largest contribution to the KSE-100’s ex-oil and gas sector earnings surge.
It was followed by construction and material and cement sectors, posting a profit growth of 43 percent QoQ and 22 percent YoY.
Electricity sector’s profit grew 28 percent QoQ and 69 percent YoY, followed by banking sector, up 6.0 percent QoQ and 30 percent YoY.
Automobile sector’s profit grew 59 percent QoQ and 179 percent YoY. Cumulatively, these sectors accounted for 100 percent of all profit rises.
The report said solid growth in cement sector’s net profits, during the quarter under review, can be attributed to 10.7 percent QoQ and 7.0 percent YoY growth in dispatches along with steady product prices.
Additionally, declining fuel and power cost on account of decline in international oil and coal prices, coupled with lower transportation costs played a pivotal role in determining the impressive profitability of the sector, it added.
The report further said fertiliser sector’s better profitability owing to 5.0 percent increase in urea prices and decrease in finance cost drove the chemical sector’s performance.
Banks drew earnings on improved margins because of hefty investment in high-yielding Pakistan Investment Bonds, lower cost of funding and modest growth in advances, it added.
“Electricity sector profits were premised mainly on decline of repair and maintenance and better load factors. Auto assemblers’ growth stemmed from margin expansion, volumetric growth and rise in other income.”
“We see fresh rally in the wake of policy rate cut of at least 50bps, which is expected in the monetary policy statement that is due this month,” Ali said. “Further, the market expects current quarter’s (Jan-Mar 2015) corporate results to be even better.”
The analysis said cements will benefit from the rate cut and improved seasonal dispatches.
It added that the ease in interest rate will make dividend yields more attractive, while better liquidity amid weak/stable oil prices will improve performance of independent power producers and fertiliser manufacturers.
As far as energy sector is concerned slight recovery in oil prices should support few companies’ profitability in immediate terms, said the report.