. .
A



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

A

STOCK WATCH

By SHABBIR H. KAZMI
Updated June 15, 2002

According to third quarter report of the central bank, the KSE-100 index has improved by almost 50 per cent after touching the peak on March 14, 2002. It was a rather abnormal movement of the index in the backdrop of war in Afghanistan and deployment of troops by India. Some analysts say, "Investors in Pakistan are learning to live with a hostile neighbour." The KSE-100 index lost 16 points on the day a car loaded with explosive blew up near the US Consulate. A similar explosion earlier killed nearly a dozen French engineers working on the submarine project. These analysts also say, "Pakistan has been a victim of terrorism and the number of incidents and intensity of damages being caused have increased after Pakistan has joined 'War against Terrorism".

The economic indicators clearly indicate that despite the synchronized global recession and shortage of irrigation water, Pakistan has been able to post improvement over the previous year. This become a pain for those who do not want that political stability and economic progress must prevail. Therefore, they keep on staging incidents which can help in portraying that Pakistan is harbouring terrorists." Though most of Pakistanis do not fall in the trap, such attacks succeed in causing temporary interruptions in economic activities and bringing bad name to Pakistan.

MUSLIM COMMERCIAL BANK

The consortium led by the bank has submitted the highest bid, Rs 8.5 billion, for acquiring 51 per cent shares of United Bank Limited (UBL). The bids submitted by others were almost half of the consortium bid. Though, the GoP has not accepted the bid, as it has to seek clearance from the central bank. If the bid is approved and a merger of UBL with MCB is allowed, the merged entity would emerged as the biggest commercial bank of Pakistan. It will also drive strength from the UBL's strong franchise value in the UK. However, the only apprehension is that after the merger MCB may chose to close down a number of branches in Pakistan because of the proximity of the branches currently under the banner of UBL.

ATTOCK CEMENT

The company having a paid up capital of Rs 680 million has offered an IPO. The company is owned by a Middle East group. The group's other two investments in Pakistan are Attock Refinery and Pakistan Oilfield. The company currently uses furnace oil but can operate on gas also. It also has a plan to completely switch over to use of coal. Its brand enjoys premium in local market, mainly Karachi and adjoining areas. In the past the company has exported clinker. According to some analysts the fair value of scrip, based on full year report for year 2001, comes close to its par value. Keeping in view the potential turnaround in cement business due to exports to Afghanistan, switchover to gas and track record of export of clinker by the company, the IPO is expected to get the attention of investors.

PAKISTAN REFINERY

The third quarter financial results show nearly 30 per cent increase in profit after tax at Rs 71.5 million. However, it was not due to any improvement in the core refinery income, which is fixed percentage, but through an improvement in income from its non-refinery operations. These are rental of storage space and pipeline capacity to the oil marketing companies and from gantry operations for the movement of furnace oil. Otherwise the refinery registered 17 per cent decline in sales and gross margin slipped by over 7 per cent. The GoP has agreed to the long standing demand of the refinery companies to rationalization of import parity pricing formula. The formula about return on assets is expected to be reduced in the forthcoming budget. A key issue faced by the refinery is mounting receivables, leading to increase in borrowing and higher financial cost.

DEWAN TEXTILE MILLS

The financial results for the half year ending March 31, 2002 indicate a reduction of profit to nearly one third as compared to profit posted for the corresponding period of last year. This decline can be attributed to a number of factors. The story started with decline in net sales from Rs 1,293 million to Rs 957 million. Though the company managed to curtail operating expenses to a large extent the fall in profit could not be resisted.

DEWAN MUSHTAQ TEXTILE MILLS

This story is also similar to the above mentioned associate company. Net sales, for the half year ending March 31, 2002, came down from Rs 412.5 million to Rs 246 million. There was an increase in operating expenses also. All these factors led to posting Rs 3.5 million loss after tax. However, it was not easy to understand that why there has been such a decline in sales. The only reason which could be attributed to this decline is a lower demand for the products. This should be a serious concern for the sponsors who are spending more time on automobile unit rather than concentrating on the core business.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

24.60

23.15

23.15

230,246,500

P.T.C.L.A

17.75

17.30

17.30

198,237,500

National Bank

20.10

19.50

20.10

40,930,500

Engro Chem.

63.80

61.40

62.55

24,177,300

P.S.O. SPOT

144.90

140.10

140.90

21,475,900

M.C.B.

27.40

26.90

27.00

14,454,000

Adamjee Ins

39.85

37.90

37.90

9,651,000

Nishat Mills

15.20

14.90

15.00

5,394,000

Fauji Fert

46.30

45.30

45.60

3,988,500

Shell Pak

220.50

215.95

215.95

79,300