pakistan cables investment and portfolio management project
TRANSCRIPT
“Pakistan Cables”
Powering the Country
At Pakistan Cables, we believe that the growth of our nation is imperative to our success.
Our vision to achieve excellence is based on our strong commitment to deliver products of
the highest quality and by being ethical in our business practices. Each step of the way, as
we progress in parallel with our growing nation, we draw strength from the way that we
power the country
Investment and Portfolio Management
Group Members:
Muhammad Abubakr
L1F13MCOM2017
Serial Number = 19
Hafiz Abdul Wahab Shahid
L1F13MCOM2014
Serial Number = 17
Mian Usman Ahmad
L1F13MCOM2015
Serial Number = 18
Abdul Hannan Butt
L1F13MCOM2022
Serial Number = 23
Mohammad Ahsan Khan
L1F13MCOM0085
Serial Number = 5
Section = A
Submitted To: Mr. Harris Aziz Mazari
Contents
Pakistan Cables Introduction of Pakistan Cables 5
Founder of Pakistan Cables 6
Background of Pakistan Cables 7
Vision Statement of Pakistan Cables 8
Mission Statement of Pakistan Cables 8
Achievements of Pakistan Cables 9
Information of Pakistan Cables on Karachi Stock Exchange (KSE) 11
Investment Analysis of Pakistan Cables
Fundamental Analysis 11
Share Prices of Pakistan Cables 11
Cash Dividends of Pakistan Cables 13
Average Return of Pakistan Cables 16
Technical Analysis 16
Japanese Candlestick of Pakistan Cables 17
Share Prices Trends of Pakistan Cables 17
Share Prices Patterns of Pakistan Cables 19
Technical Indicators of Pakistan Cables 20
Investment Decision Regarding Pakistan Cables 20
Future Outlook of Pakistan Cables in Stock Exchange 21
Engro Corp
Introduction of ENGRO Corp. 25
History of ENGRO Corp. 25
Vision Statement of ENGRO Corp. 27
Mission Statement of ENGRO Corp. 27
Information of ENGRO Corp. on Karachi Stock Exchange (KSE) 27
Investment Decision Regarding ENGRO Corp. 28
Investment Vehicle
Portfolio Management 30
Total Investment in Portfolio 30
Process of Buying Shares at Karachi Stock Exchange 31
Gold
Justifications for changes and Future Outlook of Gold 32
Crude Oil
Justifications for changes and Future Outlook of Crude Oil 33
Treasury Bill (6-Month)
Justifications for changes and Future Outlook of Treasury Bill 34
“Pakistan Cables”
Powering the Country
At Pakistan Cables, we believe that the growth of our nation is imperative to our success.
Our vision to achieve excellence is based on our strong commitment to deliver products of
the highest quality and by being ethical in our business practices. Each step of the way, as
we progress in parallel with our growing nation, we draw strength from the way that we
power the country
Page | 5
Introduction of Pakistan Cables
Pakistan Cables, the country's oldest and most reputable cable manufacturer, was established over
5 decades ago in 1953 under the sponsorship of BICC, UK and the Chinoy family. In the
subsequent five decades, Pakistan Cables has earned a reputation as a market leader in the industry
and a company that does not compromise on quality. Consequently, the company has gained a
position as being the premier cable manufacturer in the country. Pakistan Cables has been listed
on the Karachi Stock Exchange since 1955. In 2010 General Cable Corporation, a Fortune 500
company and global leader in cable manufacturing invested in Pakistan Cables by taking up a 25%
equity stake in the company. Pakistan Cables' manufacturing facilities and head office are located
in Karachi on an 11.5 acre site. This site also houses a 2MW co-generation power plant, which
allows the company to be self-reliant for its electricity needs. Pakistan Cables presently employs
over 400 people. It has regional office in Lahore and branch offices in Rawalpindi, Multan,
Abbottabad, Peshawar and Quetta. The company's distribution network covers more than 55 cities
and towns all over Pakistan. Pakistan Cables is engaged in the manufacture of wires, cables and
conductors in both copper and aluminum. In addition, Pakistan Cables also produces aluminum
sections for architectural applications under the brand name of Alum-Ex. The company has two
other product lines, namely PVC Compound and Copper Rod. Given its focus on quality, Pakistan
Cables continuously reviews and improves the effectiveness of its Quality Management System in
line with objectives of achieving higher productivity, uncompromising quality and maximum
customer satisfaction. Pakistan Cables was the first cable manufacturer and amongst the first 5
companies in Pakistan to be ISO 9001 certified. It has recently updated its certification to the ISO
9001:2008 version.
