Financial Web Log

Engro Polymer and Chemicals EPCL Accounts/Stock Review

2016-02-01T01:14:00.000-08:00

Introduction:

Engro Polymer and Chemicals Limited is incorporated in Pakistan and is listed on Pakistan Stock Exchange. The Company is a subsidiary of Engro Corporation Limited. The address of its registered office is 16th Floor, The Harbor Front Building, Marine Drive, Clifton, Karachi. The Company’s principal activity is to manufacture, market and sell Poly Vinyl Chloride (PVC), PVC compounds, Caustic soda and other related chemicals. The Company is also engaged in supply of surplus power generated from its power plants to Engro Fertilizers Limited.

Website:

http://www.engropolymer.com

Strategic Investments:

The company has in-house power generating units

Income Profile:

Annual Income and Distribution:

Year Ending: DEC KSE Symbol: EPCL Engro Polymer and Chemicals
	2012	2013	2014	2015
EPS	0.07	1.08	-1.53	-0.98

No of Shares	66.3 CRORE	66.3 CRORE	66.3 CRORE	66.34 CRORE
Benefits	NIL	NIL	NIL	NIL

Future outlook:

Global hydro-carbon chain is taking structural changes and its markets are highly volatile these days.

[Directors View]

Domestic market for PVC is expected to continue its robust performance on account of favorable construction sector outlook, improving economic sentiment and decline in interest rates, while Caustic Soda market is expected to remain stable. Improvement in PVC-Ethylene core delta, due to decline in Ethylene prices and reduction in import duty, is expected to provide support to PVC margins in the upcoming quarter.

Stock Price View:

EPCL	Time Period	Maximum	Minimum	Average
Stock Price	Jan 2013-Jan 2016	16.9	8.42	12.06

Crescent Steel and Alied Products Accounts/Stock Review

2016-01-29T02:20:00.001-08:00

Introduction:

Crescent Steel and Allied Products Limited was incorporated as a public limited company in Pakistan and is quoted on Pakistan Stock Exchange. The registered office of the Company is located at BOP Tower Main Boulevard, Gulberg-III, Lahore. The Company’s steel segment is one of the downstream industries of Pakistan Steel Mills, manufacturing large diameter spiral arc welded steel line pipes at Nooriabad (District Dadu). The Company has a coating facility capable of applying three layer high density polyethylene coating on steel line pipes. Crescent textile mills ltd is a major shareholder with 11% shareholding of outstanding shares of the company.

Website:

http://www.crescent.com.pk/

Strategic Investments:

	Marketability	No of shares	Equity held (%)	ExpFair-value
Shakarganj Energy (Private) Limited	Unquoted	8.5 Crore	100
CS Capital (Private) Limited	Unquoted	4.7 Crore	100
Crescent Hadeed (Private) Limited	Unquoted	6 Crore	100
Altern Energy Limited	Quoted	6 Crore	16.64
Shakarganj Limited	Quoted	1.5 Crore	21.93

Income Profile:

Quarterly Income:

Crescent Steel and Allied Products
	Total No of Shares: 6.2 crore KSE Symbol: CSAP
	2016				2017
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS StandAlone	1.88	3.25
Eps StandAlone cumulative		5.13
EPS Consolidated	2.67	4.22
EPS Con Cumulative		6.89
Benefits	NIL	DIV 1.5 RS

Annual Income and Distribution:

Year Ending: JUN KSE Symbol: CSAP
	2012	2013	2014	2015
EPS STANDALONE	6.05	13.14	5.80	1.71
EPS
No of Shares				6.2 CRORE
Benefits	DIV 2 RS	DIV 3.5 RS BONUS 10%	DIV 2.5 RS	DIV 0.7 RS RIGHTS 25%

Work-in-Progress:

The outlook remains promising for the rest of the financial year as significant projects have been awarded to the Company by gas transmission companies. Further, in order to cater to the current orders in hand and expected increase in demand of large diameter steel pipes owing to infrastructure developments projects announced by the Government, the Company has decided to augment its capacity for line pipe production by adding another SP Line, Coating Systems and other ancillary machinery at existing site of steel division at Nooriabad Industrial Area.

Stock Price View:

	Time Period	Maximum	Minimum	Average
Stock Price	JAN 13-JAN 16	132.1	31.38	58.11

Fauji Fertilizer Company Accounts/Stock Review

2016-01-27T23:03:00.000-08:00

Introduction:

Fauji Fertilizer Company Limited is a public company incorporated in Pakistan and its shares are quoted on the Pakistan Stock Exchange. The registered office of the Company is situated at The Mall, Rawalpindi, Pakistan. The principal activity of the Company is manufacturing, purchasing and marketing of fertilizers and chemicals, including investment in other fertilizer, chemical, other manufacturing, energy generation and banking operations. Fauji foundation and State life Insurance Corporation of Pakistan is major share holder of this company.

Website:

www.ffc.com.pk

Strategic Investments:

	Marketability	No of shares	Equity held (%)	ExpFair-value
FFC Energy ltd	Unquoted	24.3 crore	100	2.4 Billion
Fauji Fresh n Freeze Ltd	Unquoted	9.3 crore	100	1 Billion
Fauji Cement Company	Quoted	9.3 crore	6.79	3 Billion
Fauji Fertilizer Bin Qasim	Quoted	46.5 crore	49.88	23.25 Billion
Askari Bank Limited	Quoted	54.3 crore	43.15	10.86 Billion
Pakistan Maroc Phosphore S.A., Morocco			12.5	0.7 Billion
Pakistan Investment Bonds				7.7 Billion

Income Profile:

Annual Income and Distribution:

Year Ending: DECEMBER KSE Symbol: FFC
	2012	2013	2014	2015
EPS STANDALONE	16.38	15.83	14.28	13.18
EPS
No of Shares			127.2 crore	127.2 crore
Benefits	DIV 15.5 RS	DIV 15.35 RS	DIV 13.65 RS	DIV 11.87 RS

Rated Capacity and Actual Production:

Fauji Fertilizer Fertilizers
Design Capacity (Urea)	2048 KMT
2013	2408 KMT
2014	2403 KMT
KMT ‘1000 METRIC TONS’

Work-in-Progress:

The company has achieved significant in-house diversification of its business spreading across banking, food, fertilizers, cement, energy and others. Despite a declining trend in its income and dividends, the conglomerate is trying hard to achieve further economic success.

Stock Price View:

	Time Period	Maximum	Minimum	Average
Stock Price	JAN 13-JAN 16	157.52	101.43	120

Pakistan Refinery Ltd Stocks/Accounts Review

2016-01-26T22:00:00.001-08:00

Introduction:

Pakistan Refinery Limited was incorporated in Pakistan as a public limited company in May 1960 and is quoted on Pakistan Stock Exchange. The registered office of the Company is at Korangi Creek Road, Karachi. The Company is engaged in the production and sale of petroleum products.

