The CY20 remained a challenging year for the whole world. The outbreak of Covid-19 infected many people around the globe with few losing their battle against the virus. Further, the lockdown in the most parts of the world halted economic activities and resulted in a loss of employment for many. However, the story of Pakistan is a bit different. Although the country’s economic growth turned negative during FY20, Pakistan managed to deal much better than most of the developed countries to limit the virus spread and its economic effect. Thus, the KSE-100 index provided a positive return of 7.4% in CY20 against the return of 9.9% in CY19. In USD terms, the index provided a return of 3.5% during CY20 as compared to the negative return of -1.5% in CY19.
The monetary and fiscal packages during the year helped subside the devasting effects of Covid-19 on the economy. Therefore, the country resumed the track for strong economic growth as depicted by the improvements in most of the major economic fundamentals. Further, the resumption of IMF program will also restore the confidence of foreign investors as well as major multi-lateral agencies on the future economic prospects.
The foreigners remained prudent as they sold shares of worth USD 571.5 million during CY20. The crash in international oil prices, spread of Covid-19 around the globe and uncertainty regarding economic outlook forced foreigners to divest shares. Among sectors, the Banking sector witnessed the largest selling (USD 168.1 million) followed by Oil & Gas Exploration companies (USD 119.6 million) and Cements (USD
100.9 million).
Amongst the best performing sectors of the index, Vanaspati & Allied industries remained in limelight because of strong demand outlook and increased palm oil prices followed by Technology and Cements. The lockdown in the country spurred the need for technological propagation, hence, the sector remained prominent throughout the year. Further, the announcement of construction package and reduction in the policy rate stirred enthusiasm amongst all the construction and its related sectors. On the other hand, the reduction in the policy rate and ban on dividends for two consecutive quarters took the toll on the banking sector.
Cyan’s portfolio increased by 39.30% during the year against 7.41% return posted by the KSE-100 Index. Average exposure to equities during the year remained at 97%, whereas 3% was invested in cash and debt securities. The equity portfolio was aligned towards high growth investments and to this effect significant investments were made in Technology and Vanaspati & Allied industries.
Achieving Milestones
Nine years ago, the market capitalization of the Company was PKR1.95 billion, which has increased to PKR 2.27 billion in 2020. During this period, the Company managed to pay a total dividend of PKR 5.6 billion providing the shareholders with a total return of 303% The benchmark KSE-100 Index provided a return of 286% during the same period reflecting Cyan’s outperformance of 17% points.
Engaging New Opportunities
We are also aggressively looking to explore corporate advisory services for adding new stream of revenue.
Economic Outlook
Although the country’s GDP turned negative for the first time in sixty-eight years, the economic recovery on the back of pent-up demand after easing in lockdown has exceeded expectations. There is stark improvement in the external sector where the country managed to post Current Account surplus of USD 1.1 billion during 1HFY21 against the deficit balance of USD 2.0 billion in the corresponding period last year. The remittances for each month during the current fiscal year have remained above USD 2 billion mark.
The debt relief facilities provided by G20 countries and other institutional lenders have provided much needed relief to the balance of payment position. Further, the emergency lending programs offered by IMF bolstered the foreign exchange reserves. As a result, the country’s foreign exchange reserves increased to USD 20.5 billion at the end of CY20 as compared to USD 17.9 billion at the end of CY19.
The fruit of accommodative monetary policy stance has begun to offer its benefits. The large-scale manufacturing has increased by 8.16% during 1HFY21 as compared to the corresponding period last year. The auto sales observed an increase of 18% YoY during 1HYF20. The cement dispatches clocked in at 28.56 million metric tons during 1HFY21 as compared to 24.75 million metric tons in 1HFY20, depicting a growth of 15.4% YoY. Thus, the uplift in economic activities in all the major sectors is started to surface and is expected to continue in the foreseeable future.
Acknowledgments
I would like to thank all our Shareholders and the Board of Directors for their immense support. The Company’s accomplishments and present standing could not have been possible without the commitment and efforts of our employees who deserve full compliment. I am confident that the team will continue to grow and constantly deliver on expectations of all stakeholders.
Mohammad Shamoon Chaudry
(Director / CEO)
Karachi: March 15, 2022
Cyan Limited
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Dawood Center, MT Khan Road, Karachi – 75530
+92-21-35634290-3, 35684019, 35681491 & 35689339