Pakistan Cables Limited is the country’s oldest cables manufacturer engaged in manufacturing of
wires and cables and other engineering products.
The Company was established in 1953 in collaboration with BICC, United Kingdom.
The Company manufactures General Wiring Cables in the range of 250/750 volts. These cables
manufactured in conformity with national and international standards that provides safety and
saving in electricity consumption because of the use of pure copper and cable grade PVC (Plastic
Compound Vanile).
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The Company provides overhead conductors to the utility companies WAPDA and KESC which
are manufactured from EC grade Aluminum Rod and Copper Rod.
PCL also manufactures telephone, intercom, coaxial cables and various types of special cables
which include air field lighting, control cables, etc.
Alum-Ex is the brand name under which Pakistan Cables manufactures aluminum sections for the
construction and architectural industry.
PCL has also set up a plant to manufacture High Conductivity Oxygen Free 8mm Copper Rod.
In 2010 / 11, Pakistan Cables had a total turnover of USD 46 million. The Company has been a
regular winner of the Karachi Stock Exchange’s Top 25 Companies Award, most recently winning
the award in 2004, 2006 & 2007. Pakistan Cables has also been recognized as a winner of the
Brands of the Year Award in 2007 & 2008. Protecting the health and safety of our people and
ensuring a healthy working environment is also of great importance to Pakistan Cables. The
Company is committed to working towards designing a workplace that minimizes work related
risks and occupational health and safety. Pakistan Cables also lays great stress on environment
protection. Plant operations are strictly controlled to maintain safe environment for workers, as
well as the surrounding community. Several measures have been taken to control pollution and to
maintain a clean, green and healthy environment. Pakistan Cables has also achieved in January
2011 certification for its HSE Management Systems conforming to ISO 14001:2004 EMS and
OHSAS 18001:2007.
Founder of Pakistan Cables
Mr. Amir. S. Chinoy is the founder of Pakistan cables limited. He was born in Bombay on 21st
September 1921. He migrated to Pakistan in 1948. He played a pioneering role in the
industrialization of Pakistan by introducing and establishing concerns in heavy chemicals (Pak
Chemical Limited), electrical cables (Pakistan Cables Limited) and galvanized steel pipes
(International Industries Limited). His commercial interests also extended to trading (representing
major European and American companies), contracting and distribution.
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Mr. Amir S. Chinoy was president of Sind Club (1973 ~ 75), Rotary Club (1968 ~ 69) and Steward
of the Karachi and Lahore Race Clubs. In his lifetime, he also wrote a book “The Chinoys”. He
passed away peacefully on 23rd Ramazan 1418.
Background of Pakistan Cables
Pakistan Cables history can be traced back to the early 20th Century with the formation of F.M.
Chinoy & Co. In 1904 F.M. Chinoy & Co. were appointed the sole agency for Shell Petrol in India
and by 1916 F.M. Chinoy & Co. had obtained the agency for Chevrolet. F.M. Chinoy & Co.
eventually expanded to include agencies for Armstrong Siddeley, Oakland, Pontiac, Lanchester
and Vauxhall. During this period F.M. Chinoy & Co. began operating The Bombay Garage in
Bombay and in a short span of time The Bombay Garage’s footprint expanded to cover most of
India.
After the Independence of Pakistan in August 1947, the founder of Pakistan Cables, Mr. Amir S.
Chinoy migrated across to Karachi. He established a number of businesses following his
migration, including Pak Chemicals, International Industries and Pakistan Cables.
Pakistan Cables, the country’s oldest and most reputable cable manufacturer, was established over
5 decades ago in 1953 as a joint venture with BICC. In the subsequent six decades, Pakistan
Cables has earned a reputation as a market leader and premier cable manufacturer in the country
and a company that does not compromise on quality. Pakistan Cables has been listed on the
Karachi Stock Exchange since 1955. In 2010 General Cable Corporation, a Fortune 500 company
and global leader in cable manufacturing invested in Pakistan Cables by taking up a 25% equity
stake in the company.
Pakistan Cables is an affiliate of General Cable, which is amongst the world’s largest cable
companies with revenue in 2011 of USD 5.8 billion. General Cable has a global presence with 57
plants in 26 countries including the US, Canada, France, Germany, Spain, Brazil, China, Thailand,
South Africa, and the Philippines.
The affiliation with General Cable gives Pakistan Cables several advantages over its competitors,
including the ability to source almost any type of cable for customers, access to cutting edge
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technology, technical support & management best practices, procurement advantages and export
opportunities. Hence Pakistan Cables is the only cable company in Pakistan with multinational
affiliation and product quality to match the best in the world.