Website:

www.prl.com.pk

Major Shareholder:

An aggregate of more than 70% of the outsatanding shares of the company is held by following companies:

PAKISTAN STATE OIL COMPANY LIMITED

CHEVRON GLOBAL ENERGY INC

SHELL PETROLEUM CORPORATION

HASCOL PETROLEUM LIMITED

Income Profile:

Quarterly Income

Pakistan Refinery Ltd
	Total No of Shares: 29.4 crore KSE Symbol: PRL
	2016				2017
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS	-2.28	2.76
Eps Total Cumulative		0.69
Benefits	NIL	NIL

Annual Income and Distribution:

Year Ending: June KSE Symbol: PRL
	2012	2013	2014	2015
EPS	-46.16	14.17	-24.68	-5.42
EPS
No of Shares	3.5 crore	3.5 crore	3.5 crore	21.8 crore
Benefits	NIL	DIV 2.85 RS	NIL	RIGHTS 800 % AT PAR

Work In Progress:

The Isomerisation Plant, which was commissioned in June 2015, became fully operational and resulted in increased production of Motor Gasoline. After successful commissioning of Isomerisation Plant, the Company is now looking forward to installation of Diesel Hydrodesulphurisation Unit (DHDS). The company is coping with the Free fall of crude oil prices, exchange rate volatility, and the Import parity pricing formula for High Speed Diesel.

Stock Price View:

PRL	Time Period	Maximum	Minimum	Average
Stock Price	Jan 2013-Jan 2016	194.88	30.37	98.98

Kohinoor Textile Mills KTML Accounts/Financial Review

2016-01-21T23:42:00.000-08:00

Introduction:

Kohinoor Textile Mills Limited is a public limited company incorporated in Pakistan and listed on Pakistan Stock Exchange. The registered office of the Company is situated at Lawrence Road, Lahore. The principal activity of the Company is manufacturing of yarn and cloth, processing and stitching the cloth and trade of textile products. Zimpex private ltd and foreign investors are major shareholder of this company.

Website:

http://www.kmlg.com

Strategic Investments:

	Marketability	No of shares	Equity held (%)	ExpFair-value
Maple Leaf Cement	Quoted	29.1 Crore	55.22		20 Billion
Maple Leaf Capital ltd	Un-Quoted	10 crore	66

Income Profile:

Quarterly Income

Kohinoor Textile Mills
	Total No of Shares: 24.5 crore KSE Symbol: KTML
	2016				2017
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS stand- alone	1.54	2.32
Eps Cumulative		3.86
EPS Consolidated	3.43	4.83
EPS Cumulative Consolidated		8.26
Benefits	NIL	DIV 1.5 RS BON 15%

Annual Income and Distribution:

Year Ending: JUN KSE Symbol: KTML Kohinoor Textile Mills
	2012	2013	2014	2015
EPS Standalone	0.47	1.97	4.76	8.5
EPS consolidated	5.45	11.09	9.49	13.26
No of Shares	24.5 CRORE	24.5 CRORE	24.5 CRORE	24.5 CRORE
Benefits		NIL	NIL	3.5 RS

Current Business View:

In the backdrop of commodity meltdown and significant lower energy prices, the Company continues to invest steadily in all segments to upgrade quality and reduce production costs. The company envisages capital expenditure will continue for the foreseeable future. The results of the Power division have substantially improved due to further lowering of cost of Heavy Furnace Oil (HFO)

Stock Price View:

KTML	Date Observed	Time Period	Maximum	Minimum	Average
Stock Price	20 Jan 2016	Jan 2013-Jan 2016	77.65	13.77	36.53

Dera GhaziKhan Cement Company Stock/Accounts review

2016-01-21T01:06:00.001-08:00

Introduction:

D.G. Khan Cement company limited is a public limited company incorporated in Pakistan and is listed on Pakistan stock exchange. Its principally engaged in production and sale of clinker, ordinary Portland and sulphate resistant cement. The registered office of the company is situated at Lawrence road Lahore.

Website:

http://www.dgcement.com

Strategic Investments:

	Marketability	No of shares		Equity held (%)		ExpFair-value
Nishat Chunain	quoted	59.6 lac	2.98		21.9 crore
Adamji Insurance	quoted	1.6 crore	4.59		76 crore
Nishat Paper Products	Un-quoted	2.55 crore	55		22.1 crore
Nishat Dairy	Un-quoted private	27 crore	55.10		2.33 Billion
Nishat Mills	Quoted	3 crore	8.61		3.4 Billion
MCB Bank	Quoted	2.1 crore	1.91		5.3 Billion
Nishat Hotels	unquoted	5 crore	6.25		50 crore

Income Profile:

Quarterly Income

D.G. Khan Cement
	Total No of Shares: 43.8 crore KSE Symbol: DGKC
	2016				2017
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS stand- alone	3.93
Eps Cumulative	_
EPS Consolidated	3.17
EPS Cumulative Consolidated	_
Benefits	NIL

Annual Income and Distribution:

Year Ending: JUN KSE Symbol: DGKC D.G. Khan Cement
	2012	2013	2014	2015
EPS	9.38	12.56	13.62	17.4
EPS
No of Shares		43.8 crore	43.8 crore	43.8 crore
Benefits	1.5 RS	3.0 RS	3.5 RS	5 RS

Current Business View:

International commodity melt down may lead to disruption in controlled prices in Pakistan. Cement price may decline despite its huge demand owing to development activity in Pakistan in the backdrop of China Pakistan Economic corridor. [Directors View]To minimize dependency on electricity national grid and natural gas supply which is already in scarcity, the company launched a project for 30MW coal fired captive power plant at its Dera Ghazi Khan site. The company is now actively working on its Hub expansion plan. This project would be a State Of The Art project. It would be environment friendly and will comply with all the environmental standards. The project is one of its kinds, 9000 tpd single production unit in Pakistan.

Stock Price View:

DGKC	Date Observed	Time Period	Maximum	Minimum	Average
Stock Price	20 Jan 2016	Jan 2013-Jan 2016	162.13	51.15	100.64

LotteChem stock/ accounts review 2016

2016-01-20T00:55:00.001-08:00

Introduction:

Lotte Chemical Pakistan is incorporated in Pakistan and is listed on the Pakistan stock exchange. The company is engaged in the manufacture and sale of pure terephthalic acid (PTA). The company’s registered office is situated at Eastern Industrial Zone, Port Qasim, Karachi. Lotte Chemical Corporation South Korea is a major share holder with more than 75% share holding in the company.

Website:

http://www.lotte-ppta.com

Strategic Investments:

The company has in-house power generating units

Income Profile:

Quarterly Income

Lotte Chemical
	Total No of Shares: 151 crore KSE Symbol: LOTCHEM
	2015				2016
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS	-0.2	0.05	-0.18
Eps Total Cumulative		-0.16	-0.33
Benefits	NIL	NIL	NIL

Annual Income and Distribution:

Year Ending: DEC KSE Symbol: LOTCHEM Lotte Chemical
	2012	2013	2014	2015
EPS	-0.12	-0.36	-0.73	RESULT EXP
EPS
No of Shares	151 CRORE	151 CRORE	151 CRORE	151 CRORE
Benefits	NIL	NIL	NIL	NIL

Work In Progress:

The company is coping with extraordinary low rates of crude oil prices and over capacity of PTA plants worldwide. Px-PTA margin is also unsustainable over longer period of time for the company. Despite low oil prices, Pakistan textile industry is facing severe energy shortfall and load shedding. One of the PTA downstream markets is polyester fiber which derives its demand from the domestic textile market.

