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By SHABBIR H. KAZMI
Updated Aug  21, 2000

The US Dollar rate volatility has once again emerged and is expected to continue for a while. During this week the KSE-100 movement remained directionless but speculators were able to make money. They bought the shares at lower price and sold them off whenever prices became attractive. However, the prices moved in narrow bandwidth. As the PTCL is moving close to the deadline of loosing monopoly investors are getting a little concerned about its future income. Fauji Fertilizer share price has remained rather low for a long time. Karachi Stock Exchange has plans to introduce new KSE-100 index as the existing index does reflect the true state of affairs. The present index was introduced a couple of years back. It is expected that the revised index will be more reflective of market activity.

The half yearly results of commercial banks are expected to be in line with the performance of last year. Some analysts say that even if the profit is higher banks will prefer to make higher provisions. They would prefer to declare interim dividend particularly to build reserves at the year end. This expectation is based on a fact that now banks are in a race to enhance their paid up capital to one billion rupees. Besides, the performance of a bank is gauged on the basis on stability of earnings least surges.

ENGRO CHEMICAL PAKISTAN

The Company has released accounts for the half-year ending June 30, 2000. Demand for urea fertilizer in Pakistan during this period declined by 7 per cent mainly due to inadequate supply of irrigation water. The profitability of domestic urea industry also came under pressure due to increase in gas price and dumping of urea. The profit after tax for the year 2000 was Rs 73 million compared to Rs 385 million posted for the last year. In 1999 the Company benefited by Rs 114 million on account of a refund from the central bank and an exchange gain on dollar deposits. Engro declared an interim dividend of Rs. 2.00 per share (10%) despite reduced profit to maintain the dividend at the same level as for the last year due to the availability of reserves. The Company set a new record of urea production at 394,000 tonnes 13 per cent higher than last year's production. Urea sales on the other hand declined by 15 per cent at 276,000 tonnes. The sales volume and margin of imported phosphatic and potassic fertilizers also declined substantially. The outlook for the second half of 2000 appears better due to an improvement in domestic demand and some export of urea. The significant strengthening of international urea prices has made it possible to pass on the more recent gas price increase to farmers.

FAUJI FERTILIZER

Despite lower earnings for the first half of the year 2000, the Company has declared second interim dividend of 20 per cent total 40 per cent so far. It appears that the persistent increase in gas price resulting from lower margins has obliged the company to cutdown dividend payment. It had declared 90 per cent dividend for 1998 which came down to 80 per cent for 1999 and analysts forecast for 70 per cent dividend for the year 2000. The higher dividend payout was possible because the Company has been able to pass on the increase to farmers. Both Fauji and Engro have submitted their expression of interest in the privatization of Pak Saudi Fertilizer having a capacity of over 550,000 tonnes per annum for urea production.

SHELL PAKISTAN

The Company has posted over 47 per cent increase in earnings for the year ending June 30, 2000 over the profit for the previous year. It declared a final dividend of Rs 12 per share making the total dividend paid for the year Rs 16.5 per share. This was possible due to higher sales and huge rise in other income. Sales increased by over 24 per cent mainly on the back of higher price. Operating expenses also came down by 3.3 per cent. Other income increased by 71 per cent. These include non fuel retail services income and write back of provisions. Whereas other charges went up by 22 per cent. The Company is gradually increasing its market share.

METROPOLITAN BANK

The first half results for the year 2000 of Metropolitan Bank show 6.8 per cent growth of profit before tax compared to the profit for the corresponding period of last year. While the profit for the year 1999 was Rs 216.5 million profit for 2000 is Rs 235.2 million. However, profit after tax was higher by over 19 per cent. The Bank had bought two branches of Trust Bank of Kenya in September 1999 at US$ 175,000. While the earnings from mark-up etc. was reduced, the spread improved. Similarly fee based income/commission also increased but income from investment in securities came down.

BOLAN BANK

The Bank posted profit before tax of Rs 10.8 million for the first half of the year 2000. fifty per cent higher than the profit posted in the corresponding period of the previous year. The earning per share came to Rs 0.10 on 50.8 million outstanding shares.

MOVEMENT AT A GLANCE

SCRIP

HIGH

LOW

TURNOVER (SHARE MN)

CLOSING PRICE

PTCL

26.80 26/25

81,044,500

26.55

Hubco

16.85 16.60

45,525,500

16.60

Fauji Fertilizer

42.65

41.90

7,360,000

42.30

Engro Chemical

54.30

53.65

12,270,200

53.65

Metropolitan Bank

17.00

15.80

17,000

15.80

Shell Pakistan

320.75

315.00

1,240,600

315.00

Pakistan State Oil

180.10

178.10

54,943,700

178.10