Vision Statement of Pakistan Cables
The vision of Pakistan cable is to be the company of first choice for the customers and partners for
wire, cables and other engineering products. Pakistan cables vision is to be the best cables and
wires manufacturer and also remain best in the aluminum section/profiles. Pakistan cables set up
a plant to manufacture high conductivity oxygen free 8mm copper rod.
Mission Statement of Pakistan Cables
Pakistan cables mission statement is to strengthen company leadership in manufacturing and
marketing of wire and cables. To have a strong presence in engineering products market while,
retaining the options to participate in other profitable business.
Pakistan cables achieving consistent, long term financial growth and profitability for its
shareholders.
Attracting retaining and developing capable and dedicated employees who is turn contribute to the
growth of the company and shares its success.
Pakistan cables is to operate ethically while maximizing profits and satisfying customers “need
and stakeholders” interest.
The mission of Pakistan cables is also to assist in the socio-economic development of Pakistan by
being good corporate citizens. Pakistan cables is taking a long-term view of business relationships.
It is practicing the highest standards of integrity and professionalism.
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Achievements of Pakistan Cables
• 1973
In 1973 Pakistan cables awarded by the government of Pakistan they announced it is Top 25
Companies by the Karachi Stock Exchange.
• 1980
As we know Pakistan cables limited performed a very well job in last 7 years before. They
maintain their performance yet in 1980. Pakistan cables is Top 25 Companies by the Karachi
Stock Exchange.
• 1982
Corporate Excellence Award from Management Association of Pakistan (Awarded to the 6 Best
Managed Companies)
• 1983
Corporate Excellence Award from Management Association of Pakistan (Awarded to the 6 Best
Managed Companies)
• 1998
Achievement Award for outstanding performance by the President of Pakistan
• 2004
Top 25 Companies by the Karachi Stock Exchange (Position number 25)
• 2005
Consumer Choice Award for Best Electrical Wires & Cables
• 2006
Top 25 Companies by the Karachi Stock Exchange (Position number 12)
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• 2006
Consumer Choice Award for Best Electrical Wires & Cables
• 2007
Top 25 Companies by the Karachi Stock Exchange (Position number 6)
• 2007
Best Corporate Report from ICAP & ICMAP
• 2007 & 2008
Brands of the Year Award in the following categories
• 2009
Made operational a 2 MW gas-fired tri-generation power generating plant. Set up a new plant for
the manufacture of automobile cables. Received ISO 9001:2008 certification.
• 2010
General Cable Corporation, a Fortune 500 company and world leader in cable manufacturing made
an investment to take it 25% equity stake in Pakistan Cables.
• 2011
Received ISO 14001:2004 Certification Received OHSAS 18001:2007 Certification
• 2012
Achieved net sales of over Rs. 5 billion. Received Best Corporate Report Award from Joint
Committee of ICAP and ICMAP for the Year 2010.
• 2013
Celebrated 60 brilliant years!
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Information of Pakistan Cables on Karachi Stock Exchange (KSE)
In 1955 Pakistan Cables was listed on Karachi Stock Exchange (KSE), as time passed on it moved
in the top 25 companies and is currently under the KSE-100 Index.
The Historical Share Prices of Pakistan Cables is shown in the Appendix, over the periods it has
increased and decreased. The turnover of the shares has also increased and decreased over the
periods. The minimum investment in shares which an investor can is of 200 shares.
On the basis of the historical prices from the year 1955 the company indicates that the investment
has a 22.5% of value at risk (VAR).
The Company has benchmarked the prices of KSE-100 index, which shows a Beta of 0.03. This
amount indicates that it’s less volatile than KSE-100 index. The calculation of Beta is based on
past 3 year prices (2012-2014) shown in the Appendix.
The market capitalization of Pakistan Cables is round about 4737.28 Million, with a 52 week high
(2014) of 191.55 and 52 week low (2014) of 73.51.
Investment Analysis of Pakistan Cables
Fundamental Analysis
Fundamental Analysis of Pakistan Cables will include an analysis of the share prices and
dividends. It will also include the justifications for the increase and decrease of shares price, the
growth of shares prices along with the dividends will also be discussed briefly. Cash Dividend
which is paid to the investors will also be discussed.
