Morning Briefing– Stability is good for market – Standard Capital

Karachi, May 13, 2013 (PPI-OT): Investment Case:
The simple majority of one political party to form a government in the centre is a good omen.

According to Standard Capital was very much expected by local and foreign analyst that a business friendly N league is on course to win. It would off-course give a lot of clarity that a government could be formed without any coalition partners and hence budget could be passed and key economic decisions could be taken.

Mansha group companies to reign supreme
The biggest conglomerate could also be the biggest beneficiary since now he could unroll many expansion plans and also proposed good relations with India. For instance DGKC (PE 4x) which is one of the key contenders to dispatch cements to across the border via Wagah border.

Moreover, NML and NCL (the cousin company) would now gear up for GSP +. NCL (PE 4x) is well placed.
Also Standard Capital likes Adamjee Insurance (given market upsurge) since this company earns through market investments. The reason Standard Capital are writing this is because of the close affinity of the group with new ruling party.

LOTCHEM to come out of shelf
The South Korean conglomerate was disappointed with overall investment environment but now it would be one of the key players to pursue investments in coal and other energy related sectors. Moreover, it is likely to get reprieve over more duty protection on PTA from government of Pakistan where case has already been filed and up for public scrutiny.

Standard Capital would remind investors that it was Korean groups of Hyundai and Daewo which were primary investors in Pakistan during early 90s when Nawaz Sharif became prime minister for the first time. These companies were instrumental in laying of Motorway from Lahore to Islamabad. Now similar projects could be expected from LOTCHEM group.

Power and oil marketing company to rewind
Pakistan is undergoing lot of stress especially state enterprises under severe haemorrhage and need grants just to remain going concern.

Also it is the inter-corporate debt which is straining electricity supplies from Genco’s and moreover Standard Capital sees FO supplier PSO to be relieved since it is seeing receivables ballooning to the extent of Rs 150bn. Here Standard Capital likes NCPL and NPL since their receivables could be realized from WAPDA (after better governance). KAPCO is one key IPP at Muzzafargarh, in Southern Punjab and is likely to get gas from SNGP network and hence it is on Standard Capital radar.

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