10 BUSINESS
Friday, 9 February, 2018
ChInEsE dElEGAtIOn tO vIsIt PAkIstAn tO REvIEw CPEC PROjECts SINDH AND CHINA DIRECTLY IN CONTACT FOR RESOLUTION OF ISSUES RELATED TO KCR ISLAMABAD
A
GHULaM aBBas
Chinese delegation is scheduled to visit Pakistan next month to review the progress under China-Pakistan Economic Corridor (CPEC), due to reports regarding delays in the execution of projects. Rejecting the reports, CPEC Project Director (PD) Hassan Daud Butt, while giving a briefing to media here on Thursday said, that all projects of CPEC including up-gradation of Main Line-1 (ML) railway track are going smoothly and without any delay. He informed that a Chinese special business delegation is due to visit Pakistan in March 2018 to review progress on CPEC projects. The delegation
would interact with government officials and local trade bodies and would visit all the provinces to ensure expedited work on Special Economic Zones (SEZs). The governments of Pakistan and China are actively engaged for early completion of all nine SEZs. The SEZs will be built in the federal capital, all provinces and special areas of Azad Jammu and Kashmir, Gilgit Baltistan, and Federally Administered Tribal Areas (FATA). Besides, he said, the Ministry of Planning and Development has also sought time from cabinet committee on CPEC to discuss details of the project in the next meeting and discussion would help to further boost the progress on the project. In reply to a query related to the much-delayed project of Karachi Circular Railway (KCR), he said the Sindh government and Chinese government are directly and actively engaged on the project to ensure execution of the mega project aimed at reducing traffic mess in Karachi. Talking about the one of the most important project of CPEC, ML-1 to be completed at the cost of $8.2 billion, Hassan Daud said, due to huge im-
Engro Fertiliser profits dip 2.17pc, sales decline 9pc for FY 2017
plications in the project, the revised PC1 of the first phase got delayed, however, the Ministry of Railways has assured to submit the PC-1 of phase-1 by February 20, therefore groundbreaking of the project is likely to be held in a few months. Giving details about preliminary design review of the project, the director said that work scope of phase-1 subprojects has already been completed. Similarly, he said work on standards and specifications, BOQs, and cost estimates have also been finalised. He said the approval of PC-1 and award of Engineering, Procurement and Construction (EPC) would be given on fast track to ensure groundbreaking of the project as early as possible. The phase-1 of the ML-1 project consists of seven priority sub-projects with three contract packages including LahoreMultan (334 km), Khanewal-Pindora (52 km), Nawabshah-Rohri (183 km), Peshawar-Rawalpindi (159 km) and Taxila-Havelian (55 km) while the establishment of a dry port near Havelian is also part of the project. Under the project, the entire track from Karachi to Peshawar would be
doubled and speed of passenger trains would be raised from existing 80 km per hour to 160 km per hour while freight trains would run at a speed of 120 km per hour. Moreover, signalling and control system of railways would be computerised whereas safety of train operations would be ensured by grade separation. After completion of the project, freight traffic will increase from five to 25 million tonnes per annum by 2025, and passenger traffic is likely to be increased from 55 to 80 million passengers per annum, official documents suggested. Keeping in view the importance of railway sector, the government decided to include the ML-1 project in CPEC and in the 6th Joint Coordination Committee (JCC) meeting held in Beijing in 2016, this project was declared 'strategic'. According to him, all the projects that were agreed by both China and Pakistan during 7th JCC on CPEC held here on November 21, 2017, are on track as both sides were committed to completing these projects as early as possible. As per available documents, the Framework Agreement on ML-1 was signed on May 15, 2017.
Market Daily: KSE-100 index in the red again, declines 416.62 points
LAHORE
LAHORE
staff report
staff report
A bourse notification filed Thursday by Engro Fertiliser announced its financial year results for the year ending December 30, 2017. The results were disappointing as it was unable to amass more revenues than last year, and its profits declined much below industry expectations. Net sales went down by 9 per cent to touch Rs63 million in 2017 against Rs69.518 million at end of 2016, opposed to market expectations of 7 per cent increase. Gross margins declined by 19.64 per cent during the year opposed to analyst projections of a 27 per cent rise and its other income recorded a decrease of 25 per cent to touch Rs6.074 million. The finance costs were also down by more than 18 per cent and total profits dipped 2.17 per cent for the year 2017 compared against Rs25.177 million during 2016. The company also approved a final cash dividend for the year ended 2017 of Rs3 per share, following interim dividends of Rs5.50 paid previously. It reported diluted earnings per share of Rs7.60 for the financial year 2017, up 13 per cent compared to Rs6.72 in end of 2016. Engro Fertilisers Limited manufactures, purchases, and markets fertilisers in Pakistan. It offers urea, nitrogen, phosphorous, and potassium fertilisers Engro Fertilisers shares were trading at Rs69.50, up 0.85 per cent and KSE-100 index was trading at 43,794.76 points, down 301.73 points from close on Wednesday.
