PSX issues a notice to PICT for unusual share price movement

ISLAMABAD: The Pakistan Stock Exchange (PSX) has issued a notice to Pakistan International Container Terminal (PICT) to explain the recent unusual movement in the prices of its traded shares. During a review of the trading data, the PSX observed substantial changes in PICT’s share prices over the past few days without any corresponding announcement or clarification from the company. 

As per PSX regulations, listed companies are required to promptly disclose any matter or development that could be relevant to unusual movements in their stock prices or trading volume. Alternatively, the company must state if it is not aware of any such matter or development. In cases where there is material or price-sensitive information that could affect market prices or volume, the company is obligated to share the information with the exchange for dissemination to all market participants.

As it unfolds, it becomes known that the recent surge in PICT’s share prices can be attributed to its handover to a UAE-based company. Before the handover, the share prices had been fluctuating between Rs 150 to Rs 175 per share for the past three years, but they dipped to around Rs 42 in early July 2023 when the company’s fate was uncertain. However, the share prices have now surged to over Rs 71 following the successful transaction of the company’s majority share to a new entity. This is a more than 70% increase and hence warranted a PSX intervention.

PICT was handed over to a joint venture between AD Ports Group, a majority shareholder, and Kaheel Terminals, a UAE-based company. The joint venture manages, operates, and develops the Karachi Gateway Terminal Limited (KGTL) at berths 6-9 at Karachi Port’s East Wharf. Abu Dhabi Ports (AD Ports), a leading port operator, signed a 50-year concession agreement with the Karachi Port Trust (KPT) for the handling of one of its port terminals in Karachi.

The actual reason, along with details, behind the unusual movement of share prices is yet to be ascertained as PICT is expected to provide a reply to the PSX’s notice. 

According to the company’s annual financial reports, PICT’s average gross profit margin for the past three years (2022, 2021, and 2020) was around 46% for 2020 and 21 but it reduced to around 42.9% in the year ending on 31st December, 2022. The company had an average share price margin of 27.5 % during the same period. The equity share decreased to 22.6 % during the financial year 2022, compared to approximately 30% in 2021 and 2020. The company’s directors attributed the slide in share prices, profit and equity to global economic headwinds, supply chain disruptions, higher inflation, and monetary tightening during these periods.

As far as operational importance is concerned, PICT is a vital container terminal located at Berths East Wharf within the Karachi Port. Established in 2002 by Premier Mercantile Services (Pvt.) Ltd., the terminal’s sponsor has a long-standing history of handling cargo at the Karachi Port since 1964. PICT was the first port infrastructure project in Pakistan to receive funding from the International Finance Corporation, the private sector arm of the World Bank, with a total investment of approximately $150 million, highlighting its significance in Pakistan’s maritime infrastructure.