STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated July 20, 2002

 

Contrary to the massive decline of equities market in the US, Europe and some Asian countries, the KSE-100 index closed at 1799 as compared to the close at 1783 last week. While one may tend to consider Pakistan a less volatile market, the reality is the decline in the above mentioned markets was mainly due to the loss of investors confidence in 

 

Corporate America. Almost every day there are allegations about more companies for accounting irregularities. No one knows till what time such disclosures or allegations will continue. The dullness at Karachi Stock Exchange has contributed to the shrinkage in daily traded volumes, lower COT volume and COT rates. Some analysts say that it is due to lower participation from the institutional investors.

The factors which have the potential to move the market upwards are the US decision to ignore India's call to declare Pakistan a terrorist state. According to some reports, there was a suggestion in the US that India should be declared a terrorist state. Mainly due to increase in Hindu militant activities against minorities, particularly Muslims and Christians. It is alleged that while Indian authorities blame Pakistan for cross border terrorism, it is state sponsored terrorism in occupied Kashmir, particularly killing of Hindus in Jummu and attacks on Christians.

PAKISTAN STATE OIL COMPANY

Despite a 75 per cent jump in its margins, the company has failed to outperform the index in recent times. Probably, the dominance of speculators and absence of any fundamentals oriented investors has resulted in this trend. However, analysts believe that at least two triggers may lead to a re-rating of the scrip: issuance of SoQs to potential buyers for prequalification and announcement of results for the period ending June 30, 2002. Though year 2002 is marred by significant inventory losses, a 282 per cent jump in other income is likely to enable the company to post flat earnings growth. With the recent removal of tax on bonus, analysts also expect PSO's management to revert back to its old practice of issuing bonus shares. While Minister for Privatization Commission maintains that the company is likely to be privatized in September, analysts fear some delays. The list of prospective buyers include some highly regarded name in the international as well as domestic oil marketing business.

PICIC COMMERCIAL BANK

The half-yearly financial results for the period ending June 30, 2002 indicate significant improvement in profit before tax compared to the corresponding period of last year. Total income went up from Rs 464 million to Rs 885 million. However, the advantage was lost to a large extent due to increase in expenditures, from Rs 421 million to Rs 685 million. There was also an increase in operating expenditure which went up from Rs 110 million to about Rs 135 million.

TELECARD

After performing glumly since September last year, the company has shown positive movements during last six weeks. The recent surge in the share price can be attributed to the positive sentiments arising out of its successful launch of Wireless Local Loop (WLL) payphone system as well as improving economic fundamentals. The company issued right shares to finance expansion. This will reduce its financial charges and improved earnings. However, growth in sales owing to WLL will truly reflect in year 2003. WLL is a cheaper substitute of card payphones.

GILLETTE PAKISTAN

The company witnessed a reduction in trading profit for the Jan-June period of this year. This was due to two factors: 1) decrease in sales and increase in cost of goods sold. However, the management's efforts to contain administrative and selling expenses helped in avoiding significant decline in profit before tax. Sales came down from Rs 342.7 million to Rs 321.5 million. Cost of goods sold went up from Rs 198 million to Rs 207 million. Administrative and selling expenses came down from Rs 94 million to Rs 73 million.

MITCHELL'S FRUIT FARMS

The company has announced financial results for third quarter. There was slight increase in sales for Oct-June period as compared to corresponding period of last year. However, earnings per share came down from Rs 6.52 to Rs 5.79. This can be attributed to a number of factors. These include: increase in selling, distribution and administrative expenses. Financial expenses also went up from Rs 3.7 million to Rs 6.7 million.

DAWOOD COTTON MILLS

The third quarter results for the period ending June 30, 2002 indicates a reduction in operating loss as compared to corresponding period of last year. However, closer look at nine-months performance clearly indicates that there was increase in operating losses compared to corresponding period of last year. Though, the company managed to post gross profit compared to a gross loss, the benefit was eroded due to increase in operating expenses, increasing from Rs 11 million to Rs 22.86 million.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

24.20

23.20

24.05

99,016,500

P.T.C.L.A

17.95

16.75

17.80

96,126,000

P.S.O. XD

142.50

131.00

142.30

48,242,400

National Bank

21.75

18.70

21.35

25,304,000

M.C.B XB

25.55

24.00

25.10

15,271,500

Engro Chem.

62.30

59.00

61.60

12,382,100

FFC JORDAN

6.45

5.90

6.30

7,698,000

Fauji Fert

49 25

47.05

48.85

4,705,400

Adamjee Ins

36.45

34.45

35.95

4,117,500

Shell Pak

215.15

210.00

214.90

14,000