Stock Price View:

LOTCHEM	Date Observed	Time Period	Maximum	Minimum	Average
Stock Price	20 Jan 2016	Jan 2013-Jan 2016	9.13	5.16	7.11

Byco Petroleum Stock/Accounts review 2016

2016-01-19T02:16:00.000-08:00

Introduction:

Byco Petroleum Pakistan limited was incorporated in Pakistan as a public limited company and is listed on Pakistan Stock Exchange. The registered office of the company is situated at The Harbour Front, Dolmen city, Clifton Karachi. The company is principally engaged in two business lines namely Oil Refinery and petroleum marketing. The refinery has a rated capacity of 35000 barrels per day. Byco Oil Pakistan is a major shareholder with 80.84% shareholding of the company.

Website:

www.byco.com.pk

Strategic Investments:

Byco Terminals Pakistan Ltd (Wholy Owned Comprising 56 Crore Shares of 10Rupees)

Income Profile:

Quarterly Income

Byco Petroleum
	Total No of Shares: 97.7 crore KSE Symbol: BYCO
	2016				2017
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS	-0.43
EPS consolidated	-0.71
Eps Total
Eps Total Cumulative
Benefits	NIL

Annual Income and Distribution:

Year Ending: June KSE Symbol: BYCO Byco Petroleum
	2012	2013	2014	2015
EPS	-3.15	-5.01	-6.07	0.07
EPS
No of Shares			97.7 crore	97.7 crore
Benefits	NIL	NIL	NIL	NIL

Work In Progress:

The company is coping with the Free fall of crude oil prices.

Stock Price View:

BYCO	Date Observed	Time Period	Maximum	Minimum	Average
Stock Price	18 Jan 2016	Jan 2013-Jan 2016	30.36	7.06	13.36

Review of PSO Pakistan State Oil Stock Financials

2016-01-17T11:42:00.001-08:00

Introduction:

Pakistan State Oil Company Limited ("the Company") is a public company incorporated in Pakistan in 1976 and is listed on the Pakistan Stock Exchange. The registered office of the Company is located at PSO House, Khayaban-e-Iqbal, Clifton, Karachi. The principal activities of the Company are procurement, storage and marketing of petroleum and related products. It also blends and markets various kinds of lubricating oils. Federal Government of Pakistan is a major shareholder with 25.5% shareholding.

Website:

www.psopk.com

Strategic Investments:

Pakistan Investment Bonds worth 47 billion Rupees

Income Profile:

Quarterly Income

Pakistan State Oil
Year Ending: June	Total No of Shares: 27 crore KSE Symbol: PSO
	2016				2017
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS	11.97
EPS
Eps Total	11.97
Eps Cumulative
Benefits	NIL

Annual Income and Distribution:

Year Ending: June KSE Symbol: PSO Pakistan State Oil
	2012	2013	2014	2015
EPS	52.8	46.52	80.31	25.53
EPS
No of Shares	17 crore	24 crore	27 crore	27 crore
Benefits	DIV 5.5 Rupees	DIV 5 Rupees	DIV 8 Rupees	DIV 10 Rupees
Bonus	20 %	20%	10%	NIL

Work In Progress:

Receivable worth 170 Billion rupees from Power Sector, PIA, and SNGPL is causing cash flow issues. The company is also pursuing the reinstatement of favorable LNG Margin.

Stock Price View:

PSO	Date Observed	Time Period	Maximum	Minimum	Average
Stock Price	18 Jan 2016	Jan 2013-Jan 2016	452	185	336

Engro Fertilizer Stock/ Financials 2016

2015-11-05T22:46:00.000-08:00

Introduction:

Engro fertilizers limited is a public company incorporated on june 2009 in Pakistan as wholly owned subsidiary of engro corporation ltd. Principal activity of the company is to manufacture, purchase and market fertilizers. Engro Corporation is the major shareholder of this company with 86% of its stake.

Website:

www.engrofertilizers.com

Strategic Investments:

Engro Eximp Pvt ltd

Income Profile:

Quarterly Income

Engro Fertilizers
Year Ending: DEC	Total No of Shares: 133 crore KSE Symbol: EFERT
	2015				2016
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS	2.30	3.05	2.1
EPS Cumulative		5.35	7.45
Eps Consolidated		2.85	2.06

Benefits	NIL	DIV 1.5 RS	DIV 1.5 RS

Annual Income and Distribution:

Year Ending: DECEMBER KSE Symbol: EFERT
	2013	2014	2015	2016
EPS	4.66	6.29
EPS
No of Shares	122 crore	131 crore
Benefits	NIL	DIV 3 RS

Rated Capacity and Actual Productoin:

Engro Fertilizers
	UREA PLANT I & II	NPK
Design Capacity	2,275 KMT	100 KMT
2013	1581 KMT	92.8 KMT
2014	1818 KMT	117 KMT
KMT ‘1000 METRIC TONS’

Stock Price View:

	Date Observed	Time Period	Maximum	Minimum	Average
Stock Price	04 /11/2015	JAN 14-NOV 15	100	31.14	72.44

Atock Refinery Stock/Financials 2016

2015-11-03T07:17:00.001-08:00

Introduction:

Attock Refinery Limited (the Company) was incorporated in Pakistan on November 8, 1978 as a private limited company and was converted into a public limited company on June 26, 1979. It is principally engaged in the refining of crude oil. The Company is a subsidiary of The Attock Oil Company Limited, UK and its ultimate parent is Bay View International Group S.A.

Website:

www.arl.com.pk

Strategic Investments:

National refinery [25% Holding]

Attock Petroleum [21.88 % Holding]

Income Profile:

Quarterly Income

Attock Refinery Ltd
Year Ending: June	Total No of Shares: 8crore KSE Symbol: ATRL
	2016				2017
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
EPS Refinery	-5.71
EPS Non-Refinery	11.91
Eps Total	6.2
Eps Total Cumulative
Benefits	NIL

Annual Income and Distribution:

Year Ending: June KSE Symbol: ATRL Attock Refinery
	2012	2013	2014	2015
EPS Total	32.07	45.91	29.82	21.27
EPS Non-Refinery	18.63	15.22	21.66	16.52
No of Shares	8.5 crore	8.5 crore	8.5 crore	8.5 crore
Benefits	DIV 7.5 Rupees	DIV 5 Rupees	NIL	DIV 5 Rupees

Work In Progress:

Directors View: [Detailed Engineering and Procurement of ARL Up-gradation Project comprising of a Preflash unit, Naphtha Isomerization unit, Diesel Hydrodesulphurization (DHDS) unit, Auxiliary Units, Utilities and Expansion of existing Captive Power Plant has been completed. Construction activities i.e. equipment interconnecting piping, instrument and electrical cable installation, work inside electrical substations and control room, remaining civil works i.e. paving and finishing etc. are underway. Vendor representatives for different equipment are also at site. Commissioning of individual equipment has commenced. The overall progress of the Project is satisfactory.]

