ICI share price down despite no significant operating changes
KARACHI:
ICI’s (Imperial Chemical Industries) share price has dropped by 20 per cent to Rs133 per share since the start of 2010. It has been underperforming the KSE-100 index by 24 per cent despite no significant change in the operating environment, according to analysts.
ICI is the second largest producer of Polyester Staple Fibre (PSF) in the country and the largest producer of soda ash, according to BMA Capital analysts.
BMA Capital, a brokerage firm, believes that there has been nothing noteworthy to justify ICI’s performance and believes that its share price will recover soon.
A regular clientele and competitive pricing is expected to keep demand for ICI’s product constant at their current levels despite an increase in General Sales Tax (GST) for almost all of its products, according to an analyst at BMA Capital, Sana Bawani.
She expects ICI to retain its position as one of the main manufacturers of soda ash and Polyester Staple Fibre (PSF) in the country.
Peaking cotton prices have lately led spinners to tilt their mix towards polyester for blended yarn, according to Bawani. She believes that ICI’s PSF division will continue to benefit from high utilisation rates and a regular clientele going forward.
ICI’s share price touched a high of Rs186 on Jan 11, 2010 and has now declined by 27 per cent, on dividend-adjusted prices basis.
Polyester Staple Fibre
PSF contributes to 49 per cent of the company’s total and earned the company a gross margin of nine per cent in the first quarter of 2010. PSF prices averaged at Rs133/kg at the time. Then they increased to Rs138 per kilogramme in May but have come back to Rs134 per kilogramme at present.
The onset of summer season and a 15 per cent regulatory duty on yarn exports during the quarter were the key reasons for a slightly subdued demand for the product during the quarter, which led to a decline in its prices.
It is expected that the prices of its raw materials would decline, according to analysts, .
Soda Ash
Soda ash is the second major contributor to ICI Pakistan’s revenue and also yields margins of around 30 per cent. However, during the first quarter of 2010 the segment’s gross margin drastically dropped to eight per cent due to high energy costs.
BMA Capital analysts believe that the company will continue to benefit from stability in its soda ash sales in 2010 due to the commodities being in constant demand from downstream local as well as international industries.
About the company
ICI Pakistan Limited (ICI). The Group’s principal activity is to manufacture polyester staple fibre, soda ash, paints, specialty chemicals, sodium bicarbonate and polyurethanes. According to its website, the company is one of the largest quoted companies on the Karachi Stock Exchange, with a paid-up share capital of Rs1.39 billion.
Published in the Express Tribune, June 9th, 2010.
ICI’s (Imperial Chemical Industries) share price has dropped by 20 per cent to Rs133 per share since the start of 2010. It has been underperforming the KSE-100 index by 24 per cent despite no significant change in the operating environment, according to analysts.
ICI is the second largest producer of Polyester Staple Fibre (PSF) in the country and the largest producer of soda ash, according to BMA Capital analysts.
BMA Capital, a brokerage firm, believes that there has been nothing noteworthy to justify ICI’s performance and believes that its share price will recover soon.
A regular clientele and competitive pricing is expected to keep demand for ICI’s product constant at their current levels despite an increase in General Sales Tax (GST) for almost all of its products, according to an analyst at BMA Capital, Sana Bawani.
She expects ICI to retain its position as one of the main manufacturers of soda ash and Polyester Staple Fibre (PSF) in the country.
Peaking cotton prices have lately led spinners to tilt their mix towards polyester for blended yarn, according to Bawani. She believes that ICI’s PSF division will continue to benefit from high utilisation rates and a regular clientele going forward.
ICI’s share price touched a high of Rs186 on Jan 11, 2010 and has now declined by 27 per cent, on dividend-adjusted prices basis.
Polyester Staple Fibre
PSF contributes to 49 per cent of the company’s total and earned the company a gross margin of nine per cent in the first quarter of 2010. PSF prices averaged at Rs133/kg at the time. Then they increased to Rs138 per kilogramme in May but have come back to Rs134 per kilogramme at present.
The onset of summer season and a 15 per cent regulatory duty on yarn exports during the quarter were the key reasons for a slightly subdued demand for the product during the quarter, which led to a decline in its prices.
It is expected that the prices of its raw materials would decline, according to analysts, .
Soda Ash
Soda ash is the second major contributor to ICI Pakistan’s revenue and also yields margins of around 30 per cent. However, during the first quarter of 2010 the segment’s gross margin drastically dropped to eight per cent due to high energy costs.
BMA Capital analysts believe that the company will continue to benefit from stability in its soda ash sales in 2010 due to the commodities being in constant demand from downstream local as well as international industries.
About the company
ICI Pakistan Limited (ICI). The Group’s principal activity is to manufacture polyester staple fibre, soda ash, paints, specialty chemicals, sodium bicarbonate and polyurethanes. According to its website, the company is one of the largest quoted companies on the Karachi Stock Exchange, with a paid-up share capital of Rs1.39 billion.
Published in the Express Tribune, June 9th, 2010.