Share Prices of Pakistan Cables
The Historical Share Prices of Pakistan Cables shows an increasing trend over the past periods,
the periods which have been chosen for the analysis are from 2000-2014. The graph of the share
prices on the monthly basis is shown below
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The Share price of Pakistan cable increased greatly in 2004 as shown in the above graph, the main
reason behind it was the increase in the Net Sales which crossed the mark of Rupees 1 Billion
approximately, continued with the increasing trend due to Net Sales which achieved the mark of
Rupees 2 Billion in 2005, Rupees 3 Billion in 2006 and Rupees 4.5 Billion in 2007 approximately.
In 2008 the prices of Pakistan Cables fell dramatically due to Karachi Stock Exchange Operations
which was shut down for 4 months approximately (October to December), the reason behind the
shutdown was the State Bank of Pakistan which increased the interest rates due to High Inflation
which was recorded in the country. After the resumption of Karachi Stock Exchange the share
prices of Pakistan Cables remained stable with the increasing trend.
In 2014 the prices of the stock started to increase again at a greater rate due to the massive increase
in the KSE-100 Index Points, the reason behind this was the post elections which were held in
Pakistan. The growth in the share prices over the years by keeping the base as January 2000 is
shown in Appendix, below is the graph of the growth which is almost similar to the share prices
graph
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Cash Dividends of Pakistan Cables
Pakistan Cables is paying cash dividends to the investors on yearly basis, the cash dividend is paid
every 2nd or 3rd month of the year. The Dividends which have been over the past years is shown
below in the table along with the graphs which show an increasing trend.
Cash Dividends Paid
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
21,900,000 19,500,000 38,000,000 24,400,000 48,300,000 32,200,000 56,900,000 92,500,000 113,850,000 128,100,000
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From 2011 onwards the dividends which have been paid in cash are increasing, the reason
behind this is the Net Sales which has been increasing continuously.
An Investor also considers the cash dividend paid per share by the company, the trend for the
cash dividend per share of the company is increasing as it is show in the table and the graph
below
Year Cash Dividend Per Share
Growth in Cash Dividend
Per Share
2005 2
2006 3 0.50
2007 2.5 (0.62)
2008 2 (0.20)
2009 2.3 0.13
2010 1.5 (0.33)
2011 2 0.33
2012 3.3 0.63
2013 4 0.23
2014 6 0.50
Average Growth 12%
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According to the graph which has been shown above there is much fluctuation in the Dividend
per Share from 2005 to 2014, but in 2014 the growth rate in cash dividends increases with an
increasing trend towards the future periods.
The growth which is calculated on the basis of the cash dividend per share is 12% and this
growth rate is assumed to continue in the coming periods. The growth rates are used to calculate
the future dividends and the present value of the share at 2014. The next 3 years are calculated
by assuming that the dividends will grow at 12% for the coming years. The Calculation is shown
below
Required Rate of Return 20%
Cash Dividends Paid
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2 3 2.5 2 2.3 1.5 2 3.3 4 6
D1 P1
6.7 89
5.6 74
Present Value (PV0) 80
D2
7
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So, according to the calculation it shows that the present value is PKR 80 whereas in the market the stock
price at current is PKR 177 indicating that the stock is overvalued in the market.
Average Return of Pakistan Cables
The average return for Pakistan Cables is calculated on daily basis by taking the closing share
prices from (2000-2015). The average daily return is approximately 0.06% and yearly return is
20%. The historical share prices along with the working is shown in the appendix, below is the
graph of the average daily returns
Technical Analysis
Technical Analysis is done when an investor wants to invest for a shorter time period, less than 1
year.
The investment which is going to be made is for 3 months approximately, the decision may change
depending on the situation. So, the data available for technical analysis is shown in the appendix.
In Technical Analysis Japanese Candlesticks are made to analyze the overall situation of the
company’s share price along with that trends and different patterns are also analyzed.
Growth Rate
3.00
1.12
12%
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Japanese Candlestick of Pakistan Cables
The Japanese Candlestick calculated for Pakistan Cables is based on 2 months prices, the data
includes the opening prices of the share, high rates of share prices, low rate of share prices during
the day and the closing prices of the shares. The following is the graph of Japansese Candlesticks
and the monthly Japansese Candlesticks are given in the Appendix.
Share Prices Trends of Pakistan Cables
Pakistan Cables Closing share prices indicate an increasing trend throughout the time period
which has been selected for the analysis, 4 months (October 2014 to January 2015). During the
time period there has been ups and downs of prices but there was not a major swing due to which
the trend could be affected as a result the trend kept on moving upwards. The Closing Share
Prices are shown in the appendix, whereas the graph to show the increasing trend is given below
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If we use the 10 day moving average then the trend increases and decreases respectively, after
every slight increase the share prices decrease and after every decrease the share prices increase
slightly. The last days of the available prices show an increasing trend which means that on the
basis of the moving average the prices are going to go down in the coming periods showing a
decreasing trend. The 10 Day Moving Average is shown in the graph below
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Share Prices Patterns of Pakistan Cables
Technical Analysis also includes the discussion about the different price patterns which are pointed
out by the investor according to his own perception, sometimes his perception may lead him
towards profit and sometimes towards loss.