Wednesday’s gains on the Pakistan Stock Exchange (PSX) reversed on Thursday, as investors fretted and with sentiments mixed in global markets and foreign investors among the net sellers for current week, the benchmark KSE-100 index fell 416.62 points to close at 43,679.87 points. KSE-100 index was able to attain an intra-day high of 44,151.54 points, experiencing only a 55.05point increase and reached a low of 43,629.82 points after incurring a 466.67-point fall. KSE 100 index traded both in red and green zone initially but thereafter traded volume was down 9 per cent, whereas traded value declined 16 per cent. The KMI-30 index recorded a fall of 921.44 points during intra-day trading, before closing the session short of 708.00 points. And KSE All Share Index was also lower by 260.39 points at close of trading on Thursday. Lack of any positive trigger, fall in WTI prices to $ 61 (6 week low) and continuing weakness in global markets remain key concerns for investors. Worst index point performers were PPL (-2.8 per cent), MCB (-2.2 per cent), DGKC (-4.6 per cent), OGDC (-1.3 per cent) & HBL (-0.6 per cent) withholding 194 points;
while NBP (+3 per cent), ENGRO (+1 per cent), EFERT (+1.8 per cent), SNGP (+1.6 per cent) & MUREB (+5 per cent) added 64 points. On the sector front; Commercial Banks and E&P sector cumulatively eroded 341 points, while Fertilizer sector led by EFERT robust financial results and payout added 45 points, followed by Pharma contributing 43 points to the index. Advancers to decliners ratio was recorded at 118:224. Market volumes decreased to 246.02 million, with Bank of Punjab (-4.24 per cent) dominated trading with exchange of 16.59 million shares, followed by Fauji Foods (+4.96 per cent) 16.15 million and Unity Foods Limited (+4.72 per cent) 14.12 million re-
spectively. Unity Food stocks garnered investor attraction after its proclamation of commencement of operations at their edible oil refinery, followed by news of their solvency plant would also start functioning after expected arrival of imported raw materials by March 2018. Engro Fertilizer also posted its financial year results for 2017 ending December 31, with its sales shrinking 9 per cent, but gross profit margin increased from 25 per cent to 32 per cent. And it was followed by a 12 per cent rise in net profit, which contributed to net profit margins of 16.09 per cent. The company reported earnings per share of Rs 7.60 and announced a final cash dividend of Rs 5.50.
AGP IPO: Bookbuilding process ends up in strike price of Rs80 AGP's book-building process was over-subscribed by 1.598 times LAHORE MoHaMMaD farooQ
The book-building process of the Initial Public Offering (IPO) of AGP Limited, one of Pakistan’s leading pharma companies has resulted in a strike price of Rs80 per share on Thursday. AGP is offering 35 million shares constituting 12.5 per cent of its total paid up capital in a two-phase IPO, with the first phase ending on Feb 8th with an oversubscription of 1.598 times and in second phase bidding would be opened to public on Feb 16th-18th. The offer value was for 35,000,000 and bidding volume was recorded at 55,956,120 at a strike price of Rs 80 per share, resulting in an over-subscription of 1.598 times, as reported on the PSX bidding website. “At a strike price of Rs80, AGP’s offer for sale comes at a multiple of 19x, which to some may seem cheap compared to peer average of 20-25x, while to others it may seem expensive given the offer brings no fresh equity for growth, ex-Topline Security analyst Adnan Sheikh told Pakistan Today. He added, “Given the historical dearth of offerings in the drug space and looking at the book building figures, circa 60 per cent over subscription vs Matco barely making it across the finish line, indicates that either the book runners have done a good job or the market seems to be jumping at a long overdue pharma offering. If forecasts pan out, forward multiple of 15x would entail a health discount from peers with room for growth.” The subscription offer is being carried out 100 per cent through book-building, but successful bidders were slated for provisional allotment of 75 per cent of offer size only which equates to 26.25 million shares. The remaining 25 per cent or 8.75 million shares was to be offered to retail investors. AGP is aiming to raise Rs2.8 billion by offering 35 million of its shares via book-building and it has hired domestic brokerage BMA Capital to run its bookbuild whose first phase ended on Thursday. The issuer has enlisted the services of JS Global Capital as consultant for its listing. This will be 2018’s second major IPO and follows delay in the process of AGP’s intent in August last year to list on the Pakistan Stock Exchange (PSX). In August 2017, AGP Limited notified of its decision to get itself listed on the stock exchange but in early-November last year it was stopped by SECP from proceeding further with its IPO. The process had been stopped claiming the matter of repatriation of divestment proceeds of Rs6.501 billion to Pharmonte Limited by AGP Private Limited was taken up with the State Bank of Pakistan. AGP began its commercial operations in 1989 as an independent pharmaceutical manufacturing company in Karachi, Pakistan. It distributes its products via Muller and Phipps’ network of 32,400 pharmacies, Pakistan’s biggest distributor of pharmaceuticals. The operations of AGP include manufacturing, marketing and sales of pharmaceuticals and healthcare products in the domestic and export market.
