PACRA Morning Brief

4/7/23

The aim of this document is to inform the user about current news and events as gathered from various secondary sources of information such as research reports, newspapers
and websites. In addition, the Analyst preparing this report has also provided their own opinion on whether a particular news is favorable or unfavorable for the economy or
industry. This has been categorized under the word “Impact” which may be:
Positive, Negative OR Neutral
The “Impact” is limited in scope to the current days news and events only. It does not seek to provide an indication of past performance or an outlook for the future.
Economy

Sufficient fuel stock available in country: Petroleum Division

• The Petroleum Division on Sunday clarified that sufficient stock of petrol and diesel was available to meet 15-day needs of
the country, rejecting some media reports regarding shortage of petroleum products.
• Significant increase in the sales of POL products was witnessed during the previous few days due to considerable decrease in
the fuel price, for which the petrol pumps had not procured the products from Oil Marketing Companies

Source: https: https://mettisglobal.news/sufficient-petrol-diesel-stock-available-in-country-petroleum-division

Foreign investors withdraw in April 2020

• Foreign selling continued as offshore investors withdrew 68.971 million dollars from the local capital market during the
month of April 2020.
• The cumulative outflow from foreign investors' portfolio investment (FIPI) increased to 207.211 million during the current
calendar year

Source: https: https://www.brecorder.com/2020/05/03/593982/foreign-investors-withdraw-68971-million-during-april/

PACRA Morning Brief 4/7/23 2
Economy
Impact: Positive

Pakistan’s Forex Reserves Increases

• Pakistan's Forex Reserves increased by USD 1,162.70 Million
or 6.72% and the total liquid foreign reserves held by the
country stood at USD 18,463.00 Million on Apr 24, 2020.
• According to data published by the State Bank of Pakistan
(SBP) its reserves increased by USD 1,181.10 Million.
• SBP received US$1.39 billion from IMF under the Rapid
Financing Instrument (RFI) to address the economic impact of
the Covid-19 shock. SBP has also made government external
debt repayments amounting to US$ 234 million.

Foreign reserves held by 24-Apr-20 17-Apr-20 Change % Change

State Bank of Pakistan 12,070.30 10,889.20 1181.1 10.85%

Net Foreign Reserves Held by
6,392.70 6,411.10 -18.4 -0.29%
Banks
Total Liquid Foreign Reserves 18,463.00 17,300.30 1162.7 6.72%
Amount in USD Million

Source: https: https://mettisglobal.news/pakistans-forex-reserves-increase-by-usd-1162-70-million

PACRA Morning Brief 4/7/23 3
Economy
Impact: Neutral

MSCI Review
• Morgan Stanley Capital International (MSCI) is expected to
announce May-2020 Semi Annual Index Review (SAIR) on May
12, 2020, which will be effective from June 01, 2020.
• Pakistan to once again come under scrutiny in the review for a
potential downgrade from Emerging Markets to Frontier
Markets, with Pakistan’s weight estimated at ~0.05%.
• All the three constituents from Pakistan (OGDC, MCB and HBL)
do not meet the minimum free-float capitalization criteria of
US$776mn, while only OGDC meets the full market
capitalization criteria of US$1,551mn.
• The probability of a downgrade of Pakistan is low given that
MSCI may apply the Index Continuity rule and take into
consideration the impact of COVID-19

Source: https: https://mettisglobal.news/pakistans-forex-reserves-increase-by-usd-1162-70-million

PACRA Morning Brief 4/7/23 4
Economy
Impact: Positive

Inflow of hot money begins slowly

• Latest data issued by the State Bank noted a change in
March’s trend of foreign investment from the T-bills when no
hot money was recorded in the government papers
• While the outflow of foreign investment in the treasury bills
still remains high, April also witnessed some uptick in hot
money inflows.
• The government started witnessing inflows in the treasury
bills, clocking in at $204m even though the figure was dwarfed
by foreigners unloading $631m in the same month.
• The State Bank data showed that the fiscal year-to-date
outflow of dollars from the T-bills is $2.853bn, against a total
inflow of $3.636bn — leaving a balance of $782m.

