STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Oct 12, 2002

 

The election mantra brought a bullish rally at all the three stock exchanges, particularly at the Karachi Stock Exchange. The KSE-100 index touched 94 months high and closed at 2098 on October 9, 2002. However, on last trading day lost nearly 60 points. The correction was on cards, but the fall was more than anticipated.

 

The bearish trend is expected to continue till formation of the new government and the role MMAP prefers to play, join the coalition or sit in the opposition. Any rift or instability arising out of the current elections might pose serious trouble for the economy and add to the negative perception about the country.

The COT investment and volume have remained at more or less at the same level for the last few weeks. However, it is noteable that the average COT rate experienced a significant increase. The incoherence between the average investment and average volume is attributable to prevalent political situation. Moreover, the buying interest from institutional investors assisted in trivial decline in COT volume and investment. Despite that the KSE-100 touched new heights, the average COT investment in PSO and PTCL declined. In HUBCO speculative buying continued. Fauji Fertilizer remained under the focus of speculators and recorded a whopping increase of 31 per cent in its COT investment.

NATIONAL BANK OF PAKISTAN

The GoP offered another 5 per cent ordinary shares of National Bank of Pakistan at Rs 21 per share. The offer contains a green shoe option of an additional 5 per cent, if the subscription amount received is greater than the offer. Market punters believe that the second offer will be successful, but it is unlikely to be as high as for the first offer. The bank suffers from high level of infected loan portfolio. However, most of it has been due to merger of NDFC with the bank. NBP has historically enjoyed larger spread, In the current environment of low credit offtake, the bank is ideally positioned to provide loans at competitive rates as well as enjoy sizable spread. Another factor expected to improve bottom line is decline in amortization cost against VHS. The bank has been amortizing over Rs 2.6 billion per annum for the last four years and with the full amortization of this cost, a positive impact on profit is expected.

HUB POWER COMPANY

All the elements of uncertainty have been laid to rest. There is no dispute between the IPP and its sole customer WAPDA and the company has already received the last installment of Rs 1.2 billion from WAPDA. The company will be replacing two of its transformers installed at unit I and unit II. The company will pay only for one and the cost of other will be recovered from insurance. With the removal of irritants and amount received from WAPDA the shareholders can expect higher dividend payout. Analysts forecast for an interim dividend of about 30 per cent at the time of announcement of half yearly results. The total payout for the year ending June 30, 2003 is expected to be around 50 per cent. Until recently the company was required to seek approval of lenders for paying dividend. This condition has been waved off by the lenders recently.

ENGRO CHEMICAL PAKISTAN

It seems that the management of company now believe in its long-term survival in diversification. The management has redefined its vision from an international petrochemical player to an international chemical and agri related industry player. This shift is likely to play a significant role in economic value creation for Engro's shareholders in the long run. Engro's focus on NPK fertilizer, seeds business and other related products clearly indicates that management is targeting various niche markets with the aim to become a company with diversified products. The continuous investment and BMR made recently has resulted in the plant being considerably efficient. In view of no unplanned shutdown so far this year, actual production of urea is likely to surpass planned production.

TELECARD

The company has announced financial year for the year ending June 30, 2002. It has earned Rs 152 million profit for the year but Board of Directors chose to skip payment of dividend. Earning per share for the year 2002 works to Rs 5.05, a improvement from Rs 3.85 for the previous year. The company had earned Rs 99 million profit before tax for the year 2001 and also paid 10 per cent dividend amounting to Rs 25 million. The higher profit for the year 2002 is attributed to a number of factors that include: increase in sales resulting in higher gross profit and decrease in operating expenses and financial charges.

BANK AL HABIB

The financial results for the nine months of year 2002 indicate an improvement in profit after tax, from Rs 174 million for the corresponding period of last year to Rs 206 million for the period under review. This improvement can be attributed to increase in non-mark-up/interest income.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

24.70

23.95

23.95

134,834,000

P.T.C.L.A

20.25

19.70

19.70

99,006,500

Engro Chemical

67.20

63.85

64.20

49,739,900

P.S.O.

199.25

193.00

193.00

42,156,200

I.C.I.

42.65

40.55

40.55

31,409,400

M.C.B.

28.65

27.95

27.95

24,184,500

Fauji Fert

57.20

55.60

55.60

13,559,900

Adamjee Ins

45.40

43.20

43.20

11,514,500

National Bank

23.00

22.05

22.05

11,279,000

Shell Pak

311.50

304.00

304.00

1,763,200