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A weekly review of fundamentals enjoyed by the blue chips

By SHABBIR H. KAZMI
Updated Sep 04, 2000

The market is once again being driven by the speculators. The message responsible for buying spells in HUBCO is that Company and the GoP are close to reaching a resolution. The scrip price has been showing persistent improvement. However, some analysts express their apprehensions and warn that profit-taking may start any time. Another reason for the upward movement in equities market is said to be the reducing dollar volatility. There seems to be lesser pressure on limited foreign exchange reserves due to recent financing arrangement for crude oil import with Islamic Development Bank, reduction in edible oil import and virtually no import of wheat for the time being.

ADAMJEE INSURANCE COMPANY

The Company has posted a net profit of Rs 137 million for the first half of the year 2000. The earnings growth was largely on the back of capital gains of around Rs 75 million realized during the bull-run in the equities market. An interim dividend of Rs 1.5 per share, same as last year was announced. Net premiums registered a growth of 14 per cent driven largely by double-digit growth in overseas business. Whereas, domestic business growth was sluggish with industry saturation being the key factor. Dividend income increased with improved corporate profitability. Net claims increased by 15 per cent due to adverse overseas claims. Claims ratio deteriorated compared to last year. Management expenses and commissions increased by 11 per cent and profit before tax at Rs 219 million was 54 per cent higher and profit after tax at Rs 137 million was 34 per cent higher. Currently the scrip is traded at a premium keeping its earnings forecast in mind.

PACKAGES

The Company announced its financial results for the full year ending June 30, 2000 registering increase in net profit mainly due to reduction in financial and other charges and a lower effective tax rate. The Company announced Rs 2 per share dividend and 10 per cent Bonus shares. The results are in line with the estimates of analysts. While the sale increased by 6 per cent, cost of goods sold increased by 13 per cent. The scrip is being traded at a discount to its fair market price estimates.

Japan Power Generation

Japan Power Generation has signed the Memorandum of Understanding with WAPDA on May 2, 2000. The Commercial Operation Date (COD) agreed with WAPDA was March 14, 2000. The average revised tariff is 4.8 cents/kwh whereas the original rate was 6.01 cents/kwh. The levelized rate is 4.30 cents/kwh as compared to the previous 5.5 cents/kwh. The reduction in tariff was possible mainly due to extension in agreed period from 22 years to 30 years and plant factor at 60 per cent.

PHILIPS ELECTRICAL INDUSTRIES

The Company has posted loss before tax of nearly Rs 39 million during the first half of the year 2000 as compared to a profit of Rs 2,8 million for the corresponding period of the year 1999. While there was a reduction in sales the higher cost of sales resulted in lower gross profit a decline from over Rs 300 million to Rs 266 million. Other income during the period under review were Rs 3 million as compared to Rs 1.7 million for the first half of the year 1999. There was also an increase in financial and other expenses as compared to the previous year.

REFRIGERATORS MANUFACTURING CO.

The Company was also a victim of the depressed economic condition in the country and sales during the first half of the year 2000 were lower as compared to the corresponding period of the previous year. The Company has posted a loss before tax of Rs 3.8 million as compared to a profit of Rs 4.6 million for the corresponding period of the previous year. However loss after tax was around the same for the previous year due to reduction in tax liability which came down from Rs 13 million for 1999 to Rs 4.6 million for the period under review.

BATA PAKISTAN

Despite a slight increase in net sales there has been a decrease in profit before tax for the first half of the year 2000. To some extent it was due to increase in financial and other charges which went up from Rs 33 million for the year 1999 to Rs 37 million for the period under review. Despite posting a profit after tax of over Rs 21.7 million the Company has not declared any interim dividend.

PRIME COMMERCIAL BANK

There was an increase in profit after tax for the first half of the year 2000. While there was a reduction in mark up earned, the Bank was able to post higher profit before tax due to reduction in cost of funds and increase in other income. Mark up earned during the six months of the year 2000 was Rs 526 million as compared to Rs 588 million for the previous. The Bank managed to curtail its cost of fund from Rs 421 million for the year 1999 to Rs 348 million for the period under review. As a result of enhanced income profit before tax improved from Rs 91.7 million for the previous year to Rs 101.8 million for the year 2000. The Bank has not declared any interim dividend.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

TURNOVER
 (SHARE MN)

CLOSING 
PRICE

Packages Ltd.

70.00

68.00

162,000

70.00

Hub Power Co.

17.30

16.55

161,093,000

17.20

Adamjee Insurance

63.3062.40

9,846,000

62,80

 

Japan Power

5.35

5.25

716,500

5.35

Phillips Electrical

72.85

70.00

48,600

70.50

Ref. Mfg. Co.

8.95

8.95

8.95

Prime Bank

4.45

4.05

8,000

4.45