Stock Price View:

ATRL	Date Observed	Time Period	Maximum	Minimum	Average
Stock Price	2 Nov 2015	Jan 2013-Oct 2015	275	146.91	205.26

KASB Bank Stock/ Financial Analysis 2014

2014-11-18T22:09:00.001-08:00

About KASB Bank:

KASB Bank Ltd was incorporated in pakistan in 1994 as a public limited company. The bank is engaged in commercial banking, consumer banking, corporate and investment banking and related services. KASB corporation is the holding company of the bank.

Website

www.kasbbank.com

Key Data:

During the period 2011-14 the bank has shown stagnancy. No expansion of branch network as well as growth in deposit base. The bank does not meet minimum capital of Rupees 10 billion set by state bank of Pakistan. The bank is looking for capital restructuring.

	2011	2012	2013	Mar-14	Jun-14	Sep-14
Capital ('000)	2,751,602	2,611,818	1,357,602	1,293,603	1,269,980	1,320,278
Branches	104	105	105	105	105	105
Employees	1,126	1,203	1,135
Deposits ('000)	50,079,849	61,873,268	63,072,958	62,266,969	64,067,728	61,936,529
deposit growth %	8.22	23.55	1.94	(1.28)	1.58	(1.80)

Income Profile

The banks Net Spread Income as percentage of Deposits was negative during 2011 and is very low afterwards. The bank do not covers its admin expense out of its core banking activities. The earnings per share EPS is also negative all the time.

	2011	2012	2013	Mar-14	Jun-14	Sep-14
Net Spread Income NSI	-535,694	2,220,911	2,131,307	449,575	498,061	510,390
NSI as % of Deposits T-1	(1.16)	4.43	3.44	0.71	0.80	0.80
NSI /Admin expenses	(0.23)	0.83	0.86	0.77	0.80	0.78
EPS /LPS	(2.36)	(0.54)	(0.81)	(0.06)	(0.01)	(0.03)

Leverage:

Over the period 2011-14, the bank has assumed risk beyond its capacity in its loan portfolio as evidenced by its advances to equity ratio. Almost half of the loan portfolio shows infection. The bank require equity capital to carry on its business.

	2011	2012	2013	Mar-14	Jun-14	Sep-14
Total Assets/equity	22.27	33.81	50.30	52.84	54.53	50.73
advances/equity	9.77	11.37	17.87	17.91	18.19	17.17
Non-Performing Loans/Advances T-1	39.85	51.57	38.97	47.34	47.56	46.90

Stock Valuation:

	2011	2012	2013	Mar-14	Jun-14	Sep-14
Book Value	1.41	1.34	0.70	0.66	0.65	0.68
Book value without revaluation reserve	1.20	1.02	0.57	0.51	0.51	0.49
Book value without RR and adjusted for NPL	(1.72)	(2.36)	(1.06)	(1.04)	(0.76)	(0.75)

Dividend distribution:

The bank has no history of dividend distribution.

Conclusion:

This bank is simply bankrupt.

Bank Islami Stock/ Financial Analysis 2014

2014-11-17T22:52:00.001-08:00

About Bank Islami:

The BankIslami Pakistan limited incorporated in October 2004. BankIslami started its Banking operations on 7th April 2006 with its first branch in SITE, Karachi. The bank is engaged in corporate, commercial, consumer, retail banking and investment activities. Dubai Bank and Jehangir Siddiqui is major shareholder of this bank and hold more than 20% outstanding shares.

Website

www.bankislami.com.pk

Key Data:

The bank increased its presence by spreading its branch network during 2011-13. The deposits of the bank almost doubled during this period. However, the bank does not meet minimum capital of Rupees 10 Billion set by State Bank of Pakistan. The bank is in the process of increasing its capital.

Key Data BANK ISLAMI PAKISTAN
	2011	2012	2013	Mar-14	Jun-14	Sep-14
Net Assets (‘000)	5,312,638	5,572,454	6,242,201	6,524,974	6,884,816	6,811,722
Branches (No)	102	144	201	201	201	201
Employees (No)	1,448	1,410	1,520
Deposits (‘000)	50,568,785	64,216,485	75,225,869	77,576,016	85,466,298	89,589,962
Deposit growth %	32.38	26.99	17.14	3.12	13.61	19.09

Income Profile

The banks Net Spread Income as percentage of Deposits is declining. From 6.9% in 2011, it has declined to 4% in 2013. The bank merely covers its admin expenses out of its core banking activities. The earnings per share EPS is also low.


	2011	2012	2013	Mar-14	Jun-14	Sep-14
Net Spread Income NSI	2,618,799	2,468,341	2,499,504	719,649	782,398	898,546
NSI as % of Deposits T-1	6.86	4.88	3.89	0.96	1.01	1.05
NSI /Admin expenses	1.22	1.09	1.00	0.95	0.95	1.01
EPS /LPS	0.78	0.78	0.35	0.14	0.16	0.25

Leverage:

Over the period 2011-13, the bank has assumed significant risk in its loan portfolio as evidenced by its advances to equity ratio. However the loan portfolio shows very low infection. The bank should increase its equity capital.


	2011	2012	2013	Mar-14	Jun-14	Sep-14
Total Assets/equity	11.07	13.32	13.91	13.54	14.11	15.11
advances/equity	3.79	4.92	6.14	5.82	5.48	6.32
Non-Performing Loans/Advances T-1	4.79	5.99	4.04	2.96	2.88	3.01

Stock Valuation:


			2011	2012		2013		Mar-14		Jun-14	Sep-14
Book Value			10.06	10.55		11.82		12.36		13.04	12.90
book value without revaluation reserve			9.74	10.52		10.45		10.59		11.28	11.54
book value without RR and adjusted for NPL			8.84	9.12		9.44		9.56		10.29	10.33
RR Revaluation Reserve NPL Non-performing Loans

01-2012-11-2014	Maximum	Minimum			Range		Average		Current Price
Stock Price	12.04	3.09			8.95		8.13		10.5

Dividend distribution:

The bank has no history of dividend distribution.

Conclusion:

The bank is in the expansion mode and facing bottlenecks due to short of capital. The banks income profile is sustainable.

Fauji Fertilizer Bin Qasim FFBL Financial / Stock Analysis 2014

2014-11-11T23:59:00.000-08:00

About the Fauji Fertilizer Bin Qasim (FFBL) Ltd

Fauji Fertilizer Bin Qasim Limited is a public limited company incorporated in Pakistan, and its shares are quoted on the Karachi, Lahore and Islamabad stock exchanges. The principal objective of the Company is manufacturing, purchasing and marketing of fertilizers. The Company commenced its commercial production effective January 1, 2000. The Company is a subsidiary of Fauji Fertilizer Company Limited (the holding company) with shareholding of 50.88%. The design capacity of the plant in 2013 is [Urea 551,100 DAP 650,000] tonnes. Recently, the company is aggressively pursuing diversification by borrowing debt capital.

Website: www.ffbl.com

Plant Location: Karachi

Key Data:

The company is facing a declining trend in its earnings. Earnings per share declined from Rs. 11.53 in 2011 to less than Rs. 6.00 in 2014. The plants urea production dropped from 433 thousand tonnes in 2011 to 224 thousand tonnes in 2013. Whereas, its production of DAP is well above its design capacity.