Source: https://www.dawn.com/news/1553354/inflow-of-hot-money-begins-slowly
PACRA Morning Brief 4/7/23 5
Economy
Impact: Positive

Pakistan’s Yearly inflation at 8.53% in April-

20
• Pakistan's Yearly Inflation Rate in April 2020 stood at 8.53 percent
compared to 10.20 percent in March 2020 and 8.30 percent in April
2019.
• The July – April average inflation is 11.24 percent compared to 6.52
percent from the corresponding period last year.
• SPI inflation on YoY increased by 9.0% in April 2020 as compared to an
increase of 11.8% a month earlier and an increase of 10.0% in April
2019.
• On MoM basis, SPI decreased by 2.0% in April 2020 as compared to a
decrease of 0.3% a month earlier and an increase of 0.5% in April
2019.

Source: https://mettisglobal.news/pakistans-yearly-inflation-at-8-53-percent-in-april
PACRA Morning Brief 4/7/23 6
Economy
Impact: Negative Impact: Positive

Exchange Rate - PKR/USD

Delta Open
& Inter
166.59
165.75
Bank

Open
Market
PKR/USD 161.63 162.50
161.50
161.02 162.00 160.77
InterBank
PKR/USD

154.70
154.35

154.63 154.40
1.1%
0.0%
0.3% 0.2%
0.1% -0.5%

31-Jan 28-Feb 31-Mar 28-Apr 29-Apr 30-Apr

Source: State bank of Pakistan (Interbank Rates); Forex.pk (Open market rates) Source: State Bank of Pakistan (KIBOR); Mutual Funds Association of Pakistan (PKRV)
PACRA Morning Brief 4/7/23 7
Capital Markets | PSX
Sector Lead: Madiha.Sohail@pacra.com Impact: Positive

Weekly review: PSX posts smart gains

• A shorter trading week at the Pakistan Stock Exchange (PSX) ended on
a high note as the benchmark index gained 1,305 points or 3.98% to
settle at 34,112 points despite gloomy economic situation amid the
Covid-19 pandemic.
• Positive contribution came from oil and gas exploration companies
(396 points), power generation and distribution firms (201 points),
fertilizer producers (158 points), cement companies (126 points) and
oil and gas marketing companies (78 points).
• Stock-wise the positive contribution was led by Hubco (197 points),
OGDC (144 points), Pakistan Petroleum (119 points), Pakistan Oilfields
(92 points) and Fauji Fertiliser Company (79 points).

Source: https://tribune.com.pk/story/2211822/2-weekly-review-psx-posts-smart-gains/
PACRA Morning Brief 4/7/23 8
 Capital Markets | PSX
Sector Lead: Madiha.Sohail@pacra.com Impact: Positive

KSE-100 Index Top 10 Scrips Thursday, April 30, 2020

Share Price %age % of Total KSE-
S. No. Scrip Volume
31-Jan 28-Feb 31-Mar 28-Apr 29-Apr 30-Apr price Change Change 100 Volume
1 HASCOL 37,782,000 15.2  0.55  3.76% 16.0%
KSE-100 Index 41,631 37,984 29,232 32,553 33,159 34,112
2 PAEL 27,035,500 24.1  1.50  6.64% 11.5%

Change in Index Points (273) (104) 1,208 239 605 953 3 MLCF 25,834,000 28.2  0.89  3.26% 11.0%

4 PPL 17,969,061 91.3  6.35  7.47% 7.6%

Change in Index (%) -0.7% -0.3% 4.3% 0.7% 1.9% 2.9%
5 UNITY 13,482,500 11.5  0.30  2.67% 5.7%
KSE-100 Volume ('000) 140,339 163,203 186,154 124,866 110,974 235,682
6 EFERT 8,576,028 61.7  0.60  0.98% 3.6%
Change in Volume (%) 29% 25% 46% 32% -11% 112% 7 KEL 8,387,000 3.0  0.08  2.73% 3.6%
KSE-100 Traded Value ('000)
6,380,758 7,732,812 6,902,120 5,026,055 6,901,363 11,144,918 8 BOP 8,217,500 9.0  0.54  6.42% 3.5%
PKR
9 OGDC 6,730,634 105.4  7.35  7.50% 2.9%
Change in Traded Value (%) 17% 23% 79% 6% 37% 61%
10 PIOC 6,608,500 59.3  3.06  5.44% 2.8%
KSE-100 Traded Value ('000) US
41,264 50,083 41,432 31,215 42,699 69,322
$ Sub-Total 160,622,723 68.15%
30 Days rolling Avg KSE-100
165,184 109,950 170,856 159,852 159,095 161,346 Total 235,682,452
Volume ('000)
Source: Pakistan Stock Exchange website
PACRA Morning Brief 4/7/23 9
Insurance
Sector Lead: Faran.Taimor@pacra.com Impact: Positive

