[ Morning Report ] Friday, December 19, 2014 Market Overview Bullish activity witnessed in Karachi Stock Exchange (KSE) on Thursday owing to end of PIT protest in the national interest which welcome market participants. The benchmark KSE-100 index was up by 160.31 point to close at 30,827.45 points. CHCC: Higher electricity tariff restricts profitability growth In our today's morning report, we have presented the financial result of Cherat Cement Company Limited (CHCC) for the 1QFY15 in detail. PAT drop by 8% Cherat Cement has posted profit after tax (PAT) of Rs 251 million (EPS: Rs 1.42) compared to Rs 273 million (EPS: Rs 1.54) during the same period last year. Lower results posted by the company mainly due to upward revision of tariff by the government. However, rising cement prices and better volumetric growth provide support. On QoQ basis, company growth also decline by 10% QoQ to Rs 251 million (EPS: Rs 1.42) in 1QFY15 versus Rs 281 million (EPS: Rs 1.59) in 4QFY14 owing to lower volumes and decline in other income. Revenue up by 4% Revenue of the company increased by 4.3% to Rs 1.55 billion in 1QFY15 compared to Rs 1.48 billion owing to higher dispatches and elevated cement prices. Volumetric sales up by 3% to 232k tons against 225k tons in 1QFY14. Local dispatches surge by 1.5% to 145k tons against 142k tons in 1QFY14. Exports volume hikes by 5.5% to 87k tons versus 83k tons in same period last year. While cost of sales increase by 11% to Rs 1.14 billion versus Rs 1.03 billion in 1QFY14 due to due to increase in electricity charges and better sales volume. Gross profit decrease by 10% to Rs 412 million compared to Rs 460 million due to higher cost associated to electricity. Thus margin decrease to 26.6% in 1QFY15 versus 30.9% recorded in 1QFY14. Retention prices increased 1% to Rs 6,695/ton versus Rs 6,610/ton in 1QFY14. Moreover, EBITDA down by 9.2% to Rs 2,722/ton against Rs 2,999/ton in 1QFY14. Rs in million Sales Cost of Sales Gross Profit Distribution Costs Administrative Expenses Other Expenses Other Income Operating Profit Finance Costs Profit before Taxation Taxation Profit after Taxation EPS Source: Company Report 1QFY15 1,553 1,140 412 52 41 21 17 315 9 306 55 251 1.42 1QFY14 1,489 1,029 460 45 34 31 9 359 6 353 81 273 1.54 YoY 4.3% 10.9% -10.3% 14.5% 23.1% -31.2% 94.5% -12.3% 43.8% -13.3% -31.7% -7.8% 4QFY14 1,753 1,298 454 49 37 28 32 372 9 363 83 281 1.59 QoQ -11% -12% -9% 4.7% 13% -25% -47% -15% 2.1% -16% -34% -10% Outlook We expect domestic demand is expected to increase due to expectation of higher spending by private sector coupled with infrastructural projects by the government. Therefore in order to meet the expected rise in cement demand the company is going towards plant expansion which is currently operating at its maximum capacity. Moreover, political situation in Afghanistan is also improving which is expected to provide boost the reconstruction activities in the county. At the current price level of Rs 66.85, the stock of CHCC is trading 7.6% lower from our DCF based June'15 target price of Rs 72/share. NCCPL (U.S $ in million) Portfolio Investment U.S $ in million) FIPI (18-Dec-2014) -3.41 Local Companies (18-Dec-2014) -0.31 Banks / DFI (18-Dec-2014) 0.33 Mutual Funds (18-Dec-2014) -0.20 NBFC (18-Dec-2014) 0.22 Local Investors (18-Dec-2014) 1.16 Other Organization (18-Dec-2014) 2.21 Yearly(Jul, 2014 up to 11-Dec-2014) 122.84 Monthly(Dec, 2014 up to 11-Dec-2014) -20.91 Daily (11-Dec-2014) -5.67 Total Portfolio Investment (28-Nov-2014) 6029 1 News Update Total liquid foreign reserves of the country stand at $14.04204 billion, said State Bank of Pakistan (SBP). According to SBP's weekly statement here on Thursday, the foreign reserves held by State Bank on Dec. 12, amounted $9.34605 billion and the net foreign reserves held by other banks were of $4.69509 billion. During the week ending Dec. 12, SBP's liquid foreign reserves increased by $144 million to $9.347 billion compared to $9.203 billion in the previous week. During the week, SBP received $73 million from multilateral, bilateral and other sources. State Bank of Pakistan (SBP) on Thursday accepted bids of Rs 20.3 billion in its open market operation (purchase of Government of Pakistan Ijara Sukuk on Bai Mujjal basis). SBP accepted all bids offered for 6-months and 12-months Sukuk. The deferred price accepted is Rs 112.7149 billion, said SBP statement. As directed by the Prime Minister to resolve the issue regarding recovery of outstanding electricity bills, Finance Minister Ishaq Dar here on Thursday chaired a