STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Aug 10, 2002

 

The market witnessed some volatility in Adamjee Insurance Company during the week. The KSE-100 index also crossed the 1800 barrier. However, the overall sentiments remained subdued. Some activity was also witnessed in selected sugar scrips, despite imposition of 5 per cent excise duty on imported raw sugar.

 

It is necessary to reiterate that sugar mills are under immense pressure due to very high inventory level. It is expected that the mills will be able to produce over 3.6 million tonnes of sugar in next crushing season. Therefore, the overall surplus will be over a million tonne.

The GoP has also proposed 10 per cent duty on imported cotton. It is a diversion from the policy of free trade of cotton. The superior quality cotton is normally imported by those mills who are trying to achieve higher value addition. Therefore, imposition of this duty will adversely affect the exporters of value-added products.

MUSLIM COMMERCIAL BANK

The bank has launched the first ever unsecured and subordinated TFCs issue by a commercial bank for Rs 1,600 million. The advisory services and arrangement for this transaction has been completed by a consortium comprising ABN AMRO Bank, Jahangir Siddiqui & Company, and Global Securities Pakistan. The proceeds will count towards MCB's Tier-2 Capital for minimum capital requirement and will be utilized for bank's ongoing banking operations, improvement of its maturity structure of assets and liabilities, and also for the acquisition of United Bank, if declared successful by the GoP. The TFCs have a tenor of five and a half years, with the principal to be repaid in three semi-annual installments starting from the 54th month from the date of issue. The mark-up is payable semi-annually and is set at 1.5% per annum above the cut-off yield on the last successful five-year Pakistan Investment Bonds auctioned by the central bank, before the beginning of each semi-annual redemption period with a floor of 11.75% and a ceiling of 15.75%. The instrument has been awarded A+ (A plus) rating by JCR-VIS. The issue comprise of a private placement of Rs 1,400 million and a fully underwritten initial public offer of Rs 200 million. The designated Trustee bank of the issue is Orix Investment Bank Pakistan Limited.

ENGRO CHEMICAL PAKISTAN

Engro's NPK type fertilizer production plant commissioned at Port Qasim, near Karachi, has been built at an estimated cost of Rs 539 million. It has a designed capacity to produce 100,000 tonnes of granulated NPK per annum. The company produced 36,000 tonnes of NPK and sold 32,000 tonnes. The company managed to get 72 per cent capacity utilization of the NPK plant. Improvement in the plant operations were achieved but the NPK business suffered a loss of Rs 47 million during the six months period. During this period sale of DAP was 65,000 tonnes, a market share of 26 per cent.

HUBCO

With the Board of Directors meeting scheduled in September, the scrip is expected to witness price volatility based on the rumours about the interim dividend announcement. According to a report by Taurus Securities, the company had Rs 9.6 billion in cash balance as of March end 2002 and an Unappropriated profit of Rs 16.2 billion. Analysts expect two possible scenario, high interim dividend or low pay out. While the market expected higher interim dividend, the company may not opt for this for two reasons. Firstly because the dividend payout is subject to the approval of the central bank due to large shareholding by foreign investors. Secondly, it may opt to pay higher final dividend to avoid any cash crunch.

MAPLE LEAF CEMENT

Looking at the third quarter financial results, the turnaround is visible. The company has been able to post profit for the quarter after a number of years. During the quarter sales were Rs 627 million. The cost margin came down from 5-year average of 94 per cent to 72 per cent. This improvement is partly due to use of coal. The recently floated Rs 250 million TFCs, with a tenor of four years was highly over subscribed. It was the first ever issue by any cement plant, for financing the coal conversion project. The quarterly results are indicative of turnaround, both for the company and the sector. The company enjoys over 9 per cent share of the cement market.

JANANA DE MALUCHO TEXTILE MILLS

The quarterly results indicate decline in profit. During the nine months of the current year the company earned Rs 29.7 million profit before tax as compared to a profit of 61.8 million for the corresponding period of last year. The reduction in profit can be attributed to reduction in sales and the hike in cost of goods sold. Sales came down from Rs 360.7 million to Rs 343.3 million. Cost of goods sold went up from Rs 280.4 million to Rs 294.7 million bringing down gross profit from Rs 80.3 million to Rs 48.6 million. All other expenses were almost at the level of previous year. EPS dipped from Rs 18.25 to Rs 6.70 only.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

25.20

24.25

25.20

89,081,500

P.T.C.L.A

18.25

17.65

18.25

42,107,500

Sui North Gas

14.60

14.20

14.60

12,248,000

M.C.B.

24.90

23.60

24.90

12,030,500

Adamjee Ins

40.10

34.60

40.10

9,839,000

Engro Chemical

60.20

59.15

60.20

9,342,800

National Bank

20.25

19.70

20.25

8,958,000

FFC Jordan

6.40

6.20

6.40

4,879,500

Fauji Fert.

49.80

49.30

49.80

2,271,700

Sui South Gas

12.60

12.35

12.60

1,643,000