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By SHABBIR H. KAZMI
Updated Feb 12, 2001

The market which has registered an upward movement of KSE-100 index is expected to witness correction in the following weeks. All the good news have been discounted and no further news which can trigger buying are expected in the coming weeks.

As the financial results of textile units have started appearing, analysts forecast for buying spells in the shares of textile companies. However, the number of such companies is very limited and most of the scrips are either illiquid or have a very small market float. There is forecast that year 2000-2001 may not be as lucrative as was the previous year. Pakistan's major buyer of textile products, the USA, is suffering from recessionary trend. However, sector analysts say that Pakistan may not witness any substantial decline in exports as the country exports lower end products. With an ample supply of cotton available at attractive prices and PSF prices being lowered by local manufacturers, textile companies continue to enjoy better profit margin prospects.

THE BUREWALA TEXTILE MILLS

The Company, a unit of Dawood Group, maintained its dividend payout of 80 per cent for the year ending September 30, 2000. While the Company managed that kind of fabulous payout for the year 1999 due to other income amounting to Rs 49 million, it was also able to replicate the same due to a similar income of Rs 51 million for the year 2000. The proposed 80 per cent dividend for the year 2000 amounts to Rs 58.5 million. The Company had posted operating loss of over Rs 16 million for the year 1999 and was able to achieve operating profit of Rs 34.6 million for the year under review. The main reason for this turnaround was improvement of gross profit margin. While the Company posted 4 per cent gross profit for the year 1999, margin improved to 15 per cent for the year 2000.

LAWRENCEPUR WOOLLEN & TEXTILE MILLS

While the Company did not announce any interim dividend at the time of announcing half yearly results for the year 1999, the Board of Directors have decided to pay 30 per cent interim dividend for the half year ending December 31, 2000. The Company has actually utilized its accumulated profit for paying this dividend. Profit after tax came to Rs 13.9 million only, whereas dividend for preferred and ordinary shares amounted to over Rs 16 million. Not only that the Company was able to boost sales, it also managed to contain cost of goods sold and operating expenses. The net result was operating profit improved from 7.7 per cent for the six-months period of 1999 to nearly 12 per cent for the corresponding period of the year 2000.

OTSUKA PAKISTAN

Earnings per share of the Company improved from Rs 0.76 as at December 31, 1999 to Rs 1.47 as at December 31, 2000. The various factors responsible for this improvement were: increase in gross profit margin, decrease in administrative and marketing expenses and financial charges. Profit before tax, as a percentage of net sales, improved from 9 per cent for the six-months period of 1999 to nearly 17 per cent for the corresponding period of the year 2000. However, the Company chose not to announce any interim dividend.

THE HUB POWER COMPANY

Contrary to general expectation, the Company did not declare any interim dividend at the time of announcing results for the six-months period ending December 31, 2000. It may not be wrong to say that many investors do not take into account the fact that despite the formal agreement between WAPDA and the Company, unless the Agreement is ratified by the lenders and the Court also withdraws restriction on payment of dividend, HUBCO cannot make any announcement regarding dividend payment. Saying this much, one should also take into account the words of HUBCO chairman assuring some payout in May. However, such payout will largely depend on the payments by WAPDA. The IPPs issue is still not fully resolved due to persistent precarious financial position of WAPDA. Many analysts believe that privatization of WAPDA is the only way to improve financial health of the white elephant. However, it seems that the GoP has given up all its efforts to privatize WAPDA.

INDUS JUTE MILLS

The Company has posted loss before tax of about Rs 17 million for the year ending June 30, 2000 as against a profit of over Rs 33 million for the previous year. While the Company paid 27.5 per cent dividend for the year 1999, it could not announce any payout for the shareholders at the end of the year under review. Sales for the year 2000 went up by 19 per cent, from Rs 414 million for the year 1999 to Rs 494 million for the year 2000 but the Company registered about Rs 20 million loss after tax. The Directors' Report has attributed the adverse results to decline in selling price of finished products and higher raw material cost. The downturn was further aggravated by 22 per cent increase in the financial charges on account of carry over of huge inventory during July 1999 to February 2000 period.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

PTCL

20.95

20.50

20.60

71,057,000

Hubco

20.30

19.35

19.70

160,872,000

PSO

158.25

147.15

157.85

86,175,100

Shell

335.00

315.00

327.15

786,800

Burewala Textile

49.00

42.95

46.00 42,500

Lawrencepur

15.00

15.00

15.00

 
Source: Invest Capital & Securities