Engro Fertilizers converts IFC loan into equity

Engro Ferti­lizers Limited (EFERT) is set to issue 12.6 million shares of the company to International Finance Cor­po­ration (IFC) at the option price of Rs.24 per share, totalling Rs.302.2m, equivalent to $3m at the exchange rate of Rs.100.7 per dollar. The company secretary announced on Tuesday that in accordance with the disclosures in the offer documents of the company and in line with approval of its shareholders and a nod from the SECP, IFC had exercised its option to convert part of its convertible loan amount of $3m into shares of Engro Fertilizers.

The SECP in its earlier approval on June 12, 2014 had stated that “the regulator was pleased to grant variation in issue of shares to the extent of rate of conversion ie Rs24 or the IPO price whichever is lower instead of Rs41.67 (or the IPO price whichever is lower).” Engro Fertilizers Limi­ted was demerged into a separate business by Engro Corporation on January 1, 2010. The company earned profit after tax amounting to Rs5.6bn on sales at Rs49.5bn for the year ended Dec 31, 2013. Total assets of the company stood at Rs107bn with shareholders equity at Rs31.8bn.

The company is making efforts to clear its balance sheet of debts. Finance cost in the quarter ended Sept 30, 2014, which amounted to Rs.1.89bn were substantially lower than last year’s Rs.2.47bn in same quarter, which the company attributed to “loan repayments, lower KIBOR and appreciation of Rupee against the dollar”. In the directors’ report for the quarter and nine months ended Sept 30, 2014, the company CEO had stated: “As part of the re-profiling of its long-term loans in 2013, the company had agreed to sweep surplus cash (after debt servicing and capex) to its lenders at the end of 2014 on a one-off basis.“With the improved performance, the company has implemented part of the sweep in June 2014, well before the scheduled time by paying an amount of Rs4.96bn which was over and above the normal scheduled repayments”. DAWN

DIVIDENDS/RESULTS FOR OCTOBER 2014

KOHE :   EPS : 1.29

PIOC :   EPS : 1.62

MCB :   35% CASH – EPS : 16.56

MLCF :  EPS : 1.03

EFERT :   EPS : 4.19

PPL : EPS :  6.94

DGKC :  EPS : 2.64

KOHC : EPS : 4.42

HUBC :  EPS :  1.81

PSO :  EPS : 19.30

UBL :  25% CASH – EPS : 12.95

FCCL : EPS : 0.45

FFC : 37.5% CASH – EPS : 10.19

ENGRO :  EPS : 9.47

GASF :  EPS : 0.54

NCPL : 15% CASH – EPS : 1.93

OGDC :  25% CASH – EPS : 6.58

NBP :  EPS : 5.51

CHCC :  EPS : 2.39

HASCOL : 12% CASH – EPS : 6.51

POL :

APL : EPS : 15.17

ACPL :

ATRL :  EPS : 0.08

NRL :  EPS :  – 10.47

LUCK :  EPS : 8.25

PAEL :

 

The market is panicking. You shouldn’t…

The Karachi Stock Exchange is notoriously bad at judging the impact of political events on financial outcomes. That means that, for a politically sophisticated observer, market gyrations brought about by mass political protests or other political noise — such as those of this past week — can represent a fantastic buying opportunity…..You may not think this matters to markets and investing, but it does. The KSE is more than just the physical stock exchange and its management. It is the 200 brokerage firms, their thousands of employees and hundreds of thousands of clients all making investment decisions simultaneously that results in a collective view of what they think the future holds. Any market is subject to the delusions and hysteria that grip its participants. In other countries, such delusions and myths tend to be about economic matters. In ours, the political and religious can be quite important as well.

Nonetheless, over the long run, the market is forced to reconcile with reality, because commerce trumps ideology for enough people enough of the time. That means that, while the short run can seem to validate those delusions held by the public, the long run will bear out the investment hypotheses of those who are aware of reality. Let me give you a concrete example. The market appeared to believe that prior to the 2013 election Tahirul Qadri was a big threat to the stability of Pakistan’s political system. Seasoned equity analysts wrote reports speaking of the elections as “if they happen” rather than when they will happen. As Qadri’s pre-rally campaigns reached fever pitch in mid-January 2013, the KSE-100 index dropped 500 points in one day.

Now, if you are the type of conspiracy theory nut who believes that Pakistan’s political system is incapable of evolution, then Qadri seemed like a genuine threat. But if you were sophisticated enough to observe that the system had evolved to the point where enough people had a stake in continuing the political process, you would have been happily buying quality stocks at bargain prices while the suckers were selling. Between Jan 15, 2013, when the Qadri-inspired sell-off happened, and May 11, 2013, when Prime Minister Nawaz Sharif took office, the stock market went up nearly 24pc.

