Investors would be busy for the next two days as more corporate earnings would hit the stock market where Pakistan State Oil, Muslim Commercial Bank, Hubco and D G Khan Cement would be reporting higher income for the third quarter ended March 31, 2005. In line with the rising global oil prices trend, prices of major POL products (HSD, mogas, kerosene, etc) were increased four times during the last quarter, ie 3QFY05. Average prices increased by 13 percent during the 3QFY05 versus 2QFY05, and 20.8 percent versus 3QFY04.
Since margins for oil marketing companies are a fixed percentage of retail prices (around 3.5 percent for the regulated products) increasing oil prices bode will for PSO and Shell. OMCs also make huge inventory gains, during upward oil price trend, besides the higher per unit margins.
Keeping in view these facts Abdul Rasheed, research analyst at Jahangir Siddiqui Capital, said he expects PSO's 3QFY05 earnings would range between Rs 1.4 billion and Rs 1.5 billion (EPS Rs 8.2- Rs 8.7).
This means an increase of 55-62 percent, compared to 3QFY04 earnings of Rs 0.90 billion (EPS Rs 5.22). The cumulative profits after tax for 9 months (Jul-Mar) of FY05 are expected to increase by 33-36 percent, to Rs 4.0 billion- Rs 4.1 billion (EPS Rs23.4-23.9).
"PSO has already announced an interim dividend of Rs 11 per share, while we expect another cash dividend of Rs 3-5 per share by the company with quarterly results."
Muslim Commercial Bank (MCB) is expected to announce its results for the first quarter of CY05 when its board meets on Thursday, April 28, 2005. An analyst from First Capital Equities expects the bank to post a profit after tax (PAT) of Rs 703 million (EPS Rs 1.90), a growth of 10 percent over the first quarter of last year. The growth in PAT is expected to flow from a 21 percent rise in Net Interest Income of the bank and a steady increase in non-interest income.
Khalid Iqbal Siddiqui, research analyst from Investcapital Securities, expects Hubco to announce profit of Rs 4.08 billion to Rs 4.18 billion (EPS Rs3.53-3.61) for Jul-Mar FY05. This would be close to Jul-Mar FY04 profit of Rs 4.1 billion (EPS Rs3.55).
Therefore, this implies 3QFY05 profit of Rs 1.41 billion-1.51 billion (EPS Rs1.22-1.30). In Hubco's case, investors usually focus on dividends. However, profitability is also of some interest as it gives some indication of future dividend paying ability.
Hubco's load factor during 9MFY05 is expected to be significantly better than Jul-Mar FY04 due to lesser availability of water during 1HFY05. Although load factor does not impact Hubco's profitability, it gives an indication of plant usage.
D G Khan Cement is to report an after-tax profit of Rs 896 million to Rs 915 million (EPS Rs 4.86-4.96) for 9MFY05. This will be a growth of 52-55 percent from 9MFY04's PAT of Rs 591 million. This increase in earnings is expected to have the dual impact of increase in retention prices and higher cement demand.
Dispatches of the company increased by 24 percent to 1.32 million tons in 9MFY05. This increase incorporates 15 percent increase in local dispatches from 0.94 million tons in 9MFY04 to 1.08 million tons in 9MFY05 and 102 percent in exports from 120,000 tons to 244,000 tons. Retention prices in 9MFY05 are expected to have increased by 9.7percent from Rs 2,575 per ton to Rs 2,825 per ton. Cost of goods sold per ton during this period is expected to have risen by 7 percent from Rs 1,629 per ton to Rs1,746 per ton due to the rise in FO/coal prices.
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