KSE 100 recovers with tea maker buy-back, UBL financials

Tapal redemption of fund into a separately managed account and UBL financial results change the course of the market

On February 23, the three indices used to reflect the Pakistani stock market and its performance, exhibited sharp decline for the first half of the day. 

The indices made a rebound following a notification on the PSX’s announcement page titled, “Financial Results for the Year Ended 31 December 2021 – United Bank Limited”. The news was posted at 13:50 PKT and can be seen to change the market’s trajectory.

The market started with the KSE100 standing 45,012.18 points and then declining by 220.15 points (-0.49 per cent) in a span of 5 hours. 

“The market remained under pressure throughout the day given the geopolitics and domestic politics situation. However UBL surprised with a bumper payout of 6rs which led the heavyweight bank to rise 3 per cent, pushing the index into green,” says Adnan Sheikh, Analyst at Pak Kuwait Investment Company.

Why was there a bloodbath?

As per sources the reason for the sharp slump in the index is due to Tapal shifting from the public fund of their asset management company to a separately managed account/ privately managed account. 

A massive sell off was witnessed on Tuesday as Tapal redeemed their fund and into a separately managed account.

According to sources, Rs1.2 billion was moved from Tapal Tea to Tapal holdings.

Profit has reached out to Aftab Tapal for a comment but did not get a response until the filing of the story.

Sources claim the fund used were NAFA for conventional and Meezan for Islamic. NAFA took positions in banks while Meezan took positions in cement. 

However, when such massive selling occurs in a market, the market makes an uptick on the news of a buyback as investors rush to buy before the fund.

What were the financials?

In the notice, UBL revealed its financial results for the fiscal year 2021 and declared a final cash dividend for its shareholders amounting to Rs.6 per share in addition to an interim dividend of Rs.12 per share. This takes the total dividend per share of UBL to Rs.18 per share forming 180 per cent of the face value of its share (Rs.10).

The total Profit After Tax (PAT) clocked in at ~Rs.30.62 billion from ~Rs.20.79 billion last year. The Earnings Per Share (EPS) posted an increase of a massive 45% from 2020 – clocking in at Rs.24.84. 

One important thing to notice here is that UBL maintained a dividend pay-out of ~72.5 per cent which made a significant impact on the demand for UBL’s shares.

After the announcement, the market saw a major uptick with the KSE100 index closing at 45,132.92 points (+0.27 per cent), the KSE30 at 17,584.11 points (+0.41 per cent), and the KMI30 at 72,968.62 points (+0.33 per cent). 

From the minute the news unfolded to the closing time, the KSE100 posted 0.76 per cent returns, the KMI30 posted a 0.81 per cent return, and the KSE30 posted a 1.03 per cent return.

UBL’s share also went through a similar path with its open price dropping from Rs.144.99 to 144.25 by 13:51 today. After the announcement, share price skyrocketed to Rs.148 in just 8 minutes. The bank currently stands at Rs.149.81 with a Rs.4.87 (+3.36) change in its share price. 

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  1. Have you ever wondered who posts some of this stuff that you come across? Honestly the internet used to be like a different place, recently though it has turned around. What do you think?

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