STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Jan 04, 2003

 

The KSE-100 index, after crossing the psychological barrier of 2,600 points, is inching towards 3,000 level. The point that leading stocks offer incredibly attractive dividend yields is gradually loosing its attraction. The frequent surges in the KSE-100 in a day clearly indicate that profit taking is common.

 

 

 

The future activity is expected to be centered around second tier scrips. The list of such scrips also does not exceed a dozen names. Yet another problem is, other than the usual volume leaders, most of the other scrips are highly illiquid.

In such a scenario a potential threat, for investors, is that the jobbers may try to persuade the late-entrants to grab shares of any company for making quick bucks. This may lead to a situation, similar to that of nineties where the prices of shares of company either posting marginal profit or the loss making companies sky rocketed.

BHANERO TEXTILE MILLS

Despite posting a lower profit for the year ending September 30, 2002 the company maintained its dividend pay out at 50 per cent. Though, sales for the year 2002 was lower as compared to the previous year gross profit was marginally higher. Sales came down from Rs 1,439 million to Rs 1,285 million. Gross profit improved from Rs 199.9 million to Rs 201.7 million. This was possible due to better cost controls that helped in bringing down cost of goods sold from Rs 1,239 million to Rs 1,083 million. Financial charges came down from Rs 71 million to Rs 51 million. However, the advantage was partly eroded due to increase in operating expenses, going up from Rs 65 million to about Rs 73 million. EPS came down from Rs 20.38 for the year 2001 to Rs 15.67 for the year under review.

NAKSHBANDI INDUSTRIES

The higher financial charges for the year ending September 30, 2002 seem to be the key factor responsible for the decline in profit. The other factor contributing to lower profit was lower sales. Sales came down from Rs 1,185.6 million to about Rs 1,095. As a result, gross profit came down from Rs 200.9 million to Rs 196.4 million. Financial charges went up from Rs 70.6 million to Rs 84.3 million. The company posted Rs 8.77 million profit after tax for the year 2002 as compared to a profit of Rs 26.44 million for the previous year. The dividend announced also came down from 7.5% for the year 2001 to 5% for the year under review.

AISHA COTTON MILLS

The losses accumulated by the company should be a serious concern for the lenders as well as the shareholders, excluding the sponsors. As a result of Rs 31 million loss for the year ending September 30, 2002, accumulated were as high as Rs 598.7 million. The company had posted Rs 4.6 million for the year 2001 and announced 5% dividend, subject to the approval of lenders. The lender, Habib Bank, disallowed the payment and the entry has to be reversed. A closer look at the financial accounts for the year 2001 and 2002 clearly indicates that the gross profit earned is not sufficient to take care of operating expenses and charges. The company posted Rs 15.6 million gross profit for the year 2002 that was not sufficient to take care of Operating expenses (Rs 28 million) and financial charges (Rs16 million). Similarly the company earned Rs 37.8 million gross profit that was hardly enough to take care of operating expenses amounting to Rs 20.6 million and financial expenses amounting to Rs 17.5 million.

 

 

THE THAL INDUSTRIES CORPORATION

The company, commonly known as Layyah Sugar Mills, emerged to be a beneficiary of better sugarcane crop in the Punjab for the year ending September 30, 2002. Sales went up from Rs 424.6 million to Rs 716 .2 million. This helped the company to post Rs 61 million gross profit as compared to a gross loss of Rs 40 million for the year 2001. The company posted Rs 19.9 million profit before tax for the year 2002 as against a loss of Rs 84.9 million for the year 2001. The source of concern is that the company has accumulated losses of over Rs 107 million and its may take many more years to clean the slate.

HUBCO

With the persistent increase in quoted price of the scrip, analysts warn about declining dividend yield. According to a report by KASB, they have changed their recommendation from Buy to Neutral. The basis of this change is 3 per cent appreciation of rupee since July 2002. In the declining interest scenario, other income of the company is also expected to go down. Despite these odds the dividend yield works out around 12 per cent, though it still remains attractive as the GoP has announced further cut of rate of return on NSS. The apprehension that the recent withdrawal of tax exemption for IPPs would also be applicable on HUBCO does not hold any ground. Firstly because all the agreements with HUBCO are iron-clad and cannot be changed and secondly that the GoP would not like to enter into legal battle that has the potential of disrupting the inflow of foreign direct investment.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

41.45

38.40

41.45

954,033,500

P.T.C.L.A

26.35

25.35

25.55

525,788,500

I.C.I

57.65

52.10

57.65

104,480,800

Pak. PTA Ltd.

8.60

7.00

7.85

88,434,000

FFC JORDAN

10.00

9.25

10.00

76,493,000

Engro ChemXD

92.75

90.40

92.75

38,877,600

Fauji Fet

78.45

72.80

78.45

27,544,000

National Bank

28.40

27.60

28.00

20,385,500

MCB

33.55

32.50

33.50

12,018,000

Adamjee Ins

61.95

61.30

61.85

10,253,000