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A weekly review of fundamentals enjoyed by the blue chips

By SHABBIR H. KAZMI
Updated Dec 25, 2000

The share price of HUBCO did not went up, as expected, after the announcement of resolution with the GoP. It was understood that HUBCO agreement is with retrospective effect and the Company will not get its receivables from WAPDA. However, the announcement from International Power of UK (previously National Power) was a pleasant surprise. While some analysts wanted to avoid giving any comment, it seems that they ignored a fact that according to the interim court order HUBCO was getting a fixed payment which is lower than the amount based on new formula . Some analysts say that even if the agreement is with retrospective effect, the Company would get some additional payment, at least. HUBCO would like to distribute, at least 15 per cent interim dividend immediately, among the shareholders who have not received any on their investment in last couple of years.

According to some analysts, the consortium of Lahore-based investors, has once again become active. While a major percentage of the increased daily trading volume in HUBCO was said to be an outcome of their entry, ICI Pakistan seems to be their next target. These analysts say that trading in certain other scrips also indicates the entry of Lahore-based group the picks are the same as in the past.

ICI PAKISTAN

The Company has announced de-merger scheme separating the PTA business from rest of the divisions. There will be a reduction in paid-up capital of ICI Pakistan after the formation of independent PTA company which will also be listed at local stock exchanges According to the scheme the TFCs issued by ICI Pakistan in September 1999 along with certain other debts amounting to over Rs 6 billion will be retained by ICI Pakistan. Out of this amount, PTA company will get only Rs 1.8 billion. Paid-up capital of PTA company will be around Rs 5 billion out of which 25 per cent will be taken up by ICI Pakistan and remaining 75 per cent will be allocated to other registered shareholders of ICI Pakistan. After de-merger ICI Pakistan will have a paid-up capital of about Rs 1.262 billion. However, many analysts failed to fully understand the scheme but some buying euphoria was witnessed during the week. Some analysts term this price maneuvering by Lahore-based investors.

NOON PAKISTAN

Although, the Company achieved an unprecedented higher level of throughput, the end result was higher loss before tax at Rs 1.784 million for the year ending June 30, 2000. The Company had posted Rs 1.249 million profit before tax for the previous year. Despite posting loss, the Board of Directors recommended 15 per cent dividend for the year 2000. The Company had paid 20 per cent dividend for the year 1999. The intake of fresh milk for the year 2000 was 36 per cent higher than that of previous year and the gross profit margin came down from 12.14 per cent for the year 1999 to 11.29 per cent for the year under review. Factors affecting the profitability of the Company were said to be depressed marketing conditions, higher depreciation on account of re-valuation of plant and machinery, increased energy cost and higher selling and administrative expenses.

SOUTHERN ELECTRIC POWER CO.

The Company started dispatch of electricity to WAPDA on July 12, 1999 pursuant to an MoU signed and an agreement to reduce tariff. However, the MoU has not been formally ratified via an amendment to PPA. The financial restructuring agreed between the Company and its lenders during August 1999 has not been completed. Due to the delay in finalizing the financial restructuring and delay in the execution of the amendment to PPA, the Board of Directors were unable to recommend any dividend for the year ending June 30, 2000. Total turnover for the year 2000 was Rs 1,436 million and net profit came to Rs 281 million which has been carried forward. Earnings per share works out to over three rupees.

PAK ELEKTRON

The Company has finally come out of losses despite difficult economic conditions after suffering heavy losses in the past. Some internal and external factors have contributed to this recovery. These include a restructuring of the Company, improved fundamentals for power generation companies and improved sales of domestic appliances. The Company has registered 27 per cent increase in gross sales to Rs 2.243 billion for the year ending June 30, 2000. Gross profit for the year 2000 came to Rs 638 million. Administrative and selling expenses and financial charges also increased for the year. The Company posted Rs 59 million profit after tax whereas it had registered Rs 96 million loss for the previous year. Still, the Company has Rs 343.6 million accumulated loss despite a transfer of Rs 385 million from general reserve. It seems that the Company would not be able to pay any dividend for 3 to 4 years due to huge financial charges.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

Hubco

21.75

17.90

19.45

240,241,500

ICI

11.20

9.30

11.20

101,883,000

PTCL

23.00

21.40

22.90

9,693,500

Southern Electric

7.50

6.75

7.00 772,500

Pak Electron

4.45

3.70

4.45

12,500

Noon Pak

30.00

30.00

30.00

 

Lafayeette

9.60

9.60

9.60

 

Metro Steel

6.00

6.00

6.00