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By SHABBIR H. KAZMI
Updated Jul 03, 2000

Daily trading volume on June 30, was only 57 million shares — below five-year low. The KSE-100 index closed at 1520 due to a loss of 8.17 points. The low trading volume was expected due to financial year end. The next week may stir some massive buying in Sui Twins due to 15 per cent increase in gas tariff. However, one should not forget that this increase in tariff had become necessary due to persistent higher price of crude oil during last one year. Therefore, the advantage of tariff hike will be only marginal. Amalgamation of Bank of America's Pakistan operations into Union Bank may see enhanced activity in its shares.

Trade policy for the year 2000-2001 has also outlined the prospects for textile industry but all await the GoP's Textile Vision 2005 to be announced in mid August. However, there is a word of caution for banks, not to get trapped in indiscriminate lending to textile mills.

The banks are required to see the cash flow of the borrowers rather than any other plan. Many textile units, particularly those established in nineties, suffer from huge losses due to very high depreciation and financial charges.

KOHINOOR SPINNING MILLS

The Company posted over Rs 922 million sales for the year ending September 31, 1999 but incurred a loss before tax of Rs 150 million. The Company posted a gross profit of Rs 32 million. But selling and administrative expenses were Rs 79 million. If one added Rs 107 million financial charges to this the total expenses were Rs 186 million as against an operating profit of Rs 32 million. Another important observation is that its current assets were about Rs 330 million as against current liabilities of Rs 802 million. Interestingly auditors of the Company have not given their qualifying remarks and considered it as a going concern.

PAKISTAN STATE OIL COMPANY

As a result of fire at Kuwaiti oil refinery and its inability to supply POL products, profit margin of the largest oil marketing company are expected to come under pressure for the time being. Commenting on the profitability of the Company, as a result of deregulation of furnace oil import, PSO has the largest potential to gain because of its largest storage facilities. One can say this only because, onwards it will be free to determine handling and storage charges. However, this advantage may not be available for a long time as other oil marketing companies also have the option to increase their storage facilities.

HUBCO

The GoP has not come out with much awaited counter offer to HUBCO's proposal. However, knowing the stance of chairman WAPDA, one can only expect a demand for reduction in bulk power purchase tariff. Some analysts believe that reduction in tariff is the only alternative available to HUBCO as the financial condition of its sole customer, WAPDA, is getting from bad to worse due to persistent increase in fuel prices. Any reduction in gas and fuel oil price cannot be expected in the near future due to OPEC policy — maintaining crude oil price in the bandwidth of 20 to 25 dollar per barrel. At the same time, these analysts say that unless WAPDA is able to reduce its T&D losses by at least 30 per cent, its financial health cannot be improved — even if the current bulk power purchase tariff is reduced to half.

PARKE DAVIS

Pfizer inc. a company incorporated in the US has acquired Warner-Lambert Company also incorporated in the US. Warner-Lambert, US is the owner of Parke Davis & Company of the US which holds 75 per cent of the issued shares in the capital of Parke Davis & Company Limited in Pakistan. As a consequence of this change the ultimate holding company of Parke Davis & Company in Pakistan, is now Pfizer Inc. of the USA. Incidentally Pfizer also has its stake in Pakistan. Therefore, it is expected that the two companies operating in Pakistan independently, Parke Davis and Pfizer may also be merged subsequently.

BATA PAKISTAN

The year 1999 proved to be an excellent period for the Company as its sales exceeded Rs 2 billion. As a result the Company posted about Rs 34 million net profit as against a loss of over Rs 124 million for the year 1998. The Company declared 20 per cent cash dividend. This could have been higher had company's cash flow not affected due to higher receivables. The Company is expected to see fierce competition in the near future due to overall recession in the country and efforts by all other footwear manufacturing companies to maintain their market share. However, the Company enjoys edge over other manufacturers due to a large number of outlets and extensive dealer network.

HIGHNOON LABORATORIES

The Company has declared 15 per cent cash dividend and 5 per cent bonus for its shareholders for the year ending December, 31, 1999. The year 2000 is expected to witness better profitability as the GoP has decided to allow increase in prices of pharmaceutical products.

 

MOVEMENT AT A GLANCE

SCRIP

HIGH

LOW

TURNOVER (SHARE MN)

CLOSING PRICE

PTCL

27.30

27.00

90,512,500

27.00

Hub Power Co.

14.95

14.55

92,688,500

14.55

Pakistan State Oil

165.10

160.55

51,590,500

162.65

Dawood Hercules

80.00

80.00

100

80.00

Highnoon Lab.

13.00

12.45

3,000

12.50

Kohinoor Industries

3.80

3.50

3.50

Al-Meezan Investment Bank

11.50

10.75

21,000

11.50