Pakistan Cables Share Prices also show different price patterns which are going to be pointed out
from the historical data of 4 months (October 2014 to January 2015). The price patterns are pointed
out completely on the perception basis, the graph shown below points out the patters
The above graph indicates two price patterns which were pointed out, one is the Double Top and
the second one is the Head.
The Double top pattern indicates that the prices go up and then they decrease, overall this
happens twice and that too consecutively in 2 periods. The Double Top price patterns starts from
24-October-2014 and ends at 29-October-2014.
The second pattern shown is named as Head, in this period prices increase up to a huge extent
and then they decrease the same way the prices increase. The Head patterns starts with an
increase in prices from 10-January-2015 and end with the decrease in prices on 21-Jan-2015.
Head
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Technical Indicators of Pakistan Cables
Numerous technical indicators are present to analyze the situations of the stock share prices, one
of them is named as Bollinger Bands. Bollinger Bands are based on the moving averages of the
closing prices and their standard deviation. The Standard Deviation is used to find out the Upper
Bollinger Band and the Lower Bollinger Band. The graph of Bollinger band for Pakistan Cables
is given below
The above graph indicates the situations at which the investor should sell or buy the shares of
Pakistan Cables, the Purple Color circles indicates the Buy signal and the green color circles
indicate the sell signal situation.
Investment Decision Regarding Pakistan Cables
The main part of investment is the decision making point, every investor’s goal is to achieve gain
on the basis of his analysis or on the basis of his perception regarding the future outlook of the
company.
According to the analysis which has been done above we conclude that the share price of
Pakistan Cables are going to rise in the future so the best decision is to buy the required amount
of shares.
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The minimum investment which can be made is of 150 shares, so we have decided to invest 500
shares in the company due to the reason which has already been stated above that we expect on
the basis of our analysis that the prices are going to rise in the coming 3 months.
Our time period for investment is 3 months which is considered as Short Term Period and that is
why we made Technical Analysis as our decision base. The required rate of return which we
have decided is 20% per year on the basis of the Value at Risk (VAR) which is 22.5%.
Pakistan Cables
Average Return 20%
Value at Risk 22.5%
Future Outlook of Pakistan Cables in Stock Exchange
Future outlook means to forecast about the company that how it will work in the coming periods.
As we are investing for 3 months so we will just forecast the outlook of Pakistan Cables for 3
months.
Our Forecast is completely based on the analysis we have done and on the results which we have
found on the basis of our perception. We expect that Pakistan Cables Share price is going to
increase in the future. On the basis of the historical share prices the future forecasted trend is
shown in the graph below
Overall the whole future outlook is based on our fundamental and technical analysis, we also
expect that there will be no drastic change in the Economy of Pakistan it will remain stable and
the Karachi Stock Exchange will face no shutdowns.
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Another thing for which the future outlook is discussed is the dividends of the company which will
be paid to the investors. The analysis shows us that the dividends will increase as the time passes
on, the following graph is shown below indicating the growth of the dividends over the years
Cash Dividends Paid
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
21,900,000 19,500,000 38,000,000 24,400,000 48,300,000 32,200,000 56,900,000 92,500,000 113,850,000 128,100,000
-11% 100% -36% 98% -33% 77% 63% 23% 13%
Getting back towards the share prices of Pakistan Cables, the future value of the share price is also
calculated, to show that after 3 months approximately the share price will be 186.35. The
calculation of present value is given below
Future Value
Future Value 186.35
Present Value 177
Required Rate of Return 20%
Time period 94
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“ENGRO Corp” Engrobility
It’s just our way of establishing a one-word platform that describes the essence of what we
do. The essence of a unique ability that touches lives everywhere. Across all our companies,
Engro deploys the ability to improve lives, empower livelihoods and inspire meaningful
change. Moreover, taken together with our values, we believe ourselves to be a reliable,
trustworthy patriot who is a force for good with the ability to enable excellence. Whether
it’s Responsibility, Intangibility, Resource ability, Empower ability, or Sociability, Engro’s
excellence manifests itself across transformative values that mark the future with our
trademark ethic. Furthermore, whether it’s Nourish ability through Engro Fertilizers,
Favorability through Engro Foods, Usability through Engro Polymers & Chemicals,
Conductibility through Engro Powered, Flexibility through Engro Ropak or Tradability
through Engro Exim, we understand it takes all our collective abilities to challenge, develop
and inspire the future.
