. .



A weekly review of fundamentals enjoyed by the blue chips

By SHABBIR H. KAZMI
Updated Oct 09, 2000

Not only that HUBCO remained the centre of attraction, both news and rumours, moved its share price in either directions. It was apparent that no one was willing to miss a chance of making quick money and profit taking was too evident. The delay in the arrival of HUBCO team has provided enough grounds, to the speculators, to continue their activity.

Another important news of the week was the strong rebuttal by Karachi Stock Exchange regarding the contents of inquiry report prepared by Securities and Exchange Commission appointed committee. This committee was investigating the reasons for the crisis in stock market. On the basis of this report show cause notices were issued to 14 brokers from Karachi and Lahore Stock Exchanges. In an aftermath transactions in HUBCO from Lahore and Islamabad were also stopped during the last week of September.

The exchange rate volatility drained some liquidity from equities market. Even the interventions and other steps taken by the central bank could not curb upward movement of exchange rate both in kerb and interbank markets. At the fag-end of the week the exchange rate volatility seems to have been reduced. Unless the IMF Board formally approves and also fix disbursement dates, it would be very difficult for the central bank to contain dollar volatility which would continue to eclipse the equities market. At the same time the cash liquidity in banking system has been reduced due to new instructions of the central bank.

FIRST INTERNATIONAL INVESTMENT BANK

The Bank has registered over three fold increase in its profit before tax and announced 10 per cent dividend. The Board of Directors has also recommended to issue bonus shares from the share premium account in the proportion of one share for every nine shares held (11.11%). The total income for the year ending June 30, 2000 was Rs 419 million as compared to that of Rs 488 million for the previous year. However, the higher profit was due to a substantial reduction in expenses from Rs 477 million for the year 1999 to Rs 386 million for the year under review. The higher profit was despite the increase in financial charges, administration and operating expenses and a provision of over Rs 2.5 million for diminution in the value of trading investment. Provision for potential lease losses and provision under SBP's NBFIs regulations against finance provided were significantly lower.

Al-MEEZAN INVESTMENT BANK

The Bank did not pay any dividend for the year 1999 but has announced 15 per cent dividend for the year ending June 30, 2000. While there was increase in income there was an increase in expenditures also. Expenditures jumped from Rs 50 million for the year 1999 to Rs 118 million for the year under review. The increase in amortization of cost incurred on currency swap arrangements and administrative expenses eroded a large portion of the enhanced income. The Bank had made provision for diminution in the value of marketable securities amounting to Rs 3.7 million for the year 1999 whereas, it had written back Rs 3.5 million under this head during the year 2000.

SAUDI PAK LEASING COMPANY

The company has released financial results for the year ending June 30, 2000 and announced 12.5 per cent dividend it had also paid the same percentage of dividend for the previous year. While there was increase in income there was also increase in expenditure. However, operating profit was higher than the previous year, despite an increase in financial and other charges. The Company managed to curtail provision against potential lease losses but provision for diminution in the value of investment was Rs 8.3 million, whereas an amount of Rs 390,000 was written back under this head during the year 1999. The higher profit after tax for the year 2000 enabled the Company to transfer Rs 28 million to reserve for deferred taxation. A sum of Rs 16.6 million was transferred to this head during the year 1999.

SECURITY INVESTMENT BANK

For the period ending June 30, 2000, the Bank has surpassed all its previous records of profit before and after tax. The Bank has made the achievement at a time when economy is going through a difficult time. The shift in GoP policies brought many changes in its business and investment strategies of the Bank. The usual lending to corporate sector was diverted towards investment in quoted debt instruments and government papers. Despite higher profit, the Bank skipped paying any dividend for the year 2000, whereas it had paid 10 per cent dividend for the previous year. The Board of Directors has proposed 22 per cent bonus issue to consolidate capital base of the Bank. An interesting observation is jump in other income from Rs 0.926 million in 1999 to Rs 3.267 million for the year 2000. Similarly, while the Bank had made a provision for diminution in the value of investment of Rs 1.258 million for the previous year, the provision for the year 2000 came down to Rs 0.454 million.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

TURNOVER
 (SHARE MN)

CLOSING 
PRICE

Hub Power Co.

28.80

19.40

473.94

19.60

PTCL

26.25

25.65

90.623

25.65

Pakistan State Oil

174.70

172.50

32.666

172.50

Shell Pakistan

305.00

302.70

0.197

303.00

FFC-Jordan

8.25

7.87

14.432

7.85

Source IP Securities