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  1. Stock market at a glance
  2. Finex week
  3. Stock Watch

Jun 05 - Jun 11, 2000

This week witnessed auction of the card of a member in Karachi and suspension of cards of six members in Lahore. This should not be surprising for any one as we have been expressing our apprehensions and warning about the bubble. It was the logical conclusion of events that had been going on. No one, among the regulators of the financial sector, i.e. the Security and Exchange Commission of Pakistan, the central bank and the three stock exchanges took a note. By the time Karachi Stock Exchange started looking and enforcing members' exposure limit the bubble had already busted. Though, the efforts were made to save the investors from the adverse consequences of default of members — estimated to be more than a dozen, the members of Lahore Stock Exchange are still not happy with the attitude of the management of Karachi Stock Exchange. Contrary to this, one may say that defaulting members should have not been given that kind of a sympathetic treatment.

Most of the favourites and volume leaders have witnessed decline in share prices. Since this decline was without any change in economic fundamentals, it will be good to talk about some of those companies which may have small capital but enjoy enormous potential for growth. A review of some of the key players from textile and sugar industries have posted real good results. Textile industry was able to post good results mainly due to enhanced availability of cotton and its modest price — improving the capacity utilization of most of the units.


The Company is located in Gadoon Amazai. Since the various exemptions and incentives for the area have lapsed, management have chalked out a complete plan to be more competitive and maintain its profitability. It is evident from the increase in net sales revenue and earnings per share for six months period ending March 31, 2000 over the corresponding period of the previous year. While net sale increased by Rs 40 million and gross profit enhanced by Rs 24 million, the gross profit margin increased from 9 per cent to over 13.2 per cent. This translated into an increase in earnings per share from Rs 1.59 to Rs 2.41.


The Company needs to be looked at more minutely by other sponsors of textile mills. Its net sale increased from 70 million in first half of the pervious year to Rs 372 million for the six-months period ending March 31, 2000. The net result was profit before tax jumped from Rs 1.9 million to Rs 28 million. The other two textile companies belonging to the group have also performed better during this period. The management has attributed excellent results to improved availability of inputs and their prices. They have also expressed the hope that better availability of inputs can have an overall better impact on the spinning sector of the country.


The adverse impact of poor sugarcane availability and its higher prices and higher incidence of excise duty and sales are evident when one looks at the half yearly accounts of the Company. Despite an increase in gross sales from Rs 716 million in 1999 to Rs 1,015 million for the period ending March 31, 2000, operating profit increased from Rs 80 million to Rs 108 million during the corresponding period. However, profit after tax improved from Rs 20 million to Rs 30 million during this period mainly due to significant increase in financial cost.


While the number of days crushing was done were almost the same the quantity of sugarcane crushed came down from 804,195 tonnes to 489,252 tonnes. This caused in reduction in sugar produced from 60,090 tonnes to 36,798 tonnes. The availability of sugarcane was 30 per cent lower this season which compelled the management to close down the mills at least 30 days earlier than the normal season of 160 days. The average sugar recovery was 7.62 per cent during the season.

According to some sugar sector experts sugar mills located in Punjab despite having higher crushing capacity cannot earn good profit due to much lower sugar recovery percentage as compared to Sindh. This is due to unfavourable climatic condition of Punjab — high temperature and low humidity. Sugarcane demands high temperature with high humidity. That is the reason that average sugar recovery in Punjab is around 8 per cent whereas it is as high as 11 per cent in Sindh.


The Company has declared 20 per cent interim cash dividend based on half yearly results for the period ending March 31, 2000. During this period the Company had registered 22 per cent increase in net sales and 19 per cent growth in profit after tax. This translated into earning per share of over Rs 8.08 as compared to that of Rs 6.81 for the corresponding period of the previous year.




Turnover (Share Mn)

Closing Price

Saif Textile

15.50 14.00



Dewan Mushtaq




Dewan Sugar

15.75 15.00


Haseeb Waqas Sugar





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