SECP proposes new regulations for

insurance agents
• The Securities and Exchange Commission of Pakistan (SECP) has
notified draft Corporate Insurance Agents Regulations, 2020 for
eliciting public comments.
• Proposed Regulations aim at strengthening the regulatory regime for
corporate insurance agents including bancassurance and curtail mis-
selling to potential policyholders.
• The proposed regulations promote digitalization, introduce automatic
commission claw-back provision, minimum premium allocation rates
and rationalize commission rates etc.
• https://www.secp.gov.pk/document/sro-343-i-2020-draft-corporate-in
surance-agents-regulations-2020/?wpdmdl=39182&refresh=5eaa66b6
dce8f1588225718

Source: https://mettisglobal.news/secp-proposes-new-regulations-for-insurance-agents
PACRA Morning Brief 4/7/23 10
Communication
Sector Lead: Saniya.Tauseef@pacra.com Impact: Positive

Cellphone call rates to be slashed by 10

paisa
• The government has decided to slash Mobile Termination Rates (MTRs)
from the current Rs0.80/min to Rs0.70, which would help keep tariffs
low for consumers.
• The MTRs play a critical role in driving retail tariffs, especially for off-
net calls.
• In view of the changing market structure of the cellular mobile
segment and considering that the last change in MTR was made in
2010, a review of the existing MTR at PKR 0.90/min was required in
Pakistan.

Source: https://www.brecorder.com/2020/05/03/593985/cellphone-call-rates-to-be-slashed-by-10-paisa/
PACRA Morning Brief 4/7/23 11
Energy | Power
Sector Lead: Anam.Waqas@pacra.com Impact: Positive

HUBCO plans to convert two units

• Hub Power Company (HUBCO) is considering converting two units of
its base plant to coal from furnace oil, and selling electricity to K-
Eelectric. The 1,208MW Hub Plant consists of four units.
• Management explained that cost of electricity would be cheaper for K-
Electric instead of setting up a new plant, as HUBCO’s base plant has
repaid its debt
• HUBCO is the first and largest Independent Power Producer (IPP) in the
country with a combined installed power generation capacity of
2,920MW.

Source: https://www.thenews.com.pk/print/651638-hubco-plans-to-convert-two-units-of-hub-plant-to-coal
PACRA Morning Brief 4/7/23 12
Energy | Crude Oil
Impact: Negative

Brent Crude Oil vs WTI (USD/bbl) Monthly Average

Brent Crude vs WTI
64.94
63.82
62.27

59.58 55.51
58.03
57.00
22.7%
57.2 12.4%
20.9% 50.93
52.2
50.6 0.7%
0.5%
45.5
-1.8% -14.3%
-2.2%
34.95
-13.0%
-11.5% 27.2 26.4
23.3 23.5 27.51
20.8 31.53
17.4
14.2
11.8
-46.2%
-54.3% 20.04
Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20
31-Jan 28-Feb 31-Mar 28-Apr 29-Apr 30-Apr To Date avg

Source: Investing.com Source: Investing.com

PACRA Morning Brief 4/7/23 13
Infrastructure | Cement
Sector Lead: Sehar.Fatima@para.com Impact: Negative
Financial Results for the Nine months ended Mach 31, 2020 ('000 Rupees)
Mar-20 Mar-19 % change

