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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 Dec 19, 2002

During the week KSE-100 index gained over 100 points and closed at 1479. This gain was mainly driven by major institutional and individual demand for blue chip stocks. There was a shift in sentiments from wary and cautious to more trusting and positive. Average daily trading volume went up from last week's 94 million to 165 million. Market was guided by politics more than other thing pressure on India to hold talks reduced the fear of any major conflict as described by KASB analysts.

Going forward corporate earning potential will set the future direction of KSE-100 index movement. The volume leaders continue to enjoy strong fundamentals and the only factor having the potential to move the index in any direction is investors' confidence. One should take a clue from what Governor of State Bank of Pakistan has said, "We, as a nation, are victim of negative perception about Pakistan." While international financial institutions have repeatedly shown strong confidence in Pakistan's economy, we still does not have the confidence.

PAKISTAN TELECOMMUNICATION COMPANY

The company has recently released its financial results for the first quarter indicating over 7 per cent increase in revenue. Core profitability has improved as reflected in its gross margin of 45 per cent. The increase in other income by 41.5 per cent and a decline in financial charges by 47 per cent contributed to the improvement in core profitability. The Pakistan Telecommunication Authority has allowed PTCL to reduce installation charges by 50 per cent, average NWD rates by 12 per cent and average international call charges by 25 per cent and also allowed an increase in monthly rental. However, it has disallowed the requested increase in local charges.

HUBCO

The new year has brought with it a wave of hope for future of Pakistan's power sector as the tussle between the government-owned power utility WAPDA and the IPPs on the issue of electricity tariff has come to an end through mutual agreement. In addition to the tariff renegotiations, the important issue of dividend payouts to international shareholders seems to have balanced out with the approval of funds under PRGF facility as well as inflow of foreign exchange in developmental aid to Pakistan. The settlement agreement between WAPDA and HUBCO outlines the cashflow available to HUBCO for dividend, with a reasonably accurate picture of HUBCO's dividend payment potential in the future.

FAUJI FERTILIZER COMPANY

The company had posted net profit of Rs 1,429 million for the first half of year 2001 as compared to a profit of Rs 916 million for the corresponding period of previous year. Despite a 2 per cent decline in urea demand, there was an increase in sale due to 20 per cent increase in end-user prices. At the same time, better cost management led to nearly 5 per cent fall in cost of goods sold boosting gross profit to 49 per cent. With the closure of FFC-Jordan's DAP plant, the company is expected to sell imported DAP aggressively to fulfil market demand. With an attractive dividend payout history, the scrip is undervalued even at current price.

KOHINOOR RAIWIND

The company has announced financial results for the year 2001 posting Rs 132 million net profit, down 20 per cent from Rs 165 million for the previous year. However, sales showed a healthy increase of 20 per cent but the massive rise in provisioning for diminution in the value of investment dragged down profitability. The company is basically an export-oriented company and its 94 per cent sales receipts were from exports. The real problem was due to provisioning against investment. These investments are in the stocks of its group companies. Since the company is going through expansion, the financial charges also rose by 33 per cent. A reduction in the other charges by 15 per cent could not prevent profit before tax from dropping.

PAKISTAN PTA

The de-merger process of ICI Pakistan is now complete. Untill the completion of the term of the loans and finances obtained for PTA division, ICI will guarantee those loans. Therefore, the continued health and viability of the US$ 490 million operation remains of paramount importance to ICI. The decision to finance the PSF expansion for ICI's continued operations through modaraba reveals the management's decision to reduce its exposure in PSF and PSF related business. The reason being that the company nowhere in the world is involved in this business. ICI has also announced that it is seeking a junior/senior or a joint venture partner for its PTA business. The PTA project commenced commercial production in June 1998. However, the operation has been hit by one of the worst recession in this line of business. As of June 30, 2001, The company had an accumulated loss of over three billion rupee. The PSF industry is not likely to do well this year also. The slowdown of economy alongwith the belated cut in the regional production of PTA is expected to lead to a slow down in sales volume growth at a time when prices remain subdued.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hubco

21.45

19.00

21.40

379,414,500

PTCL

17.00

15.50

16.90

206,252,000

SNGP

11.00

9.75

10.90

35,387,500

ENGRO

61.00

56.25

59.10

28,791,700

Fauji Fertilizer

47.10

44.80

47.00

12,932,000

Nishat Mills

16.60

15.40

16.50

10,500,000

MCB

22.45

21.40

22.35

9,210,000

Adamjee Insurance

37.75

33.95

37.05

9,195,500

ICI

42.15

39.65

42.15

9,101,600

SSGC

10.80

9.90

10.80

1,235,000