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 1. FINEX WEEK
 2. STOCK WATCH
 3. STOCK MARKET AT A GLANCE

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STOCK WATCH

By SHABBIR H. KAZMI
Updated Apr 06, 2002

The market continued to move sideways during the week mainly due to lack of investors' confidence. The other point of view is that the index has been pushed to a level from where future upward movement seems to be difficult in the prevailing circumstances. Prices of most of the volume leaders can not be pushed further. This is also evident from high volume of Badla as well as its rate. The average Badla rate was marginally higher as compared to previous week. Despite higher average trading volume the total Badla volume was low, indicating lack of buying interest of speculators also. It is said to be in anticipation of policies to curb investment in Badla.

Out of a total Badla of Rs 6.43 billion at the end of week, PSO accounted for Rs 1.37 billion. HUBCO came in after PSO with an investment of Rs 1.4 billion. Investment in PTCL, despite a decline was as high as about Rs 1.2 billion. The decline of investment in some market leaders was attributed to a shift in speculative positions to PSO. The rising investment in PSO is a dampener for the market sentiments because it remains the key sentiment mover on the KSE.

ADAMJEE INSURANCE COMPANY

The largest general insurance company of the country has announced much-awaited results for the year 2001. The company has posted about half a billion rupee loss after tax and did not declare any dividend. Thus combined impact of posting loss and skipping dividend creates negative sentiment about the company. For an insurance company, sustainable and stable income is a must. This can be achieved through a well managed investment portfolio. Over the period investment related income has grown at around 5 per cent. This has, to a significant extent mitigated the volatility in underwriting income. The 13 per cent decline in the investment income during year 2001 demands a review of investment portfolio and redefining of investment strategy. Looking at the investment portfolio, there is certainly room for improving performance in this area.

PAKISTAN TELECOM COMPANY

Various forecasts are being made about full year earnings of the company, ranging from Rs 18 billion to Rs 20 billion. Therefore, it is necessary to explore various factor having a direct impact on the income. Though, the international incoming voice traffic is likely to be higher, it may not result in any major increase in revenue given the ongoing decline in international rates. As opposed to this domestic call traffic is expected to be buoyant due to higher NWD traffic, introduction of Premium Rate Service and growing popularity of pre-paid calling cards. The greater traffic is mainly due to reduced tariff and may not lead to any significant increase in revenue. The introduction of Premium Rate Service, in collaboration with various satellite television networks, will likely result in revenue due to their popularity. Pre-paid calling card business has been a successful venture. The dividend payout is expected to be close to 25 per cent.

DANDOT CEMENT COMPANY

During July-December 2001 period the company has posted Rs 42.98 million gross profit as against a gross loss of about Rs 10 million for the corresponding period of last year. Under the new management, production of cement increased on account of the continuing market consolidation. Despatches increased by 18 per cent. However, persistent slump in cement demand was an obstacle in achieving higher capacity utilization. The two factors which will continue to affect profit and dividend payout are financial cost and accumulated losses. Though, there was increase in financial charges, the company managed to curtail operating expenses from Rs 11 million to Rs 6.6 million. Accumulated losses exceeding Rs 1.3 billion as at December 31, 2001 will not allow the company to pay a modest dividend for a number of years to come.

FAUJI FERTILIZER

The scrip is likely to underperform due to the short-term negative sentiments for the fertilizer sector. However, with the merger of Pak Saudi Fertilizer Limited (PSFL) operational synergy will accrue which may allow the company to avoid any drastic decline in dividend payout. Another factor having an upside potential is sale of production from recently acquired plant under its premium brand, Sona. On top of everything, tax credit will bolster company's earnings. Assuming the additional debt servicing is met by income from purchased entity, the company will gain due to investment tax credit. This would result in a reduction in effective tax rate of the company in the following years. Financial results of PSFL for the year 2001 are quite decent, posting a net income of Rs 628 million, an increase from Rs 407 million for the previous year. The margins are expected to further improve after the merger.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

PTCL

19.80

18.70

18.85

168,291,000

Hub Power

25.25

23.65

23.85

151,671,500

Sui North Gas

14.60

13.75

14.05

53,921,000

I.C.I

59.55

56.65

56.95

42,539,400

National Bank

23.55

22.40

22.70

23,027,500

M.C.B

27.60

26.35

26.80

10,913,500

Engro Chem

74.00

71.05

72.50

9,881,500

Fauji Fertilizer

49.65

47.20

47.65

8,754,400

Adamjee Ins.

46.75

35.25

38.50

5,821,500

Sui South Gas

13.10

12.60

12.90

1,706,000