The short-term panic over “Pakistan is about to collapse” would have lost you money. The long-term view of “we’ve got problems, but the largely peaceful transfer of power is about to happen” would have made you money….Whatever your political views may be, the reality is that neither Imran Khan nor Tahirul Qadri have the capacity to bring down the government. And they have neither the capacity nor the interest to affect economic policy. So why would you sell your shares in Hubco or Lucky Cement or Habib Bank? What can the PTI or Tahirul Qadri possibly do to cause a financial loss to these companies? Or really any company listed on the stock exchange?

I suppose one should not blame investors for being scared. Barring five or six people in the entire country, there is absolutely nobody in the media — and absolutely nobody in television — who understands the economy and is able to explain it to ordinary readers or viewers. So perhaps it is not surprising that people have irrational reactions. On Aug 4, the market was down 666 points because of fears of what would happen as a result of political rallies scheduled for later in the month in Islamabad. But remember: for every trade, there is a seller and a buyer. The sellers on that day were motivated by a short-term hysteria that has little basis in reality. The buyers were likely motivated by long-term optimism and fundamental value they see in the Pakistani market. Which side of the trade would you like to be on?…. DAWN

Corporate results: OGDC notches up a profit of Rs.123 billion

Oil and Gas Development Company (OGDC) on Tuesday announced its financial results for fiscal year 2013-14 with a profit of Rs123.914 billion, up 35.7% over the previous year on the back of higher prices for oil and gas. The state-run petroleum exploration giant also announced a final cash dividend of Rs3 per share, taking full-year payout to shareholders to Rs9.25 per share. OGDC’s revenues increased 15% to Rs257 billion despite a 2% drop in its overall petroleum production in oil equivalent terms. Sales went up as a slight increase in oil production, which fetches a higher price, outshone the decline in gas output. “Average oil production stood at 42,000 barrels per day (bpd) in fiscal year 2013-14 against 41,000 bpd in the previous year,” said Vahaj Ahmed, analyst at Topline Securities, citing the data provided by the Pakistan Petroleum Information Services (PPIS). “On the other hand, average gas production was down 3% to 1,181 million cubic feet per day (mmcfd) against previous year’s 1,212 mmcfd.”

During 2013-14, OGDC made just two gas discoveries, which according to initial tests yielded just 7.84 mmcfd of gas and 65 bpd of condensate. The results showed a sharp decrease in exploration and prospecting expenditure to Rs8.722 billion from previous year’s Rs14.97 billion, but analysts said that was because of a large tax adjustment in 2012-13 and write-offs involving dry wells. Setting financial results aside, analysts don’t see much improvement considering the size of the company. Huge profits also mask the liquidity strains suffered by OGDC, which has billions of rupees stuck in inter-corporate circular debt. After it mails the final dividend, OGDC would have paid out Rs40 billion from its profit of Rs123 billion in cash dividends. Industry officials say with major oil and gas fields depleting fast, petroleum exploration firms have to spend more to employ hi-tech machinery to dig deeper to find hydrocarbon reserves. OGDC has 39 operating licences…. EXPRESS TRIBUNE

Pakistan Petroleum Limited makes another gas discovery

Pakistan Petroleum Limited (PPL) on Monday announced the discovery of 42 million standard cubic feet per day (mmscfd) of gas in the Gambat South block, its third and biggest discovery so far in the particular area. The company said the exploration well Sharf X-1 was spud on April 18, 2014, and the final depth of 3,730 meters was reached on July 6, 2014. Along with the gas, condensate with flow of 199 barrels per day has also been discovered, reinforcing the commercial viability of the well, the company said. More significantly, PPL said the expected production from the well could go up to 60 mmscfd. “Two additional zones have been identified that will be tested later, resulting in an expected cumulative production of 60 mmscfd, which translates into approximately 7,400 barrels per day in oil equivalent and foreign exchange saving of $0.75 million per day.”

PPL announced two discoveries in the Gambat South block, which is located in Sanghar District of Sindh, last year within a span of two months. Previous wells Wafiq X-1 and Shahdad X-1 had initially yielded 7.4 mmscfd and 27.8 mmscfd of gas, respectively. “The well is being flowed at different choke sizes to measure the gas flow rates, and the actual flow potential of the well will be determined after completion of the test,” the company said about its latest find.

Government Holdings Private Limited (GHPL) and Asia Resources Oil Limited (AROL) with 25% and 10% working interest are joint venture partners of PPL in the block. PPL, which has a portfolio of 47 exploration blocks, has been aggressively searching for new hydrocarbon finds since last year to compensate for decrease in production from its established fields like Sui….. State-run PPL had earmarked Rs10 billion to be spent on exploration activities during last fiscal year with most of the focus on Gambat South. PPL accounts for 22% of the country’s gas production…..PPL’s six producing fields include Sui, Kandhkot, Adhi, Mazrani, Chachar and Hala, while it has working interest in eight partner-operated fields……EXPRESS TRIBUNE