STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Dec 28, 2002

 

Finally the KSE-100 idex managed to surpass the highest level achieved in 1994, only technically. The closed at 2,661.38 on December 27, 2002. Whereas the highest achieved on March 22, 1994 was 2,661.31 only marginally lower than the new record. However, one must keep a fact in mind that the 1990s rallies were driven by foreign fund managers and this time the market driver are the local retail and institutional investors.

 

Now the market punters are talking about 3,000 level. This seems achievable in the prevailing conditions, strong economic fundamentals. However, the only threat appears to be the US attack on Iraq. Due to the mounting tension in the Middle East, crude oil prices have already crossed US$ 30/barrel. Any hike in oil prices can affect Pakistan in two ways: 1) adverse impact on balance of trade and 2) hike in cost pushed inflation.

GADOON TEXTILE MILLS

According to Syed Hussain Haider of IP Securities, despite facing an intractable time, the company managed to sustain decent profit for the year 2002. It posted Rs 229 profit after tax, down by 6% as compared to previous year. The gloomy international economic conditions resulted in squeezed margins. The company witnessed a 5% fall in sales. Even with a 35% reduction in the operating margin compared to the year 2001, the company upheld the last year's level of net margin. This can be attributed to a substantial decline in financial charges, from Rs 167 million to Rs 101 million, mainly due to improved debt management. The company is engaged in production of yarn and exports nearly 30% of its production. Despite the encouraging export performance in terms of larger volume, the sector was unable to fetch premium prices. This led to reduced average unit price realization. Prices of cotton yarn slipped from US$ 1.80/kg to US$ 1.71/kg. The company has announced Rs 2.5 per share dividend which was half of the amount paid out for the last year.

NOON SUGAR MILLS

The company was able to double its dividend payout for the year ending September 30, 2002 as compared to previous year, mainly due to three fold increase in profit after tax. The higher profit was due to enhanced sales/production. The mill is located in Punjab where sugarcane supply was more than adequate during the last crushing season. The company posted Rs 109.6 million profit after tax for the year 2002 as compared to a profit of Rs 32.2 million for the previous year. The EPS for the year 2002 came to Rs 21.20 as compared to an EPS of Rs 6.23 for the previous year. The beauty of having a low paid up is that even the 60% dividend payout amounted to Rs 31 million.

ANSARI SUGAR MILLS

The company has posted a gross loss of over Rs 29.7 million for the year ending September 30, 2002 as against a gross profit of Rs 122.5 million for the previous. This reversal of fortune is attributed to decline in sales/production, a common phenomena faced by the sugar mills located in Sindh province. Sales came down from Rs 855.3 million for the year 2001 to Rs 628.5 million for the year under review. Though the management was able to contain administrative and marketing expenses but could not resist hike in financial expenses. The net loss after tax for the year came to Rs 120.4 million as against a profit of 18.9 million for the previous year.

SAKRAND SUGAR MILLS

The financial results of this company also confirms the tale of the difficult situation faced by sugar mills located in Sindh province. As a consequence of reduced production, sales came down from Rs 761 million for the previous year to Rs 452 million for the year ending September 30, 2002. The financial charges also went up during the year 2002 to Rs 66.8 million as compared to that of Rs 24 million for the previous year.

ZAMAN TEXTILE MILLS

The company seems to be a victim of out of proportion financial charges.

For the year 2001, financial charges amounting to nearly Rs 26 million pushed the company in red. The higher sales and lower financial charges helped the company to post a dismal profit of nearly Rs 3 million for the year ending September 30, 2002. However, profit before tax of Rs 3 million on a sale of Rs 505 million looks extremely disappointing. This a unit of the House of Al-Karam and it is difficult to swallow the bitter pill of inefficiency.

ALLAWASAYA TEXTILE & FINISHING MILLS

Despite a reduction in sales and lower profit after tax the company maintained its dividend payout for the year ending September 30, 2002 at the level of previous year, 52.5 per cent. Sales came down from Rs 589.4 million to Rs 539.7 million. Gross profit also declined from Rs 54.4 million to Rs 46.7 million. Another factor responsible for lower profit after tax was the increase in tax liability, going up from Rs 10.3 million to Rs 16.5 million. This company also has a smaller paid up capital. This point is substantiated by the fact that payment of 52.5% dividend would utilized Rs 4.2 million of Rs 12.7 million profit after tax.

MOVEMENT AT A GLANCE

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FFC JORDAN

9.60

9.15

9.60

84,600,000

Engro Chem

94.85

88.25

92.50

75,591,000

I.C.I

52.45

49.80

51.15

55,102,000

Fauji Fert

73 95

71.00

73.15

38,760,900

D.G.K. Cement

13.55

12.90

13.55

21,778,500

Lucky Cement

11.20

10.35

11.20

8,073,500

Telecard

16.20

15.40

15.85

7,364,000

WorldCall Comm

14.30

13.90

13.90

3,600,000

Attock Cem

17.75

17.00

17.45

793,000

Dawood Hercu

119.30

108.50

118.25

12,700