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A weekly review of fundamentals enjoyed by the blue chips

By SHABBIR H. KAZMI
Updated Nov 06, 2000

Increasing uncertainty regarding IMF funding ahead of the expiration of the rescheduling period is likely to continue to bear down on market sentiments for couple of weeks. By keeping T-Bill cutoffs at more or less the same level, the central bank has indicated that interest rates will be maintained. The SBP, in an attempt to curb the depreciation of the rupee, has also resorted to a tighter monetary policy by increasing CRR and the discount rate. According to some analysts the SBP is unlikely to allow further easing of liquidity to guard against speculation in the interbank foreign exchange market.

Lack of news on the HUBCO front is creating difficulties for those who have taken long positions in anticipation of some positive developments. High Badla rates are a confirmation of this overbought position. Similarly, PSO has proved to be extremely erratic and positions at higher levels raise concern. The market may witness strong corrections as there is very little institutional participation. With the usual volume leaders showing little volatility, there may not be many speculative trading opportunities in the following weeks.

The Board of Directors of Ahmed Oriental Textile Mills have decided to voluntary de-list the securities of the company. The Sponsors/Directors have decided to buy back the shares at the rate of Rs 8.50 per share. The reasons for the voluntary de-listing are: 1) the prevailing stock market conditions and declining price of the scrip, 2) change of status would increase the earnings and decrease the financial cost.

 

NATIONAL FOODS

The Company has released its annual accounts for the year ending June 30, 2000. The corporate policies, procedures and systems introduced last year have helped in realization of rupee one billion sales target. Gross sales growth was 25 per cent of which local sales grew by 27 per cent and the exports registered a 14 per cent increase. The overall cost of sales came down that led to a profit before tax of Rs 25.578 million a growth of 75 per cent over last year. Similarly, due to major savings in variable costs, gross profit also increased by 43 per cent. Profit before tax for the year 2000 came to Rs 25.578 million whereas the Company had posted a profit of Rs 14.593 million for the previous year. The Company has declared a total dividend of 21.5 per cent for the year 2000 as against a dividend payout of 14 per cent for the previous year. The earning per share for the year 2000 worked out to Rs 4.35 as compared to that of Rs 2.69 for the previous year.

(Readers are requested to please ignore the details published in our issue number 43. We regret any inconvenience caused to the management and stakeholders in the Company) .

 

DEWAN SALMAN

The Lahore High Court has approved the acquisition of Dhan Fibres by Dewan Salman, making the latter the largest PSF producer in the country. Earlier, a shareholder, holding 12 per cent shares of Dhan, had opposed the acquisition on grounds of an unfavourable swap ratio. Nichimen Corporation also challenged the acquisition on grounds that Chakwal Group was disposing shares pledges against a loan from it. Concerns were also voiced by the Monopoly Control Authority regarding Dewan's market share after the acquisition market share of Dewan will increase from current 28 per cent to 51 per cent. The advantage will continue till year 2002 when additional capacity of Ibrahim Fibres comes on line.

 

HONDA ATLAS CARS

The Company has released its annual accounts for the year ending June 30, 2000. Sales jumped to Rs 3,506 million. The introduction of the Honda 'City" model in the 1.3 litre category helped boost top-line growth. Increase in prices also contributed to growth. However, production costs increased by 41 per cent. The imported component represents approximately 70 per cent of the car cost. The weakening of rupee against yen has had an adverse effect on production cost. Weak industry fundamentals have made it difficult for car assemblers to pass on increase in cost to customers. Consequently, gross margin has shown a decline. The Company has posted a profit before tax of Rs 208 million. Provision for taxation showed a significant jump as effective tax rate increased from 13 per cent for 1999 to 34 per cent for the year under review. The Company announced final dividend of 20 per cent.

 

SECURITY STOCK FUND

The Fund has announced 17.5 final dividend. Earlier it had paid 15 per cent interim dividend for the year ending June 30, 2000. No dividend was paid for the year 1999. The total income of the Fund went up from Rs 11.395 million for the year 1999 to Rs 36.179 million for the year under review. It was mainly due to a substantial increase in capital gains on marketable securities, dividend income and return on investment and bank deposits. At the same time remuneration paid to investment advisor jumped from Rs 2 million to over Rs 6 million during this period. Profit before tax came to Rs 32.746 million for the year 2000 as against a profit of Rs 21.616 million for the previous year.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

TURNOVER
 (SHARE MN)

CLOSING 
PRICE

PTCL

24.95

23.70

71,387,500

24.95

Hubco

18.90

17.80

152,917,000

18.90

Fauji Fertilizer

39.80

38.00

5,357,700

39.80

ICI Pakistan

12.90

12.65

16,307,000

12.70

Dewan Salman

25.65

24.45

9,043,000 25.60

Honda Atlas Car

14.65

14.25

102,000 14.65

Security Leasing

5.00

4.00

500

4.00
Source IP Securities