Pioneer Cement incurs losses Gross revenue earned from

contracts with customers
Cement- Local  9,986,259  10,439,407 -4.54%
• Pioneer Cement Limited has reported a net loss worth PKR Cement- Export  62,078  336,932 -81.58%
523.19 million (LPS: PKR 2.30) for the nine months period Clinker-Export  –  5,439
 10,048,337  10,781,778 -6.80%
ended on March 31, 2020, against the profits of PKR 825 Less:
million (EPS: PKR 3.63) realized in the same period of last Sales Tax  (1,702,317)  (1,693,835) 0.50%
year. Federal Excise duty  (2,266,764)  (1,512,037) 49.91%
Commission  (60,594)  (26,567) 128.08%
• The losses were mainly attributable to the decline in net sales Discount and rebate  (45,714)  (60,708) -24.70%
 (4,075,389)  (3,293,147) 23.75%
by 20.2% YoY on account of a substantial drop in retention Sales – net  5,972,948  7,488,631 -20.24%
prices amid intense competition in the domestic market. Cost of sales  (6,031,184)  (5,729,931) 5.26%
Gross profit  (58,236)  1,758,700 –
• This massive decline in retentions was not sufficient to cover Distribution cost  (235,505)  (132,978) 77.10%
production costs due to incremental depreciation stemming Administrative expenses  (81,070)  (83,605) -3.03%
Other income  (86,558)  (160,732) -46.15%
from the newly inaugurated cement plant, as a result of Other expenses  47,049  44,072 6.75%
which PIOC witnessed a gross loss of PKR 58.23 million.  (356,084)  (333,243) 6.85%
Operating profit  (414,320)  1,425,457
• The gross profit margin was clocked in at -1% against 23% in Finance cost  (265,136)  (287,568) -7.80%
the same period last year, owing to high fixed cost emanating Profilt before taxation  (679,456)  1,137,889 –
Taxation  156,257  (312,775) –
from the depreciation of new line, high energy tariff and low Profit after taxation  (523,199)  825,114 –
retention price. Loss/ Earnings per share -basic and
 (2.30)  3.63 –
diluted (Rs.)
Source: https://mettisglobal.news/pioneer-cement-incurs-losses-on-account-of-lower-retention-prices
PACRA Morning Brief 4/7/23 14
Textile & Allied | Composite
Sector Lead: Muhammad.Hassan@pacra.com Impact: Negative

Financ ial Re s ults fo r the Nine mo nths e nde d Mac h 31, 2020 ('000
Nishat Mills’ profitability plunges Mar-20 Mar-19 % c hang e
Re ve nue  73,260,529  70,277,201 4.25%
• Nishat Mills Limited (NML) has observed 4.6% YoY Cos t of S a le s  (58,873,885)  (57,921,211) 1.64%
deterioration in net profits to PKR 6.79 billion from PKR 7.12 Gros s P rofit  14,386,644  12,355,990 16.43%
billion in the corresponding period of last year. Dis tribution cos t  (4,799,216)  (4,106,520) 16.87%
Adminis tra tive e xpe ns e s  (1,561,259)  (1,341,032) 16.42%
• This reflected in the company’s earnings per share which Othe r e xpe ns e s  (304,174)  (225,468) 34.91%
plummeted by 13% YoY from PKR 16.18 to PKR 14.06. tota l e xpe ns e s  (6,664,649)  (5,673,020) 17.48%
• The decline in company’s bottom-line during the period was  7,721,995  6,682,970 15.55%
Othe r income  1,713,531  1,823,865 -6.05%
attributable to weak core textile earnings on the back of muted
profit from ope ra tion  9,435,526  8,506,835 10.92%
growth in topline (4.25% YoY) amid significant Rupee Fina nce cos t  (2,106,854)  (1,922,319) 9.60%
depreciation which resulted in the rise in prices of final  7,328,672  6,584,516 11.30%
products. The gross margins of the company went up by 2ppts s ha re of profit from a s s ocia te s  481,650  1,347,133 -64.25%
from 18% to 20%. P rofit be fore ta xa tion  7,810,322  7,931,649 -1.53%
Ta xa tion  (1,012,588)  (806,084) 25.62%
• Additionally, the company also witnessed a substantial decline P rofit for the pe riod  6,797,734  7,125,565 -4.60%
in profits from associates by 64.25% YoY and a decline in other Ea rnings pe r s ha re – ba s ic a nd
income by 6% YoY on account of lower dividend income  14.06  16.18 -13.10%
dilute d (Rupe e s )
received from DGKC and NPL as well as lower exchange gains
put an additional dent on NML’s profitability.
Source: https://mettisglobal.news/nishat-mills-profitability-plunges-by-4-6-yoy-owing-to-weak-core-textile-earnings
PACRA Morning Brief 4/7/23 15
Textile & Allied | Industry
Sector Lead: Muhammad.Hassan@pacra.com Impact: Positive