Wheat farmers saved by timely weather forecast LAHORE aGeNCIes
In early November last year, Muhammad Islam was surprised by news from the Pakistan Meteorological Department. The 40-year-old farmer learnt that good rains were forecasted for the crucial wheat growing months of November and December. That was important information, as farmers in the northeastern districts of Pakistan’s Potohar region had turned away from wheat – a favoured and high-earning crop – as unpredictable rains over the last decade led to repeated crop failures. This year, however, they expect their income to increase as they return to wheat production, after years spent planting some of their land with less lucrative vegetables and tending poultry.
Well-timed seasonal rain forecasts from Pakistan’s weather service – something new in the country – are making that possible. “I would have been, for sure, at a loss and missed the timely wheat plantation, had I ignored the rain forecast … on a local news TV channel,” said Islam, who farms 4 acres (1.6 hectares) of land in Bhata, a village about 50 km (30 miles) from Pakistan’s capital. Winter rains that traditionally fell in mid-November came as late as the end of December in 2016, part of a trend of erratic rains that has confounded farmers who are entirely reliant on rainfall because they lack irrigation systems. But last November the meteorological department correctly forecasted rain for early November, giving Islam and farmers like him the opportunity to
plough their land and be ready to sow. Islam planted wheat on half his land in the third week of November, leaving the rest for vegetables. By January 17, he says, the wheat plants had grown to a height of 70 cm, whereas in the past eight years they never grew to more than 10 cm over the same period. As a result, he and other farmers in the area expect to get at least 1,200 kg of wheat from each acre this year – 30 per cent more than in previous years. Islam reckons this will increase his own income by around Rs23,000. Wheat is grown on 22 million acres (9 million hectares) of land in Pakistan – nearly the size of Jordan – 30 per cent of which is rain-fed. Each year, the country produces 25 million tonnes of the crop. About 3 million tonnes of this is grown on the Potohar plateau, comprising
Islamabad and the surrounding districts of Rawalpindi, Chakwal, Jhelum and Attock. The area is characterised by subsistence and smallholding farming. Erratic rains ForcE switch to VEgEtablEs: Farmers usually finish sowing wheat by midNovember, and under normal circumstances two rainy spells in November and December drench the fields, allowing the seeds to germinate. After two or three more spells of rain in January and February, the harvest begins in April. But the erratic rainfall of the last decade has pushed farmers to shift to other crops in the Potohar region. Wheat acreage there has declined by around 30 per cent compared to 10 to 12 years ago, when rains were abundant and predictable and farmers could reliably harvest at least 1,000 kg of wheat per
acre, according to the Barani Agriculture Research Institute, a state-run body in Chakwal district. Many farmers say they struggle to build rainwater harvesting ponds, use groundwater or adopt the latest efficient irrigation technologies. “Lack of resources and access to technical know-how are major hurdles in our way to our adapting to the rapidly shifting weather patterns,” said 65-yearold smallholder wheat farmer Safeer Ahmed, from Gujar Khan. In response, some have turned to other sources of income like vegetables which require less water and can be irrigated with water fetched from ponds. “Many traditional wheat growers are gradually … switching over to vegetable, cattle and poultry farming,” said Hameed Bhatti, a statistician at the Punjab Agriculture Department in Rawalpindi.