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Introduction of ENGRO Corp.
Engro Corporation is a public company based in Pakistan. The company has stakes in the fertilizer,
food, power generation, petrochemicals, automation and terminal storage industries. Engro
underwent an employee led buyout in 1992.
Engro Corporation Limited is one of Pakistan’s largest conglomerates with businesses ranging
from fertilizers to power generation. Currently Engro Corporation’s portfolio consists of
diversified businesses which include chemical fertilizers, PVC resin, bulk liquid chemical
terminal, foods, power generation and commodity trade.
The company also co-owns Sindh Engro Coal Mining Company. As a holding company its
subsidiaries include:
Engro Fertilizers Limited
Engro Foods Limited
Engro Eximp Private Limited
Engro PowerGen Limited
Engro Polymers and Chemicals Limited
Engro Vopak Limited
Energy Terminal Pakistan Limited
History of ENGRO Corp.
It was 1957 when in search for oil by Pak Stanvac, an Esso/Mobil joint venture led to the discovery
of the Mari Gas field near Daharki Pakistan. Esso proposed the establishment of a urea plant in
that area which led to a fertilizer plant agreement signed in 1964. In the subsequent year, Esso
Pakistan Fertilizer Company Limited was incorporated, with 75% of the shares owned by Esso
and 25% by the general public.
The construction of a urea plant commenced at Daharki in 1966 and production began in 1968. At
US $43 million with an annual production capacity of 173,000 tons, it was the single largest foreign
investment by a multinational corporation in Pakistan at the time.
In 1978, it was decided to rename the company from Esso Fertilizer Company Limited to Exxon
Chemical Pakistan Limited.
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In 1991, Exxon decided to divest its fertilizer business on a global basis. The employees of Exxon
Chemical Pakistan Limited, in partnership with leading international and local financial
institutions, bought out Exxon’s 75% equity. This was at the time and perhaps still is the most
successful employee buy-out in the corporate history of Pakistan. Renamed as Engro Chemical
Pakistan Limited, the Company has gone from strength to strength, reflected in its consistent
financial performance, growth of the core fertilizer business, and diversification into other
businesses.
It was year 1997 when Engro Chemical Pakistan limited decided to establish Engro Vopak
Terminal Limited on 50/50 partnership basis between Engro and Royal Vopack of Netherlands,
for handling bulk liquid chemical storage at Port Qasim Karachi. In that same year Engro Asahi
polymer Chemicals limited was established in a result of joint venture between Mitsubishi
Corporation and Asahi for the manufacturing and marketing of PVC resin.
Engro EXIMP was established in 2003, after which in 2005 Engro decided to diversify their
business more by venturing into the food business by establishing Engro Foods Limited.
Engro also ventured into the power generation business by setting up Engro Energy Limited in
2006, which later on was renamed as "Engro Powergen Limited" in 2008. It was established with
the basic aim to play Engro's part to tackle the energy crisis in the country.
In year 2007, Engro Asahi polymer divested its share in joint venture with Mitsubishi and the
company renamed as Engro Polymer and Chemicals Limited.
In 2010, keeping in view the immense diversification of Engro Chemical Pakistan Limited, it was
decided to rename the company as Engro Corporation as the holding company. In the year 2011,
Engro Corporation had a major global diversification with the acquisition of US-based
Company, Al Safa Halal. This new business venture comes under Engro Foods Canada Ltd and its
subsidiary Engro Foods USA, LLC. Al Safa Halal targets 7 million population of Muslims in North
America.
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Vision Statement of ENGRO Corp.
To be the premier Pakistani enterprise with a global reach passionately pursuing value creation
for all stakeholders. Promoting growth of communities around Engro’s supply chain and giving
people equal access to choices, opportunities and ability to exercise their rights
Engro Foundation brings realization to the dreams of our people to make a difference in lives of
those around us. We believe in the power of Pakistan’s human capital to change the face of
communities and economies and make them agents of a wider change.
Mission Statement of ENGRO Corp.
Engro Foundation is committed to make positive impact on lives of communities around its supply
chain through provision of improved basic services (health, infrastructure, water and sanitation);
education and skill development; environment and livelihood training. In addition, it will work
with partner organizations to provide financial and technical support in response to natural
calamities.
