Updated Sep 25, 2000
The market remained devoid of any news which could trigger
even speculative buying. Investors preferred to sit on the sideline and follow
wait and see policy. An important announcement is that after September 29, 2000
transaction in HUBCO shares could not be executed at Lahore and Islamabad stock
exchanges. This may cause some selling pressure in the scrip and may result in
decline in quoted price as well as decline in KSE-100 index.
For a long time trading in HUBCO has been driven by rumours
and views. Its fundamentals have gone weaker due to the delay in resolving the
controversy with WAPDA. The resolution may get difficult due to persistent
increase in crude oil price — ultimately affecting WAPDA and its consumers.
Some analysts say that in Pakistan the largest turnover in HUBCO, apart from its
large free float, has been due to the ongoing controversy. They also go to the
extent of asking that if the issue is resolved how would the market behave?
However, it is certain that there will be surges of lesser magnitude in KSE-100
and the daily trading may go down further.
Ironically the two oil marketing companies, Shell and PSO,
have been revising furnace oil price too frequently. Such a policy is creating a
lot of confusion for the analysts in preparing any forecast for the two
companies enjoying keen interest of investors and speculators.
Badla rate is also at a very low at present. This clearly
indicates that investors are not willing to take positions. While it is commonly
said that the lower interest in equities market is due to prolonged negotiation
with the IMF, it carries hardly any weight. It is more or less clear that
Pakistan would get the assistance and quantum will also be substantial.
Announcement of textile policy has been delayed. While APTMA
seems to be exerting all its pressure for more negotiating concessions, it tend
to forget the forecast of 16 million bales for the new crop. The higher output
will certainly plunge the price and compensate for the increase in utility
INDUS MOTOR COMPANY
The Company has released the financial results for the year
ending June 30, 2000. It has also declared 15 per cent dividend. Whereas, it had
declared 20 per cent dividend for the year 1999. While there was increase in net
sales there was also an increase in cost of sales which resulted in reduction in
gross profit. There was reduction in financial and other charges. Profit before
tax for the year 2000 was Rs 280 million as compared to a profit of Rs 501
million for the previous year.
PAKISTAN INDUSTRIAL LEASING
Revenue of the Company for the year ending June 30, 2000 came
down to Rs 592 million as compared to a total of Rs 653 million for the previous
year. There was decline in income from lease financing and short-term placement.
However, other income jumped from Rs 1.6 million for the year 1999 to Rs 6.6 for
the year under review. There was also reduction in total expenditure and
provisions which provided some respect to profit before tax which was nearly Rs
Apparently after the Company posted Rs 2.3 billion loss for
the first half of the year 2000, efforts were said to be made to ask the GoP to
impose regulatory duty on the import of DAP type fertilizer. It is true that
global prices of DAP have come down but this was not the only factor responsible
for the huge losses. Another legacy that fertilizer plants make huge profit due
to availability of gas at subsidized rate does not seem to be working in case of
FFC-Jordan. While the imposition of regulatory duty may help the Company in
minimizing its losses, it would be against the interest of farmers. As such
farmers in Pakistan do not use balanced doze of fertilizer and with the increase
in DAP price the balance would be further disturbed.
With the introduction and stringent enforcement of new
exposure limits and reduction in average daily trading volume at the three stock
exchanges, there has been a marked decrease in daily turnover of Fauji shares.
Another factor which seems to be working against the Company is its huge
investment in FFC-Jordan and the need of FFC-Jordan for the induction of fresh
capital. If FFC-Jordan increases its paid-up capital through Right Shares it
will have a negative impact on always cash rich Fauji.
The Company has posted an overall improvement for the year
ending June 30, 2000 as compared to the previous year. The Company announced
final dividend of 22.5 per cent. It has already paid interim dividend. A 10 per
cent bonus share was also announced. All this was possible due to nearly double
the profit posted for the year 2000 as compared to the previous year. Profit
after tax for the year 2000 was Rs 82.8 million as compared to a profit of Rs
44.8 million for the previous year. This was despite the increase in operating
expenses and financial charges.