FFBL Key Data 2011-14
	2011	2012	2013	Mar-14	Jun-14	Sep-14
EPS	11.53	4.64	6.01	0.05	0.81	1.04
UREA (TONNES)	433,053	281,068	224,477	22,000	102,000	158,000
DAP (TONNES)	662,304	648,038	744,436	99,000	297,000	500,000

Profitability:

During the period 2011-13, the company is facing tough competition and resultantly the margin is declining. Gross Margin declined to 26.7% in 2013 from 36% in 2011. The net profit margin also declined from 19.3% in 2011 to 10.3% in 2013 and the decline in margin continues.

FFBL Profitablity (2011-2014)
	2011	2012	2013	Mar-14	Jun-14	Sep-14
Gross Margin	36.0%	23.9%	26.7%	13.7%	24.6%	22.7%
Operating Profit Margin	30.9%	17.3%	18.1%	1.9%	13.4%	15.1%
Net Profit Margin	19.3%	9.1%	10.3%	0.8%	7.8%	7.5%

Debt Profile:

The company is ever increasing its borrowing to finance diversification of its businesses. The company investing in new businesses such as banking, food and meat processing, power and so on. The company’s debt burden is increasing as evident by the increase in financial cost and its changing capital structure. The company is increasing its equity risk by increasing equity investment.

FFBL Capital Structure and Debt and burden (2011-14)
Leverage	2011	2012	2013	Mar-14	Jun-14	Sep-14
Total Liability /Book Equity	1.95	2.22	1.70	2.29	2.52	2.65
LT Liability /Book Equity	0.50	0.39	0.29	0.34	0.27	1.06
Operating Profit / Finance Cost	15.86	4.55	6.52	2.75	3.66	3.07

Dividend:

The company distributed Rs 4.5 and Rs 5.00 in year 2012 and 2013 respectively. The company also distributed an interim dividend of Rs 1.75 for the year ending December 2014.

Stock Price:

During the period January 2012 to November 2014, the stock price of the company showed less volatility and traded around its average price most of the time.

Stock Price of FFBL (Jan 2012 – Nov 2014)
	Book Value	Maximum	Minimum	Range	Average
STOCK PRICE	13.34	50.41	35.91	14.5	40.51

Conclusion:

The company is endeavoring for diversification by increasing debt capital. This increases both risks and returns.

MCB bank KSE Stock/Financial Analysis Nov 2014

2014-11-06T01:29:00.002-08:00

Introduction:

MCB Bank Limited (the ‘Bank’) is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The Bank’s ordinary shares are listed on all the stock exchanges in Pakistan whereas it’s Global Depository Receipts (GDRs) representing two ordinary shares are traded on the International Order Book (IOB) system of the London Stock Exchange. The Bank operates 1,208 branches including 27 Islamic banking branches within Pakistan and 9 branches outside the country. Maybank International is a major shareholder of this bank.

www.mcb.com.pk

Key data

The bank has extensive branch network in Pakistan making it one of the best bank in banking activities. The bank has strong capital base as well as human capital. It has a deposit base of 666 billion rupees as of September 2014.

Key economic data MCB Bank
	2011	2012	2013	Mar-14	Jun-14	Sep-14
Capital (Bn Rs)	88,802,482	101,750,806	110,230,981	113,550,299	114,486,274	116,421,700
Branches (No.)	1,173	1,188	1,217	1217	1218	1222
Employees (No.)	13,380	13,046	12,611
Deposits (Bn Rs)	491,188,710	545,060,728	632,330,286	627,143,643	685,765,679	666,344,116
Deposit growth%	13.87	10.97	16.01

Income profile:

The banks net spread income as %age of Deposits declined from 10.32 to almost 7 during 2011-13. Despite the fall it is well above industry average. The bank has strong income profile. The bank’s core income adequately covers regular admin expenses.

Income Profile and sustainability
	2011	2012	2013	Mar-14	Jun-14	Sep-14
Net Spread Income NSI	44,526,314	40,856,172	37,868,229	10,013,882	11,422,972	10,577,276
NSI as % of Deposits T-1	10.32	8.32	6.95	1.58	1.82	1.54
NSI /Admin expenses	2.86	2.39	2.02	2.08	2.40	2.04
EPS /LPS	17.45	18.81	19.31	4.95	5.58	5.75

Leverage:

The bank’s balance sheet is quite stable and it has significant room for taking more risk. The leverage is stable over the period 2011-14.the bank should take risk and expand its loan portfolio and stop feeding on government rent. The %age of non-performing loans has decreased from around 10.5% of loans in 2011 to 7.7% in Sep 2014.

Leverage and Loan Portfolio Infection
	2011	2012	2013	Mar-14	Jun-14	Sep-14
Total Assets/equity	8.28	8.69	8.38	8.34	8.51	8.30
advances/equity	2.86	2.72	2.55	2.55	2.78	2.77
NPL/Advances T-1	10.48	11.32	9.71	9.07	8.73	7.72

Dividend Distrbution:

The bank issued/distributed 10% bonus shares in the year 2012 and 2013 as well as Rs. 13 and Rs. 14 per share as dividend respectively.

Stock Valuation:

Stock Market Price Faysal Bank (Jan 2013-Oct 2014)
	2011	2012	2013	Mar-14	Jun-14	Sep-14
Book Value	79.78	91.42	99.04	102.02	102.86	104.60
book value *	70.90	79.20	87.39	89.15	91.68	94.09
book value **	66.59	76.35	83.96	85.81	88.35	90.58
* without accounting for revaluation reserve ** without accounting for revaluation reserve and adjusted for Non Performing Loans
Oct 2013 – 2014 (unadjusted)	Book Value	Max	Min	Range	Average
Stock Price		311	234	77	285

Conclusion:

The bank’s balance sheet is less leveraged and therefore the bank needs to raise its loan portfolio.

Faysal Bank Financial/ Stock Analysis June 2014

2014-10-19T08:02:00.001-07:00

Introduction:

Faysal Bank Limited (the Bank) was incorporated in Pakistan on October 3, 1994 as a public limited company under the provisions of the Companies Ordinance, 1984. The Bank is mainly engaged in Corporate, Commercial and Consumer banking activities. The Bank has a network of 269 branches including 53 Islamic banking branches. The Registered Office of the Bank is located at Faysal House, ST-02, Shahra-e-Faisal, Karachi. Ithmaar Bank B.S.C., a Bahrain based retail bank, is the parent company of the Bank, holding, directly and indirectly through subsidiaries 66.78% of the shareholding of the Bank.

www.faysalbank.com

Key data

The bank is unable to increase its presence significantly as evidenced by its number of branches since 2011. As of 2013, the bank meet minimum capital requirement prescribed by state bank of Pakistan. The deposit growth of the bank is not substantial; in fact deposits declined this year.

Key economic data Faysal Bank
	2011	2012	2013	Mar-14	Jun-14
capital	19,213,159	20,977,904	22,166,193	21,526,242	21,727,231
branches	257	265	269	269	269
employees	6,442	6,462	6,866
deposits	214,614,731	240,712,826	271,134,303	266,053,928	271,943,835
deposit growth %	9.881221024	12.16043972	12.63807895

Income profile:

The banks net spread income as %age of Deposits hovers around 4.5% to 5% which is below the industry average. The bank barely covers its admin expenses out of its core banking activity and therefore to some extant banks income profile is sustainable.