Through its network of facilities across Pakistan, Engro aims to make a difference in communities
where average household income borders or is below the poverty benchmark. Engro Foundation
works across rural and suburban Pakistan in partnership with development organizations to create
a trickledown effect of resource development, enabling indigenous communities to sustain
economies, employ their human resources, and learn critical skills they need to be part of national
mainstream.
Information of ENGRO Corp. on Karachi Stock Exchange (KSE)
In 1965 ENGRO Corp was listed on Karachi Stock Exchange (KSE), as time passed on it moved
in the top 25 companies and is currently under the KSE-100 Index.
The Historical Share Prices of ENGRO Corp over the periods has increased and decreased. The
turnover of the shares has also increased and decreased over the periods. The minimum investment
in shares which an investor can is of 500 shares.
Page | 28
On the basis of the historical prices from the year 1965 the company indicates that the investment
has a 12.5% of value at risk (VAR).
The Company has benchmarked the prices of KSE-100 index, which shows a Beta of 0.01. This
amount indicates that it’s less volatile than KSE-100 index. The calculation of Beta is based on
past 3 year prices (2012-2014) shown in the Appendix.
The market capitalization of Pakistan Cables is round about 142,312.12 Million, with a 52 week
high (2014) of 299.89 and 52 week low (2014) of 158.61.
Investment Decision Regarding ENGRO Corp.
The main part of investment is the decision making point, every investor’s goal is to achieve gain
on the basis of his analysis or on the basis of his perception regarding the future outlook of the
company and as we are making a portfolio so that the risk can be diversified. According to our
analysis which has been already done Pakistan Cables is much riskier investment so we have
chosen the ENGRO Corp. for risk diversification.
According to the analysis which has been done above we conclude that the share price of ENGRO
Corp. are going to rise in the future so the best decision is to buy the required amount of shares.
The minimum investment which can be made is of 500 shares, so we have decided to invest 2000
shares in the company due to the reason which has already been stated above that we expect on
the basis of our analysis that the prices are going to rise in the coming 3 months.
Our time period for investment is 3 months which is considered as Short Term Period. The required
rate of return which we have decided is 16% per year on the basis of the Value at Risk (VAR)
which is 12.5%.
ENGRO Corp.
Average Return 16%
Value at Risk 12.5%
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Portfolio Management
Portfolio Management simply means diversification, every investors aim is to diversify his risk
either by hedging gold or by investing in a company according to his situation. Mostly Portfolio is
created when investors want to diversify their risks which are relating to their investments,
diversification may leads towards less risk and more return again completely depending on the
situation.
In our situation Pakistan Cables is a riskier investment so to diversify risk we are going to make a
portfolio by investing in another company which is less risky as compared to Pakistan Cables. The
company in which we are going to investment is ENGRO Corp.
The reason behind choosing Corp, firstly it has a less VAR as compared to Pakistan Cables which
is already discussed before and secondly they have a minor correlation which helps us in offsetting
our risk, the correlation (Beta) between both the companies is 0.01. The calculation for the
Portfolio Beta is shown below along with the expected return
Stock Amount Invested
Expected Return
Beta Weights Expected Return
Beta
PCAL 89,450 20% 0.03 0.14 3% 0.004
ENGRO 546,000 16% 0.01 0.86 14% 0.009
PKR 635,450
Total 17% 0.01
Expected Return for Portfolio
17%
Portfolio Beta 0.01
Total Investment in Portfolio
In this part simply calculations will be displayed relation to the portfolio, that how many shares
will be purchased and what will be their total cost, along with that their Average returns and Future
Value will also be shown in the table below
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Minimum Investment
PACL (Shares)
Price of 1 Share of PACL
Total Investment (In Rupees)
Minimum Investment
ENGRO (Shares)
Price of 1 Share of PACL
Total Investment (In Rupees)
Total Shares
Total Investment in Portfolio (In
Rupees)
500 177.00 PKR 88,500
2,000 277.57 PKR 555,140
2,500 PKR 643,640 Ratio 20% 80% 100%
Process of Buying Shares at Karachi Stock Exchange
Karachi Stock Exchange is a place where trading takes place, an investor cannot directly purchase
or sale shares at the stock exchange. The Security Exchange Commission of Pakistan (SECP) has
provided brokers who are officially registered and they are provide a platform to the investor to
carry transactions.
In this case we have selected a brokerage firm, named as Arif Habib Limited. Arif Habib Limited
is officially registered as a Broker by the Security Exchange Commission of Pakistan (SECP).
