit is likely attributable to higher than estimated inventory losses. Lower gross profit and other income were partially offset by lower finance cost. Stock currently offers an upside of 18% to our June 2015 PT of PKR450/share. However, we currently maintain our HOLD stance on the stock with burgeoning circular debt heightening risks for the company’s cash flows. Courtesy: Elixir Securities
Posted on: Wed, 03 Sep 2014 16:42:42 +0000
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