Income Profile and sustainability
	2011	2012	2013	Mar-14	Jun-14
Net Spread Income NSI	9,206,354	8,963,405	10,845,153	3,320,210	3,359,350
NSI as % of Deposits T-1	4.713587991	4.176509673	4.505432128	1.224562869	1.262657547
NSI /Admin expenses	0.851342978	0.829157131	0.978881991	1.058083855	0.982757173
EPS /LPS	1.227195261	1.363867455	1.773180481	0.41	0.29

Leverage:

The bank’s balance sheet is quite leveraged. The leverage is stable over the period 2011-14. The bank may not increase its assets including both loan portfolio and investment portfolio without increasing its equity base. The bank is working hard to improve its loan portfolio. The %age of non-performing loans has decreased from around 20% of loans in 2011 to 15% in 2014.

Leverage and Loan Portfolio Infection
	2011	2012	2013	Mar-14	Jun-14
Total Assets/equity	16.44	16.72	17.26	16.87	17.17
advances/equity	8.33	9.20	8.95	9.03	8.72
Non-Performing Loans/Advances T-1	19.48	18.59	16.03	15.01	16.23

Dividend Distrbution:

The bank issued/distributed 12.5% bonus shares in the year 2012 and 2013.

Stock Valuation:

Stock Market Price Faysal Bank (Jan 2013-Oct 2014)
	2011	2012	2013	Mar-14	Jun-14
Book Value	18.42	20.11	21.25	20.63	20.83
book value *	17.06	17.95	19.73	18.97	19.30
book value **	8.45	9.06	12.19	13.05	12.86
* without accounting for revaluation reserve ** without accounting for revaluation reserve and adjusted for Non Performing Loans
Jan 2013 –Oct 2014 (unadjusted)	Book Value	Max	Min	Range	Average
Stock Price	17.66	19.2	8.21	10.99	12.41

Conclusion:

The bank’s balance sheet is highly leveraged and therefore the bank needs to raise equity capital.

Financial / Stock Analysis of JS Bank ltd June 2014

2014-10-14T01:26:00.000-07:00

Introduction:

JS Bank Limited incorporated in Pakistan, is a scheduled bank, engaged in Commercial banking and related services. The Bank’s ordinary shares are listed on Karachi Stock Exchange in Pakistan. The Bank is a subsidiary of Jahangir Siddiqui & Co. Ltd. (JSCL). The registered office of the Bank is situated at Shaheen Commercial Complex, Dr. Ziauddin Ahmed Road, Karachi. The Bank operates with 211 (December 31, 2013: 211) branches/sub-branches in Pakistan.

Website:

www.jsbl.com

Key data

The bank has expanded its branch network from 147 in 2011 to 211 in 2013. However, it has stopped expanding its branches in 2014. The bank also meet minimum capital requirement prescribed by state bank of Pakistan. The banks deposit growth is also substantial averaging more than 30 % last four years.


	2011	2012	2013	Jun-14
Capital (‘000)	7,477,030	8,955,809	8,933,893	10,726,118
branches	147	185	211	211
employees	1473	1715	2082	NA
Deposits (‘000)	41,487,031	62,543,793	80,916,125	94,207,585
deposit growth %	57.89	50.76	29.38	16.426219

Income profile:

The banks net spread income as %age of Deposits declined from 6.5 % in 2011 to around 4% in 2013-14. The bank barely covers its admin expenses out of its core banking activity and therefore to some extant banks income profile is sustainable.

Income Profile and sustainability
	2011	2012	2013	Mar-14	Jun-14
Net Spread Income NSI	1,728,682	2,264,640	2,325,259	742,834	900,387
NSI as % of Deposits T-1	6.578856833	5.458669723	3.717809376	0.9180296	1.088427
NSI /Admin expenses	0.936021529	1.07924438	0.910850052	0.7948744	0.992135
EPS /LPS	0.42	0.7	0.33	0.13	0.13

Leverage:

The bank’s balance sheet is quite leveraged. The leverage has increased over the period 2011-14. The bank may not increase its assets including both loan portfolio and investment portfolio without increasing its equity base. The bank is doing well in improving its loan portfolio. The %age of non-performing loans has decreased from around 20% of loans in 2011 to 8% in 2014.

Leverage and Loan Portfolio Infection
	2011	2012	2013	Mar-14	Jun-04
Total Assets/equity	7.18	9.30	12.34	10.919001	11.59192
advances/equity	2.40	2.29	3.69	3.2951563	3.967385
Non-Performing Loans/Advances T-1 (%age)	19.87	16.86	13.75	8.0299517	7.53843

Stock Valuation:

Stock Market Price JS Bank (Jan 2013-Oct 2014)
	Book Value	Max	Min	Range	Average
Stock Price	8.94	6.58	3.43	3.15	4.86

Conclusion:

The bank is doing pretty well. It has to increase equity capital so that it can increase its branch network and asset portfolio.

June 2014 Azgard9 ANL Financial Analysis

2014-10-10T04:59:00.003-07:00

Introduction:

The main business of the Company is the production and marketing of Denim focused Textile and Apparel products, ranging from raw cotton to retail ready goods. Azgard Nine Limited is one of the largest denim products Company by sales in Pakistan. Azgard Nine Limited ("the Company")was incorporated in Pakistan as a public limited company and is listed on Karachi Stock Exchange (Guarantee) Limited. The Company is a composite spinning, weaving, dyeing and stitching unit engaged in the manufacturing of yarn, denim and denim products. The registered office of the Company is situated at Ismail Aiwan-e-Science, off Shahrah-e-Roomi, Lahore. The Company has three production units with Unit I located at 2.5 km off Manga, Raiwind Road, District Kasur, Unit II at Alipur Road, Muzaffargarh and Unit III at 20 km off Ferozpur Road, 6kmBadian Road on Ruhi Nala, Der Khurd, Lahore.

Capital structure:

The company is highly leveraged. The leverage is unsustainable with negative equity capital in 2014. Although financial charges are declining, however, it is unsustainable considering current business environment.

Capital structure and leverage
Year ending june	2012	2013	2014
leverage	3.075314	3.368534	4.254345
leverage without revaluation reserve	5.548871	12.63014	-22.4879
Equity capital	4,471,164,231	1,262,285,899	-748,295,453
Total liability	24,809,914,809	15,942,846,283	16,827,600,700
Financial charges	3,424,378,071	2,101,750,204	1,529,841,093

Revenue and income profile:

The company has stagnant sales stream albeit declining sales in 2014. Although gross profit is improving, its bottom line is very poor due to bulky management and administration expenses as well as financial charges.

Income and revenue profile
Year ending June	2012	2013	2014
sales	11,524,279,419	13,719,625,585	13,301,847,243
Gross Profit	-1,118,047,394	461,579,630	962,330,849
Operating loss	-2,536,242,646	-1,054,167,199	-53,715,181
PAT	-6,076,575,125	963,944,545	-2,125,555,933
EPS/LPS	-13.35	2.119	-4.673

Stock valuation:

This company is at the mercy of donors and can be consider as junk company. However favorable economic and business environment can easily make this company sustainable.

