Last update: Thu, 28 Jul 2016 05pm

BR Research: All


Slow and surely Fauji Foods Limited (Formerly Noon Pakistan Limited) is starting to show its presence on the growing formal dairy sector of Pakistan.
Thal Industries Corporation Limited (TICL) has once again suffered decline in its net revenue for the period of nine months ended in June 2016. The decrease in top line came because the company witnessed sales decline of 34 percent during the first quarter and 29 percent drop in its third quarter of its current financial year. Thal saw its core cost drop significantly during the period, and that has helped a 300 bps bump in the gross profit margin for the company.
The fertilizer sector is being tested to its limit. Expectedly, profits have come down crashing. The market leader, Fauji Fertilizer Company (FFC) announced its 1HCY16 earnings yesterday, reporting a massive 41 percent year-on- year dip in after-tax profits. It all started from the top, as urea off-take for most of the 1HCY! 6 remained massively under pressure.
The advantage of 44 percent lower oil prices, on average, precipitated in thin air as the current account virtually remained unchanged in FY16; posting a deficit of 0.9 percent of GDP in FY16 as compared to one percent in the previous year. The trade deficit in FY16 worsened by seven percent, which implies that the benefit of lower petroleum imports was more than offset by higher non-oil imports and lower exports. The overall import bill is down by two percent, while the exports fell by nine percent in FY16.
Would serious economic reforms have to wait for next government? In its fourth year now, the ruling PML-N looks short of the political capital to expend on painful measures. It's another matter that the economic czars keep talking up reforms when the government seems to run on auto-pilot. There is not much time left, or stomach, it seems, to make way for the reforms that the lion from Punjab had offered back in 2013.
The Securities and Exchange Commission of Pakistan (SECP) has unveiled its new roadmap for the development of the capital markets. The Capital Market Development Plan 2016-18 launched earlier this month identifies the major challenges and hurdles that are stunting the growth of capital markets in Pakistan. (Read:"SECP's new development plan" published 19 July, 2016).
At a time when the government has set targets of $35 billion for exports by 2018, and commodity prices globally are bouncing back, exports have fallen by 12 percent in FY16 reaching $20.8 billion against $23.6 billion in FY15. This fall coupled with the increase in non-oil imports (9 percent) especially with an up tick in machinery and industrial item imports is pressing down hard on the current account.