Pakistan textile exporters get new orders

• All Pakistan Textile Mills Association (Aptma) said a
significant development has taken place (in the textile export
sector of Pakistan). The industry has received new export orders
for those textile products which are mainly used in hospitals like
white bed-sheets, white gowns and white t-shirts.
• The orders are a mix of new ones and the ones which were put on
hold and got temporarily suspended after the world imposed
lockdown to contain the virus.
• The receipt of the new export orders much earlier than the
expectation may, however, help in booking lower export losses
than the one initially estimated following the outbreak of the virus
in the country.

Source: https://tribune.com.pk/story/2212716/2-pakistan-textile-exporters-get-new-orders/
PACRA Morning Brief 4/7/23 16
Textile & Allied | Industry
Sector Lead: Muhammad.Hassan@pacra.com Impact: Positive

Punjab Government allows textile industry,

allied supply chain to resume operations
• APTMA chairman announced that Punjab government has allowed the
textile industry and its allied complete supply chain to resume its
operations in the lager interest of saving the country's largest export
oriented sector.
• APTMA chairman said that a delegation of the Punjab-based textile
associations had called on Chief Minister Punjab and briefed him about
the measures taken by the textile industry to avoid the spread of
coronavirus at factory premises.
• Chief Minister Punjab has expressed his satisfaction over the
arrangements and allowed the textile value chain to resumes
operations throughout Punjab.

Source: https://www.brecorder.com/2020/05/03/593997/buzdar-allows-textile-industry-allied-supply-chain-to-resume-operations/
PACRA Morning Brief 4/7/23 17
 Textile & Allied
Sector Lead: Muhammad.Hassan@pacra.com Impact: Neutral

Cotton Prices Trend

1st July To-
Jan-20 Feb-20 Mar-20 28-Apr 29-Apr 30-Apr
Date
Daily Cotton Price in US Cents/lbs - New York 70.69 62.20 51.33 55.01 56.18 56.40

Daily Cotton Price in US Cents/lbs - Local 70.96 70.70 64.79 66.52 66.39 66.53

Daily Cotton Price Average | PKR/ Maund 8,900 9,000 8,800 8,800 8,800 8,800 8,744

Volume Traded in Bales 3,000 5,000 - - - - 1,408,082

Daily Cotton Price Average - Previous Year 8,900 8,600 8,650 9,000 9,000 #N/A 8,625

Volume Traded in Bales Average - Previous Year 8,600 8,600 8,650 9,000 5,000 #N/A 1,971,994

Bale : KG | Maund : KG | Bale : Maund ^Averages for the current month are to date
1 : 170 | 1 : 37.3 | 1 : 4.6 Total Volume Traded in Bales in KCA in FY20 (mlns) 1.4
Total Cotton Production in FY20 (millions) 8.6
Volume traded to production 16%

PACRA Morning Brief 4/7/23 18

Ads & Notices

Client
Indus Motor Company Limited
Arif Habib Corporation Limited
Notice
Corporate briefing session to be held on 5th May 2020.
Transmission of Results for the quarter ended 31st
March 2020.

Pakistan International Container Terminal Limited Transmission of Results for the quarter ended 31st
March 2020.

Mughal Iron and Steel Industries Limited Financial Results for the quarter ended 31st March
2020.

Source: Pakistan Stock Exchange

PACRA Morning Brief 4/7/23 19
Interesting Info

PACRA Morning Brief 4/7/23 20

The Pakistan Credit Rating Agency Limited
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Disclaimer
This document has been prepared by financial analyst(s) at The Pakistan Credit Rating Agency Limited (PACRA). All views, thoughts and opinions expressed in this document belong solely to the author and
do not necessarily reflect the views or opinion of PACRA. The aim of this document is only to inform the user about current news and events as gathered from various secondary sources of information
such as research reports, newspapers and websites. This document does not aim to provide any recommendation (financial or otherwise) about any individual or entity.
© The Pakistan Credit Rating Agency Limited.