2014	Book value	Book Value Rev Reserve	Avg Market Price	High price	Low price
	Negative Value	8.79	6.69	10.34	4.59

Conclusion: High risk investing in ANLtill next report

State Bank of Pakistan mainained its policy rate of 12%: Nov 2011

2014-10-09T08:38:00.000-07:00

State Bank of pakistan maintained its policy rate of 12%. it considered that the bank has to issue its reserve currency to the interbank money market to maintain financial stability in the country. As of 28 November 2011, the outstanding amount of liquidity injected by SBP through its Open Market Operations (OMOs) is Rs340 billion. Most of the currency requirement of the banking system is due to the government borrowing for budgetary support.

There is no sign for uptake in private credit despite an earlier 200BPS reduction in policy rate but SBP hope that bank will start lending money to private sector. the circular debt issue has been resolved and most likely the productive capacity of energy sources will be full utilized and hopefully the energy shortage will be reduced which will make borrowing for productive purpose cheaper.

SBP considered three route to solution of the current monetary weakness;
The Government should try to bring foreign resources as promised so that SBP can inject liquidity without affecting exchange rate. The Govt should also bring about change in its tax collection system and increase its tax to GDP ratio. And finally, SBP is trying to develop a secondary market for government securities. it is encouraging depositors to invest in government securities through Investor’s Portfolio Securities (IPS) accounts.

It is obvious that as long as government of Pakistan fiscal deficit is not curtailed, the foreign inflows do not enhance it is less likely that private sector can flourish in the presence of high inflation and energy shortages.

The nature of islamic money: a derivation from the concept of riba, interest

2014-10-04T06:03:00.001-07:00

The concept of Riba:

In the Holy Qur`an we read:

O you who believe! Be mindful of God and give up what remains of al-riba if you are believers. If you do not do so, then receive a declaration of war from God and his Messenger. But if you repent, you shall have your capital sums (ru`us al-amwal). You do not deal unjustly and you are not dealt with unjustly (2:278-279)

Here riba means -- in simple terms -- a physical increment in a loan contract. For example a loan contract in which 100 gram gold is loaned for two years for 110 gram gold. This additional 10 gram gold is an increment to the original 100 gram gold. This increment is physical in nature and uses the total return concept so that if the borrower return back 10 gram gold in the first year it will not be the riba unless the remaining 100 gram gold is returned in the second year.

Riba is injustice, inequality, increment:

The concept of riba is against the concept of justice, equality, and morality. The Islamic philosophy of justice, equality and morality prohibit both in the process of exchange (Riba al Fadl) as well as in the process of loan making (Riba al Nasea) any increment/riba in bi-partisan contracts.

Riba in exchange/ Riba al Fadl

Riba in exchange is very important concept in order to evaluate the stance of Islam on the nature of monetary objects. Barter exchange is completely acceptable in Islam that is selling/exchanging one good with that of other goods different in nature such as one party selling silver coins with that of gold coins or selling wheat for oranges. However, exchange of similar goods such as selling wheat of inferior quality with that of superior quality or selling silver coins of one origin with that of another origin are susceptible to riba.

The concept of trade in Islam is based on the concept of equality between two objects as perceived by two economic agents’ i.e. buyer and seller. Although two objects in exchange are dissimilar, different in nature, however equality is established by way of trading between the two economic agents despite that the exchange may not be equal from the perspective of any other individual or equality between the trade is scientifically or legally or morally cannot be justified. So trading is about the difference of opinions regarding the price of one good in terms of the other goods and when the opinions of buyer and seller meet trading occurs at that proportion.

From 'Ubada ibn al-Samit : The Prophet, , said:

"Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt - like for like, equal for equal, and hand-to-hand; if the commodities differ, then you may sell as you wish, provided that the exchange is hand-to-hand." (Muslim, Kitab al-Musaqat, Bab al-sarfi wa bay'i al-dhahabi bi al-waraqi naqdan; also in Tirmidhi)

Exerpts Taken from Usmani 2002

The abstract objects without any discription:

The concept of riba al fadl generates a negation to the concept of differentiated objects based on marks, shaping, stamping, embossing, engraving, printing, or naming conventions. This clearly negates the concept of money as prevalent in orthodox economic systems. One cannot sell silver coins having 10 gram silver content with that of other silver coins having 11 gram silver content. The exchange of similar objects like silver coins should be done on equal footing rather than on market conventions. This finding is extremely important in deriving the theory of money from the theory of riba.

The concept of money is considered to be related to the standard of value. However no standard have been found to be advocated during early islam. Only the standard of weight or measure has been devised. In all practical senses, the dirhams were no more than the silver coins of certain weights. So dirhams were not standard of value but rather dirhams were related to the concept of weight or measure. So riba al fadl clearly negates the concept of differenciated objects based on the prints, shaping, embossing, engraving etc. the application of riba were not on the names of dirhams rather on its content. However, ironically scholar consider the riba to be operative on names and thereby refuting the riba al fadal.

Objects created by printing names on gold, silver, copper or on an alloy or on paper were disregarded in islam. There were tendencies to misrepresent the coinage by various means including mixing of silver or gold with inferior quality metals, weighing of coins rather than counting them, declaring silver coins dirhams as gold coins dinars etc. the gold coins of roman empire i.e. dinars were bought and sold at more than their gold contents because of their roman stamps on them. Islam forbade this practice and allowed the exchange of roman coins using their actual gold contents.

Conclusion

One can conclude that islamic money is time-invariant, discribable money as opposed to abstract money without any discription.

The purpose of the central banking: Managing an abstract, concocted, out of the blue Money

2014-09-27T13:08:00.001-07:00

What is un-Islamic about central banking? The purpose of the central bank:

Central bankers abstract, concocted, out of the blue currency:

The purpose of the central bank is to monitor its currency such as its magnitude and its value. And it does so by monitoring inflation rate and setting its borrowing and lending rates. The product of central banks cannot survive without a legal support and therefore its product also known as legal tenders. The names such as Dollars, Dirhams or Rupees are abstract words and they got their description in a market economy in terms of goods and services they can fetch. This phenomenon is in contrast to the practices prevailing during Prophets time-period. During this period money such as dirhams, and dinars were not only defined but they have independent description in terms of it content, and characteristics Such as dinars and dirhams were made of gold and silver respectively.

Central bankers watch-dog: INFLATION

Central bankers believe that inflation is pure monetary phenomenon. On the domestic front, central banks can increase policy rates, discount rates, and reverse repo rate to discourage banking system to demand its currency and therefore control inflation. Similarly, central bankers by intervening in foreign exchange markets can control imported inflation. Whatever be the choice of central bankers policy mix, it does not come without cost.

Central banking: public finance, banking operations, forex

A monetary construct such as rupees can affect economy through various channels. The biggest beneficiary of the seignorage is the government. Government can pursue expansionary fiscal policy by borrowing from central banks directly or indirectly through banking system. This phenomenon can reduce the willingness of the government to improve its tax profile. Similarly, the banking community requires a central banker to fulfill its liquidity needs. The central bankers compromise to the banking community and keep interbank money market vibrant and resilient. In the absence of central banking, the banking community would take pain to mobilize deposits as well as keep interbank money market interest rate volatility. And also the beneficiary of monetary construct such as central banking is the external sector of the economy including both trade and services.