high level meeting asking NAB to resume the recovery exercise on fast track basis. Chairman NAB, Ch Qamar Zaman, Secretary Finance, Dr Waqar Masood, Secretary Water and Power, Younus Dhaga, Advisor Finance Division, Rana Asad Amin and other senior officials attended the meeting. The meeting observed that billions of rupees of electricity bills were unpaid to date, placing the national economy under tremendous strain. Both private as well as public sector entities and domestic consumers were among the defaulters. This situation could not be allowed to go on any further, the meeting agreed. KSE Statistics Indices All Share Index KSE-30TM Index KSE-100TM Index Turnover All Share Index KSE-30TM Index KSE-100TM Index December 18, 2014 22,397.74 19,892.16 30,827.45 195,190,130 78,856,150 126,783,920 [ Morning Report ] Friday, December 19, 2014 Pivot Analysis Board Meetings Company CR RSI Buy 1 Buy 2 Sell 1 Sell 2 Pivot KSE 100 INDEX 30827.45 41.00 30,612 30,397 31,098 31,368 30,883 Attock Cement 195.05 66.38 189.55 184.10 199.00 203.00 193.55 Adamjee Insurance 49.26 51.80 48.85 48.45 49.85 50.40 49.45 Askari Bank 22.00 43.57 21.80 21.65 22.20 22.35 22.00 Azgard Nine 5.96 50.72 5.80 5.65 6.15 6.35 6.00 Attock Petroleum 510.31 33.24 506.90 503.45 516.90 523.45 513.45 Attock Refinery 188.83 41.86 186.95 185.10 190.35 191.90 188.50 Bank Al-Falah 30.36 45.51 30.10 29.80 30.85 31.30 30.55 BankIslami Pak 10.09 46.64 10.00 9.95 10.20 10.30 10.10 Bank.Of.Punjab 9.98 69.88 9.80 9.60 10.25 10.55 10.10 Faysal Bank 16.84 35.28 16.65 16.50 17.00 17.20 16.85 Fauji Cement 23.95 57.30 23.75 23.60 24.25 24.50 24.05 Fauji Fert Bin 42.90 50.28 42.50 42.15 43.55 44.20 43.20 Fauji Fertilizer 116.25 37.30 115.50 114.75 117.50 118.75 116.75 Habib Bank Ltd 211.01 57.32 209.35 207.70 212.35 213.65 210.65 Hub Power 73.46 55.19 72.55 73.90 74.35 73.45 ICI Pakistan 481.67 26.52 477.45 473.25 485.45 489.20 481.20 Lucky Cement 476.49 52.10 472.20 467.90 480.90 485.30 476.60 MCB Bank Ltd 280.92 36.70 276.05 271.15 288.90 296.85 284.00 Maple Leaf Cement 41.48 68.99 41.00 40.50 42.15 42.85 41.70 National Bank 64.95 54.03 64.40 63.90 65.70 66.50 65.20 Nishat Mills 119.76 41.92 116.20 112.60 123.65 127.60 120.10 Pak Petroleum 176.16 32.21 174.30 172.45 178.20 180.25 176.35 21.64 44.15 21.95 22.25 21.75 P.T.C.L.A 73.00 21.45 21.25 CR = Yesterday's Closing Rate; RSI = 14 day RSI. RSI Indication: Less than 30 Indicate oversold position & Greater than 70 Indicate overbought position. Risk Disclosure This report has been prepared by AZEE Securities (Pvt) Limited and the information contained in the Product is intended solely for the recipient or attached skilled individuals of the firm. The Firm accepts no liability whatsoever for the actions of individual, collateral or third parties in all over Pakistan and abroad as well. This report is provided solely for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and AZEE Securities (Pvt) Limited accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report contents. All rights reserved. The material contained in this report is based on data obtained from sources we deem to be reliable and without prior written permission this information is provided on an "as is" basis. 2 Company Siemens (Pak) Shahmurad Sugar Mills Fauji Fertilizer Al-Noor Sugar Mills Ltd Dewan Sugar Mills Ltd Mirpurkhas Sugar Mills Ltd DATE 19-12-2014 19-12-2014 22-12-2014 22-12-2014 22-12-2014 23-12-2014 TIME 10:00 11:30 11:00 11:30 4:00 3:00 Key Data Money Market T-Bills (3 Mths) T-Bills (6 Mths) T-Bills (12 Mths) Discount Rate Kibor (1 Mth) Kibor (3 Mths) Kibor (6 Mths) Kibor (9 Mths) Kibor (1 Yr) P.I.B (3 Yrs) P.I.B (5 Yrs) P.I.B (10 Yrs) P.I.B (15 Yrs) P.I.B (20 Yrs) P.I.B (30 Yrs) 10-Dec-2014 10-Dec-2014 10-Dec-2014 15-Nov-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 18-Dec-2014 9.46% 9.49% 9.50% 9.50% 9.91% 9.66% 9.66% 9.94% 9.97% 10.40% 10.73% 11.65% 12.10% 12.20% 12.40% Commodities Crude Oil (brent)$/bbl Crude Oil (WTI)$/bbl Cotton $/lb Gold $/ozs Silver $/ozs Malaysian Palm $ GOLD (PMEX) PKR KHI Cotton 40Kg PKR 62.57 57.54 60.51 1,202.65 16.05 621 38,840 5,037 Contacts CORPORATE OFFICE. Suite # 208 2nd floor, Business & Finance Centre, Main I.I. Chundrigar Road, Karachi, Pakistan. Tel: 111-293-293, 021-2467131-40 Email: [email protected] Karachi Stock Exchange (Guarantee) Ltd. (Registered) 33, Ground Floor, Karachi Stock Exchange, Stock Exchange Road, Karachi – 74000, Pakistan. Tel: 021-2473513-22 Fax: 021-2473519 Email: [email protected] CALL: 111-AZE-AZE URL: http://www.azeetrade.com Email: [email protected]