The Nature of Account in our case is Single, registered on the applicant named as Abdul Hannan
Butt. We will maintain a margin of 60 % and the account will be operated by the following
authorized persons
Abdul Wahab Shahid
Mian Usman Ahmad
Mohammad Ahsan Khan
Further details are also given in the form which is attached in the appendix.and already said before
that we will be purchasing 500 shares of Pakistan Cables and 2000 shares of ENGRO Corp.
Pakistan Cables
Average Return 20%
Value at Risk 22.5%
Engro Corp
Average Return 16%
Value at Risk 12.5%
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Justifications for changes and Future Outlook of Gold
Gold which is most commonly used as an inflation hedge mostly shows negative correlation with
the stock exchange.
We will discuss about the gold prices from the period 2000 to 2014 (15 years) and also
justifications are given for the changes in the prices of the Gold. The graph for the prices of Gold
is shown below
If we have a look at the graph for the gold prices it shows an increase in prices till 2012, after that
it starts to decline.
In 2008 due to the recession period in United States the gold prices rose up slightly, in 2009 the
economic and financial problems of the most recent recession continued but still gold price rose
more than 2008. The Federal Reserve engaged in a policy of monetary easing in an effort to inject
liquidity into the U.S. economy, which helped lower the value of the dollar, one of the main
alternatives to gold. As a result of the economic contraction and monetary easing, many investors
put their money into gold, which increased its value in the weak economic environment.
From 2010 to 2011 gold prices jumped more than 50% mainly the result of speculation surrounding
an uneven recovery and volatility in the U.S. financial markets, with gold reaching an all-time
high price point.
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In 2012, price increases for gold slowed, rising less than they had in each of the previous 4 years
due to the measures which were taken by the US Government to strengthen the economic
environment.
If we talk about the future outlook of the gold on the basis of the reasons given above Gold Prices
in the nearby future we can say for 6 months, the prices will continue to decrease because of the
measures which are been taken by the US Government to recover from the economic and financial
problems of the recent recession which happened in 2012.
Measure taken by US Government include, strengthening the value of the Dollar and focusing on
the growth of Gross Domestic Product (GDP).
Justifications for changes and Future Outlook of Crude Oil
In this portion we will discuss about the crude oil prices from the period 2000 to 2014 (15 years)
and also justifications are given for the changes in the prices of the Crude Oil. The graph for the
prices of Crude Oil is shown below
If we have a look at the graph for the crude oil prices it shows an increasing trend in prices till
2008, where the prices reached at a high point and after that it decreased.
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The 2008 global financial crisis, which is considered one of the greatest financial crises since the
Great Depression. The prices increased due to many factors, including the falling value of the U.S.
dollar and a decline in petroleum reserves, Middle East tension, and oil price speculation.
In the late 2008 the prices decreased by a huge extent due to the Global Recession, the recession
caused demand for energy to shrink in late 2008 due to which the prices decreased, whereas in
2009 the crude oil prices started to stabilize.
In 2014 nearly after 5 years the prices of crude oil started to decline once again, due to the demand
which is low because of weak economic activity, increased efficiency, and a growing switch away
from oil to other fuels. The other factor which also influenced the crude oil prices is America which
has become the world’s largest oil producer, though it does not export crude oil but now it imports
less which is helping in creating a lot of spare supply.
Due to the given reasons about the decline in 2014 we expect that in the coming months and years
the prices of crude oil is going to continue its trend of decrease.
Justifications for changes and Future Outlook of Treasury Bill
In this portion we will discuss about the 6 Month Treasury Bill prices from the period 2000 to
2014 (15 years) and also justifications are given for the changes in the prices of the 6 Month
Treasury Bill. The graph for the prices of 6 Month Treasury Bill is shown below
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If we have a look at the graph for the 6 Month Treasury Bill prices it shows an increasing trend in
prices till mid of 200, where the prices reached at a high point and after that it decreased and again
then again started to rise.
The reason behind the increase in prices in 2000 was the Foreign Aid which was provided to
Pakistan by United States Government. Due to the Foreign Aid the Central Bank of Pakistan
revised its monetary policies and increased the interest rates which led towards more buying.
In 2001 the price of 6 Month Treasury Bill collapsed because The Central Bank of Pakistan again
revised its policies, which lead to the decrease in prices. The price kept on decreasing till 2003 and
after that it suddenly jumped at a higher price because of the revision of policy. In 2014 the prices
are almost stable with an increasing trend.
In the coming years, almost up to 3 years we expect that there will be increasing trend in the prices
due to monetary policy which will be remained unchanged or we can say that there will no drastic
change in the interest rates, overall it completely depends on the Foreign Aid.
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