South Asia Investor Review

Renewed construction boom in Pakistan has helped the nation's cement producers significantly increase their sales and profits. Year-over-year, income at Lucky Cement, Pakistan's largest producer of building materials,  is up 33% while DG Khan Cement, second largest cement company, has quadrupled its profits. Source: Credit Suisse Report on Pakistan Cement Sector Cement production, an important barometer of national economic activity, was up 8% in 2011-12, according to a research report compiled by a Credit Suisse analyst . CS analyst Farhan Rizvi says in his report that "higher PSDP (Public Sector Development Program) spending has led to a resurgence in domestic cement demand in FY12 (+8%) and with increased PSDP allocation for FY13 (+19%) and General Elections due in Feb-Mar 2013, domestic demand is likely to remain robust over the next six-nine months". Nagan Chowrangi Interchange in Karachi  Ongoing public sector projects include new large and smal...

Media coverage of Pakistan's brisk Eid-ul-Azha livestock sales are a reminder that the nation is among the world's  top ten consumers of goat meat  and beef based on  USDA data . Pakistan's goat meat consumption of 779,000 tons in 2011-12 ranks it among the top 3 in the world. 1.7 million tons of beef consumption in Pakistan is ranked  9th among beef consuming nations. In addition, 834,000 tons of poultry meat consumption puts it among world's top 20. Source:  Economic Survey of Pakistan 2011-12 Along with rising meat consumption, there has also been a big surge in milk consumption with the ongoing  livestock revolution in Pakistan . Pakistanis consumed nearly 39 million tons of milk in 2011-12, according to  Economic Survey of Pakistan . This translates into 223 Kg of milk consumption per person which is about the same as the  developed world's per capita milk consumption  and more than twice that of neighboring  India's 96 k...

US is providing $80 million to create multiple VC and PE funds in Pakistan. These funds will be run by professional fund managers who will be required to manage and raise additional money from other sources to start multiple funds. US Embassy in Islamabad told Express Tribune that they expect that "there will be substantial interest from local, regional and international investors”. Polish Model: The initiative is based on the Polish American Enterprise Fund model which was started with $140 million from US government and has now grown to several billion dollars of investable funds, according to Express Tribune . US AID's Theodore Heisler said that co-investment was essential in bringing the size of each fund to a level where it can cover operating expenses. The funds will focus on investing in small and medium entrepreneurial companies which, the US Silicon Valley experience has demonstrated, are major drivers of innovation, economic growth and job creation. Histo...

US venture investor Tim Draper, Swiss food giant Nestle, and American beverage titan Coca Cola are investing heavily in Pakistan's agribusiness. Silicon Valley private equity investor Tim Draper, a well-known international venture capitalist, is quietly investing in Pakistan's agribusiness, the largest provider of food commodities in the Middle East, according to San Francisco Examiner . The share of livestock in Pakistan's agriculture output nearly doubled from 25.3 percent in 1996 to 49.6 percent in 2006, according to FAO . As part of the continuing livestock revolution, Nestle is investing $334 million to double its dairy output in Pakistan, according to Businessweek . Reuters is reporting that the company has already installed 3,200 industrial-size milk refrigerators at collection points across the country to start the kind of cold storage chain essential for a modern dairy industry, and give farmers a steady market for their milk. In another development on th...

A string of strong earnings announcements by Karachi Stock Exchange listed companies and the Central Bank's 1.5% rate cut have helped the KSE-100 index gain 32% year to date. In the week ended on August 16, the benchmark index surged by 238.59 points, or 1.61 percent, to 51-month high of 15,000.08 points. This was the highest close since April 30, 2008. Strong Earnings: Last week, KSE-listed Indus Motors announced 57% jump in profits on record sales of Toyota Corolla cars.  It was followed by Lucky Cement Ltd. (LUCK), Pakistan’s largest producer of the building material, announcing 71 percent surge in profits to a record as an increase in domestic sales offset a decline in exports. Pakistan Petroleum Limited (PPL), the country’s second largest oil and gas explorer, said its profits soared 30% to Rs40.9 billion in fiscal 2012. Strong earnings have also been reported by Unilever Foods and Bata shoes in the last few days. Best Performing Market:  So far in 2012 Pak...

Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India over the last two decades. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report titled "Asia's Emerging Middle Class: Past, Present And Future. New York Times' Sabrina Tavernise described the rise of Pakistan's middle class in a story from Pakistani town of Muzaffargarh in the following words: For years, feudal lords reigned supreme, serving as the police, the judge and the political leader. Plantations had jails, and political seats were practically owned by families. Instead of midwifing democracy, these aristocrats obstructed it, ignoring the needs of rural Pakistanis , half of whom are still landless and desperately poor more than 60 years after Pakistan became a state. But changes began to erode the aristocrats’ power. Cities sprouted, with jobs in construction an...

Indus Motor Company earned Rs. 4.3 billion in net income on sales of Rs. 75 billion in 2011-12, representing an increase 57% in net income and 25% in total revenue over previous year. The company that is 37.5% owned by Japan’s Toyota Motors sold over 55,000 cars during the financial year that ended on June 30, 2012, its highest ever for a single year. Both revenues and profits were the highest in the company’s history in Pakistan, according to media reports . Pakistan's total car market was about 235,000 units in July 2011-June 2012 period. The domestic auto industry sold 178,753 cars, 23% more than last year. The rest of the demand was met by imports of 55,000 cars in fiscal year 2012, representing an increase of 50% over last year. In addition to durables like automobiles, companies in FMCG (fast moving consumer goods) sector are also expected to report strong sales and earnings this year. Engro Foods has emerged emerged as the supercharged FMCG player with over 400 per...