STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Dec 21, 2002

 

Though the punter predicted unabated upward move of KSE-100 index, they also warned about possible profittaking. As the signs of the market being overbought were quite visible, during the last two days speculators indulged in significant selling. On the last trading day index closed at 2524 points. Now the talk of the town is, can the index breach

 

2600 points before the last day of this year? Looking at the predictions one tends to believe that the index may cross 2600 level very conveniently. The scrips that may contribute to this will be HUBCO, PTCL, FFC, Engro, MCB, and NBP.

The GoP attitude towards regulatory authorities has become a cause of concern. In the recent past the cabinet decision to lower electricity tariff circumvent NEPRA autonomy. Now the Ministry of Oil & Gas opposes any significant role for OGRA. It is necessary to reiterate that autonomy of various regulatory authorities is essential if the GoP wishes to move ahead with privatization programme.

PAKISTAN STATE OIL COMPANY

Analysts strongly believe that PSO's future price performance is now linked directly to the international oil price movements. Any adverse movement in international oil prices can eliminate the cushion of raised distribution margins going forward. The production cuts and stricter quota compliance by OPEC and the potential of the US attack on Iraq brighten the chances of improvement in bottom line of the company. On account of recent increase in POL prices, the company is expected to record over Rs 77 million inventory gains. The last two reductions had also caused inventory loss to the company.

FAUJI FERTILIZER COMPANY

The scrip is more likely to out-perform the market in the medium-term in the declining interest rate scenario. The investors are looking towards stocks with stable dividend payout. The scrip has always been a favourite on dividend yield perspective. Even at current prices the scrip offers attractive dividend yield. After the acquisition of PSFL, investors value the scrip as growth stock. Analysts the bottom line should grow in double digit during the next couple of years.

IBRAHIM FIBRES

The company announced its financial results for the year ending September 30, 2002, posting Rs 532 million profit after tax. Although sales declines, the driving factor behind improvement in the bottom line has been significant decline in tax liability for the year 2002. Tax liability declined by 85%, attributable to the deferred tax provisioning that the company had made in year 2001 - amounting to Rs 350 million. The decline in sales has mainly come on account of comparatively lower sales prices, volume has certainly increased as compared to previous year. As anticipated the company announced a 15% dividend. With the commissioning of the expansion project, cash plough-back requirement in the business has reduced considerably.

NATIONAL FOODS

The first quarter of year 2003 has been a promising period for the company. Revenue growth has been laudable at nearly 16%. This coupled with improved profitability resulted in a growth of 17.7% of profit after tax. While the domestic sales increased, there was a decline in exports during the quarter. The restructuring efforts initiated by the company of the selling and distribution infrastructure also contributed towards higher domestic sales. The decline in export sales is due to lower prices of chilli following a better than expected crop. The cost of raw material increased by 35%, depreciation expenses by 21% and salary expenses by 29% as compared to the corresponding period of last year.

NISHAT MILLS

According to a report by IP Securities, the company has been facing a ruffling time for the last couple of years. During the year 2001, the company from high raw material and fuel prices that resulted in a 55% decline in profit after tax. The 9/11 incident marked its adverse effect in year 2002 in the form of reduced sales price for the company's products. The rupee appreciation against dollar during the current year was also a downslide effect on the value of export sales that comprised nearly 87% of the total sales in year 2001. During the first nine months of year 2002, the company posted Rs 101 million profit after tax that was 60% lower than the profit posted for the corresponding period of last year. The resurgence in the foreign textile markets and good cotton crop this year would act as a flicker of new life for the company.

CHERAT CEMENT

According to a report by AKD Securities, Cherat Cement's noticeably improved performance for the year 2002 has been followed by a seemingly disappointing first quarter of year 2003. However, analysis for the results for the quarter reveals some positive long-term trends. Though first quarter results show no real improvement in core profitability, it seems to be due to enhanced depreciation charges of the machinery for coal firing system. The gross margin is expected to improve due to lower fuel cost. At the back of positive outlook for the economy the demand for cement is expected to improve leading to higher revenue.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

33.40

32 00

33.00

755,689,500

P.T.C.L.A

25.90

23.65

23.65

204,687,000

Sui North Gas

22.45

20.80

22.25

168,694,000

National Bank

28.00

27.60

27.60

76,703,000

Adamjee Ins

64.90

60.50

60.50

24,996,500

Dewan Salman

16.05

15.50

15.50

23,369,000

M.C.B.

33.95

33.30

33.30

20,680,500

Sui South Gas

17.75

16.95

17.50

7,365,000

Ibrahim Fib.

19.15

18.80

19.00

2,119,000

Union Bank

9.95

9.95

9.95

405,500