The Value of Money: Rupees Value in terms of 2005 Gold Prices

2014-09-24T02:27:00.000-07:00

The numerical value of Money:

The value of money is a subjective analysis. Mathematically the value of money is its numerical value. The numerical value in itself has no meaning without its description. For example 100 Rupees has no meaning unless people go to market and try to exchange it with other goods and services. So value of money is concerned with how much goods and services money can buy. The value of Rupees in 2005 is not the same as its value in 2014. It is not that the goods prices have increased, rather the value of rupees have declined.

Can orange or bananas be summed together?

Here is a source of widespread confusion. More of something in a lending contract is riba or interest. Here something must be identified. Even mathematician will consider a description is necessary for justification of an increment. For example four plus four equal eight does not mean that eight is more than four. Only when four and eight is described it is possible to say that eight is more than four. That is four bananas plus four bananas equal eight banana. And not, four bananas plus four orange equal eight bananas. Hence money must be identified in order to apply Islamic rule of riba or interest. During prophet’s time-period, there existed two different currencies that are Dirhams and dinars. Dirhams were silver money whereas dinars were gold money. Merely words have no meaning unless they are defined and described.

Description of Money is necessary in Islamic monetary contracts:

Because money is not defined or described, it is senseless to compare monetary contracts of different time period. Nobody will vote that 1990 100 rupees have same contents/value as its value in 2014. Following information gives value of money/description of money in terms of Gold.

It can be found that the value of money remained 20 % jan 2010 onwards as compared to its value in Jan 2005

UPDATED SEPTEMBER 2014:PMEX Gold Trading and Gold Price Analysis

2011-12-22T08:59:00.000-08:00

At Pakistan Mercantile Exchange, the Gold is traded using deliverable as well as non-deliverable futures contract ranging from one week to three months. The Gold units traded are tola (1tola = 11.664 Gram), ounces (1 ounce = 28.3495 gram), and Gram. The exchange charge fix amount on percentage basis for insurance and storage cost of Gold. The Gold traded are 99.9% pure i.e. 24 carat gold.

The gold price analysis:

Throughout the human history, the gold has played an important role in transferring wealth from one generation to the other generation and it has peculiar investment property. It has been shown to be a good inflation hedge.

In 2005 the gold price remained around Pakistan Rupees 8500 for 10 Gram Tezabi gold, however, it touched to 53,500 Rupees at the end of year 2012. During this period it remained volatile as well.

Quarterly Return of Gold

the highest Quarter return of 28% on Gold occured during the last quater of the year 2005 whereas the large loss occured during the first and second quarter 2013.

Conclusion:

Despite Gold price have linear trend occasionally it returned abnormal return.

Financial Analysis of National Bank of Pakistan:2011

2011-11-17T12:20:00.000-08:00

About the National Bank of Pakistan Ltd. (NBP):

National Bank of Pakistan (the bank) was incorporated in Pakistan under the National Bank of Pakistan Ordinance,1949 and is listed on all the stock exchanges in Pakistan. The bank is engaged in providing commercial banking and related services in Pakistan and overseas. The bank also handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP). The bank also provides services as trustee to National Investment Trust (NIT), Long-Term Credit Fund (LTCF) and Endowment Fund for student loans scheme.

Registered Office

NBP Building, I.I. Chundrigar Road
Karachi, Pakistan.

Website

http://www.nbp.com.pk

Key Financial and Operating data: (As of June 2011)

Total Assets: 1,045,175,697,000

Net Assets: 126,452,155,000

No. of Ordinary Shares (As of June 2011): 1,681,829,000

Net Assets per Share: RS 75.20

No. of Branches: 1289

Profit or Loss per Share (Half Year Ended June 2011): Rs 4.81

Market Price per Share (As of 16/11/2011): Rs 44.50

Credit Rating As of June 2011

Ratings By JCR-VIS

Short Term: A-1+
Long Term: AAA

Income Analysis:

Net spread income during the period 2005-09 showed a declining trend. The growth rate in net spread income remains 48% during the year 2005 and fell to 4% in year 2009. However this trend has reversed in 2010. The net spread income shows how well the banks interest rate management performed. There is declining trend in income per share during the period 2006-10. The income per share remained Rs.24 in year 2006 whereas it declined to Rs.13 in year 2010.

Return and Efficiency:

The bank returned a healthy profit on its net assets amounting to 30% in year 2005; however, it declined during the period 2005-10. The return to net assets remained 15% in year 2010. The bank managed to earn a lucrative 6% interest spread income on its deposits. It also managed to keep its administrative expenses well below its spread income on its deposits.

Risk, Liquidity and Depth of Banking Operations:

The bank's risk profile remained mediocre. Its ratio of total assets to the net assets hovered around 8; which seems to be low. The bank’s asset profile is volatile, with non-consistent allocation to investment portfolio as compared to its loan portfolio. Recently, owing to the higher proportion of liquid investments as compared to the ill-liquid loan portfolio, the banks liquidity has increased. Greater proportion of investment in liquid asset may imply a higher level of illiquidity and risk of loan portfolio. Historically, the bank’s ability and willingness to extend loan was above average.

Conclusion:

Overall financial performance of the bank remained un-interesting. The bank needs to reduce its holding of low yield government securities and increase its lending business. The bank’s leverage is lower and it can increase leverage to increase its earnings.

Capital Control and Rupee Convertibility: Pakistan

2011-10-28T13:46:00.000-07:00

Capital Control and Rupee Convertibility: Pakistan

An open capital account for a country means that capital may flow in and out of the domestic economy without impediments. In Pakistan there is a vibrant foreign exchange market including interbank foreign currency market and a network of registered exchange companies and resilient central bank. Open capital accounts facilitate investment and growth of the economy and stabilize consumption pattern and output of the economy. Currently monetary easing in developed countries like US and UK has led to lower interest rates which enabled capital flight to developing counties where interest rates are higher. Occasionally large capital outflow or inflow can have non-desirable economic outcomes including banking and currency crisis.

The following is the characteristics of Pakistan’s capital accounts:

       Residents or nonresidents can open Foreign Currency Accounts (FCA) at commercial banks with remittances from abroad, foreign travelers’ cheques, or foreign currency in cash, but not with income from export or similar activities.

       Nonresidents or foreign firms may open domestic currency accounts that are fully convertible into foreign currency, so long as foreign funds are channeled through the banking system.

       Nonresidents may acquire listed securities with remittances from abroad with no restrictions on the repatriation of capital gains, dividends, or receipts from the disposal of such securities.

       Nonresidents are free to trade in registered corporate debt instruments and bonds listed on the stock exchange, federal investment bonds, or Pakistani investment bonds as well as market treasury bills.

       Branches of foreign banks and foreign-controlled investment banks may also engage in these activities.
Currently, the only notable restrictions on the capital account relate to the limits on the amount of domestic currency that a traveler may physically carry overseas (PKR500 to India and PKR3,000 to other
countries) and on the amount Pakistani residents may hold in overseas bank accounts (a maximum of USD1,000 in all countries other than India, Bangladesh, Afghanistan, and Israel, where Pakistani residents may not own any bank accounts.)