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A weekly review of fundamentals enjoyed by the blue chips

By SHABBIR H. KAZMI
Updated Dec 04, 2000

While the receipt of first tranche of fund from the IMF has improved the liquid foreign exchange reserve of the country, it has failed to creat any buying euphoria in equities market. Acccording to a report by KASB, Given the likely scenario that the GoP is not matching revenue collection, a severe budgetary gap is building up. There seems to be no immediate solution unless the GoP comes with a mini-budget or hike in POL prices to build the Development Surcharge Cushion. With no positive news expected in near future, the SECP's restriction on blank selling will extend the decline over a longer period.

NATIONAL LEASING

The Board of Directors of National Development Leasing Corporation have recommended 17.5 per cent dividend for the year ending June 30, 2000. It had paid 15 per cent dividend for the previous year. There was reduction in total income but an stringent control on expenditure helped in minimizing the adverse impact. Income from investment/finances came down from Rs 100 million for the year 1999 to Rs 58.5 million for the year under review. Financial charges and return paid on CoIs came down but administrative and operating expenses increased during the year 2000 as compared to last year. While the Company made higher provision against doubtful debts, an amount of Rs 17.369 million was written back from provision against diminution value of investment. Profitability of the Company is expected to improve in the following years due to enhanced economic activities in the country.

PAKISTAN TELECOMMUNICATION

PTCL has announced 22.5 per cent dividend for the year ending June 30, 2000. The payout is higher than the forecast of analysts. PTCL's revenue for the year 2000 at Rs 58.643 billion, is 14.6 per cent higher as compared to last year's Rs 51.187 billion. The higher growth in revenue and profit before tax seems to be the result of ongoing tariff rationalization. Tariff increase in local calls, line rent and installation charges are expected to improve its earnings in future. However, it is profit after tax which would determine the future payout. Profit after tax for the year 2000 dropped by a whooping 24 per cent to Rs 13.331 billion from Rs 17.568 billion for the previous year. With the tax holiday coming to an end PTCL had to provide, for the first time, a sum of over Rs 9 billion for tax. PTCL has also charged Rs 7.6 billion to current year's profit for an unfavourable adjustment specified as "effect of change in accounting policy". Therefore, the Company was obliged to transfer an equivalent amount from general reserve to be able to pay dividend at enhanced rate.

D. G. KHAN CEMENT

The Company, despite sluggish cement demand and pressure of price has posted Rs 448.761 million gross profit for the year ending June 30, 2000. It has posted a gross loss of Rs 57.62 million for the previous year. However, the advantage was eroded largely as operating costs more than doubled and the financial charges, though slightly lower, continued to play havoc with the Company's profit potential. As dispatches picked up sales improved by 30 per cent over previous year due to improved cement price and enhanced net retention price. The efficient cost control helped in containing cost of goods sold and gross margin for the year 2000 was 15 per cent as compared to a negative 3 per cent for the previous year. According to a KASB report, with the restructuring of company's debt by IFC the cashflow is expected to improve in the following years and would yield dividend to its shareholders.

ATTOCK REFINERY

The Company has posted a profit before tax of Rs 107 million from refinery operations for the year ending June 30, 2000 as compared to a profit of Rs 63 million for the previous year. Similarly, net income from non-refinery operations increased from Rs 14.73 million for the year 1999 to Rs 27 million for the year 2000. The improved profitability enabled the Company to pay higher dividend to its shareholders. It had already paid 5 per cent interim dividend and also declared 14 per cent final dividend total 19 per cent. The Company had paid 10 per cent dividend to its shareholders for the year 1999. It is worth noting that expenses of refinery jumped from Rs 127 million for the year 1999 to Rs 439 million for the year under review. This was mainly due to increase in financial charges from Rs 30 million to Rs 321 million during this period.

TELECARD

The Company has released financial results for the year ending June 30, 2000 and still remains in red. Though gross profit for the year 2000 was double as compared to previous year, higher administrative and selling expenses and financial charges eroded the advantage to a large extent. However, a profit after tax of Rs 27 million helped in lowering accumulated losses from Rs 58.6 million at the end of the year 1999 to Rs 31.5 million as on June 30, 2000.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

PTCL

22

19.6

19.7

174,481,500

Hubco

15.5

14.3

14.3

98,526,000

NDLC

5

4.75

4.9

169,500

DG Khan

7.35

6.7

6.95

1,869,500

Attock Ref

50

50

50

Telecard

13

12.2

12.3

652,200

Source: Invest Capital & Securities