. .



A weekly review of fundamentals enjoyed by the blue chips

By SHABBIR H. KAZMI
Updated Jan 06, 2000

The first weak of the year 2001 witnessed significant improvement in KSE-100 index despite profit taking by certain quarters. After the resolution of WAPDA-HUBCO dispute and a ban on blank selling volatility of market has reduced considerably. However, price maneuvering by certain groups was visible in ICI Pakistan, Engro Chemical, Adamjee Insurance. The increase in Fauji Fertilizer was more due to improved earnings outlook for FFC-Jordan. The increase in DAP price is expected to contain expected loss for FFC-Jordan. There seems to be a revival of interest in the scrips of commercial banks.

ENGLISH LEASING

The Company has posted slightly higher profit before tax for the year ending June 30, 2000 as compared to the previous year. While there was an increase in administrative and operating expenses, financial and bank charges came down during the year under review. The Company has declared 12.5 per cent dividend. The Company falls in the group which has less than Rs 100 million paid-up capital. It has Rs 80 million capital but shareholders' equity exceeds Rs 136.6 million as at June 30, 2000. The Company has a diversified lease portfolio with the highest percentage in plant and machinery. However, the recovery ratio could not be improved from 70 per cent achieved during the year 1999.

CLIMAX ENGINEERING COMPANY

The Company has posted Rs 12.67 million loss before tax for the year ending June 30, 2000 as against a profit of Rs 12.55 million for the previous year. The advantage of an increase in sales was eroded by hike in cost of goods sold and higher administrative and general expenses. However, a closer look at the results indicates that operating profit for the year 2000 was higher than previous year. It was other income for the year 1999, at Rs 25 million, which enabled the Company to absorb Rs 25 million financial charges. Since other income was Rs 269,000 only for the year 2000 and financial charges amounted Rs 20.8 million the Company ended the year with a loss of over Rs 12 million. Accumulated loss as at June 30, 2000 stood at Rs 63 million as against paid-up capital of Rs 33.10 million. While chief executive's report has termed at least eight factors responsible for the poor performance, most of the issues pertain to GoP policies.

FIRST HAJVERY MODARABA

The Board of Directors have decided to pay 14 per cent dividend among the certificate holders for the year ending June 30, 2000. It had paid 13 per cent dividend for the previous year. The higher payout for the year 2000 was despite reduction in operating income from Rs 74.8 million for the year 1999 to Rs 57.9 million for the year under review. This was possible due to reduction in financial charges and provision against classified morabaha finances. While financial charges came down from Rs 13.96 million to Rs 7.95 million, provisions came down from Rs 16.8 million to slightly more than Rs 7 million. However, balance sheet footing size as at June 30, 2000 reduced to Rs 300.5 million as against that of Rs 366.4 million as at June 30, 1999.

METROPOLITAN STEEL CORP.

The Company has posted about Rs 40 million loss after tax for the year ending June 30, 2000 and its accumulated losses as at June 30, 2000 touched Rs 1,366.5 million. The liabilities of the Company were in excess of its assets by Rs 476.5 million, whereas the shareholders' equity is a negative Rs 976 million. According to auditors report, the Company has not been able to comply with the covenants of the MoU with the consortium of lenders. Although the Company posted Rs 19.86 million gross profit, it registered operating loss for the year 2000. The Company is expected to incur substantial financial charges unless its present obligations are appropriately rescheduled by its lenders. Therefore, without additional external financial support and rescheduling of present obligations, it is doubtful that the Company shall be able to continue its operations as a going concern.

LAFAYETTE INDUSTRIES SYNTHETICS

The Company has posted loss after tax amounting to Rs 14 million and accumulated loss as at June 30, 2000 touched Rs 31 million. While there was reduction in local sales, exports registered five fold increase. Net sales for the year 2000 were Rs 389.78 million as compared to Rs 410.2 million for the previous year. There was 7 per cent increase in production and closing stock jumped from Rs 8.7 million for the year 1999 to Rs 44 million as at June 30, 2000. Cost of production also went up due to uncertain market trend leading to frequent changes in counts and blends and thus affecting the efficiency. The Company posted Rs 27.8 million operating profit but Rs 40 million financial charges turned operating profit into loss. Labour cost of the Company increased, as stated in annual report, because of shortage of workforce. Such a scenario prevailed due to revival of cotton spinning mills.

 

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

PTCL

23.40

22.00

22.70

251,761,000

Hubco

20.70

19.90

20.05

167,402,500

ICI

11.65

10.50

11.15

89,258,500

SNGPL

13.10

12.40

12.75

35,197,500

MCB

35.40

32.75

34.35

15,344,320

KESC

9.05

8.25

8.50

12,340,000

SSGC

13.30

12.60

12.70

708,000

Source: Invest Capital & Securities