By SHABBIR H.
May 22 - 28, 2000
Since the KSE-100 index movement remained directionless in this past
week and some of the companies also announced their results, this review mostly covers the
financial highlights. Another important observation is that third company is seeking
listing at local stock exchanges.
Al-Meezan Investment Bank has proposed to go public by floating shares
to the tune of Rs 180 million. At present the Bank has a subscribed and paid-up capital of
Rs 730 million. Apart from the proposed public issue, the Bank has apportioned 10 million
shares for its Employees Share Ownership Plan. With a total paid-up capital of rupees one
billion, the Bank will become the largest capitalized investment bank in Pakistan.
Al-Meezan is the third company to seek stock market listing this year.
The period ending December 31, 1999 was a year of consolidation. Sales
volume grew 5 per cent. Performance was affected by a depressed economic environment and
reduction in the international prices of tea and oil which led the Company to reduce
prices of its products in the domestic market. In other businesses, detergents, personal
products and ice cream, price increases were moderate. Operating profit was up 47 per
cent. This was due to measures which led to cost efficiency combined with restructuring of
their tea operations and a successful strategy to reduce stock level. The Company plans to
grow in excess of twice the GDP growth rates of the country. The management has
highlighted three avenues. Identifying growth potential in all the business areas.
Entering into new business through mergers and acquisitions and taking the Company's brand
into new distribution channels to reach consumers.
ENGRO CHEMICAL PAKISTAN
The Company releases its quarterly results. The review of first quarter
of the year 2000 results indicates a sharp fall of earnings per share to Rs 0.37 as
compared to Rs 2.04 for the corresponding period of last year. The sharp decline in
profitability is primarily attributable to 58 per cent increase in gas price and 8 per
cent drop in the selling price of urea. The steady decline in the price was due to dumping
of urea in the country and excessive inventory level in the country. During this period
the price per bag came down by Rs 27.00. During this period the demand for urea reduced by
14 per cent mainly due to shortage of irrigation water which led to a 17 per cent decline
in sales of the Company. Engro production was 6 per cent lower due to need to advance the
annual plant turnaround to attend to equipment malfunction issues. The fertilizer market
is expected to remain weak in near future. However, the GoP's decision to allow export of
100,000 tonnes of urea is expected to compensate for the decline in local demand.
PAKISTAN TELECOM. COMPANY
Pakistan Telecommunication Company Limited (PTCL) has announced nine
month financial results. Profit before tax shot up by nearly 47 per cent. This was mainly
due to a 13 per cent increase in revenue resulting from rationalization of local tariff,
increase in working lines and improved efficiency. However, it must be kept in mind that
with the falling revenue from international calls and end of monopoly by the end of year
2003 there is need to expedite completion of mobile phone systems.
ADAMJEE INSURANCE COMPANY
The largest general insurance company has registered a fall in profit
after tax. Analysts attribute this to reduction in capital gains posted during the year
and higher tax incidence. Now capital gains and dividend income are taxed at a higher
rate. However, the insurance business for the year 1999 grew as well as claims were at a
lower level. The Company has declared a total 22.5 per cent dividend for the year whereas
it had paid 30 per cent dividend for the year 1998.
FAUJI FERTILIZER COMPANY
Fuji Fertilizer by virtue of its own plant and being the key
stakeholder in FFC-Jordan controls the largest market share in fertilizer market in
Pakistan. Its earnings are expected to come under pressure due to technical problems being
faced by FFC-Jordan as it is sucking a lot of liquidity of the parent company. At the same
time Fauji Fertilizer is expected to be the largest beneficiary of the GoP's policy to
allow export of urea, indirectly, because FFC-Jordan's urea plant is located in the
vicinity of Port Qasim and also because its production is sold by the same brand name,
Sona. A profit determining factor to be watched in the forthcoming budget is feedstock