Finance Division refutes reports on government borrowing from SBP

May 06, 2022 (MLN): The profitability of the top 100 companies listed on the Pakistan Stock Exchange (PSX) continued to soar as they recorded a 23% year-on-year increase in net profit to Rs 822 billion in the nine months ending March. 31 2022, fueled by heavily weighted sectors including commercial banks.

Compared to 9MFY20, index earnings also improved by 93% YoY.

According to a report compiled by Arif Habib Limited (AHL), the top five sectors that recorded significant growth in their profitability during the review period were commercial banks which posted profits of Rs 211.9 billion (18% year-on-year), followed by oil and gas. exploration, recording profits of Rs209.1bn (52% YoY), cement with Rs40.8bn (30% YoY), technology (PAT of Rs1.7bn compared to a loss in 2Q) while automotive assembler generated net profits of Rs21bn (up 44% YoY).

On the other hand, the major laggards during 9MFY22 were Fertilizers (earnings down 8% YoY) and Technology which registered a loss of Rs 9.3 billion.

The 100 index’s profitability jumped 34% year-over-year during 3QFY22. Although ex-oil, growth falls to just 9% year-on-year. Earnings growth was led by large commercial banks given the recent rise in interest rates, the report noted.

This was followed by the fertilizer sector, instead of an increase in urea prices associated with a 17% year-on-year recovery in urea withdrawals. The oil and gas exploration sector also recorded a notable jump following a significant increase in international oil prices in the context of the Russian-Ukrainian conflict. While the cement sector recorded moderate growth, with the impact of higher retention prices being partially offset by soaring coal prices, he added.

The Oil & Gas Marketing sector also impressed with its results, helped by strong inventory gains in the quarter. Other notable results were posted by composite textiles (given the depreciation of the PKR) and the refinery sector (gains on inventories).

Relevantly, the recovery in profits on a QoQ basis came in at 28% as they were propelled by a whopping 155% from 3QFY20.

In comparison, earnings from other heavily weighted sectors such as technology and power generation contracted by 66% (PAT of PKR 1.7 billion) and 36% (PAT of PKR 10.0 billion). ), respectively. While investment banking and the engineering sector also saw declines in profits of 6% (PAT 3.6 billion PKR) and 65% (PAT 2.6 billion rupees), respectively .

On a sequential basis, KSE-100 Index earnings posted 28% quarter-on-quarter growth, led by banks (+19%) due to higher effective interest rate, fertilizers (+25 %) due to higher urea prices, oil and gas exploration (+28%) amid rising average oil prices, cement (+4%) helped by revenue growth business following a rise in cement prices, power generation (+18%) as HUBC recognized a share of associate and joint venture losses of Rs 1,462 million in the last quarter.

While the automotive assembly and engineering sectors posted profit declines of 9% and 32% QoQ, respectively due to PKR depreciation and failure to pass on the impact of rising input costs.

During 3QFY22, the KSE-100 posted a positive return of 334 points, up 0.75%. The fertilizer sector remained the best performer adding 605 points to the index, followed by automotive assemblers (+196 points), energy (+172 points), banks (+171 points) and composite textiles ( +107 points).

The brokerage conducted its analysis on the KSE-100 index by counting the financial results of 86 companies among the top 100 companies.

“The companies that were included in our analysis represent nearly 95% of the market capitalization of the benchmark exchange,” AHL said.

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