STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Jan 11, 2003

 

The bulls continued to dominate the market during the week. The index gained another 124 points and closed at 2,869 level. It may have breached 2,900 level had there been no profit taking. The daily trading volume remained high during the week. The incredibly attractive dividend yields of the recent past are shrinking very fast. Most of the leading scrips are being quoted at their fair price value. It may not be

 

 

 

incorrect to say that speculative sentiments have been dominating over economic fundamentals. Now it is the time for the SECP to ensure adherence to high level of corporate governance by the listed companies. It is feared that jobbers would now try to sell the second or third tire scrips which do not enjoy favourable economic fundamentals.

GUL AHMED TEXTILE MILLS

The company maintained its payout at 50% for the year ending September 30, 2002. However, a closer look shows an overall increase in costs. Sales increased from Rs 4,996 million to Rs 5,766 million. There was over 15% increase in sales but the hike in cost of goods sold reduced the gross margin, a decline from 26% to 21%. Similarly, operating expenses and financial charges also went up. Operating expenses went up from Rs 371 million to Rs 441 million. Financial charges went up from Rs 333 million to Rs 397 million. There was also increase in provision for tax that went up from Rs 46 million to Rs 64 million. The cumulative increase in costs brought down profit after tax from Rs 473 million to Rs 336 million. Despite payment of 50% dividend the company was able to transfer Rs 175 million to general reserves.

KOHINOOR WEAVING MILLS

The company has posted Rs 285 million profit after tax for the year ending September 30, 2002. However, it is worth noting that the Board of Directors to pay only 20% dividend amounting to Rs 43.75 million and issue 10% bonus shares. An amount of Rs 220 million was transferred to general reserves. Sales went up from Rs 2,722 million to Rs 3,892 million. However, the increase in cost of goods eroded the benefit completely. Rather, there was a decline in gross profit, from Rs 583 million to Rs 567 million. Gross margin came down from 21.5% to 14.6%. Operating expenses went up from Rs 94 million to Rs 126 million. Similarly, financial charges hiked from Rs 124 million to Rs 172 million

RELIANCE WEAVING MILLS

The company was able to improve its bottom line due to over 60% increase in sales for the year ending September 30, 2002 as compared to previous year. However, the advantage was grossly eroded by increase in operating expenses and financial charges. Sales went up from Rs 1,253 million to Rs 2,037 million. Gross profit improved from Rs 196 million to Rs 314 million. Operating hiked from Rs 61 million to Rs 95 million. Financial charges grew from Rs 97 million to Rs 135 million. While the EPS for the year 2002 works out to Rs 3.31, the Board of Directors have recommended only Rs 0.75 per share dividend.

TOWELLERS

The company is a leading exporter of towels to the USA and European Union. The adverse effects of 9/11 incident and subsequent events are visible from its profit and loss statement. There was a decline in sales resulting lower profit after tax for the year ending September 30, 2002 as compared to previous year. Sales came down from Rs 1,958 million to Rs 1,778 million. Despite better cost controls the management could not resist decline in operating profit that came down from Rs 114 million to Rs 91 million. The EPS came down from Rs 3.81 for the year 2001 to Rs 2.75 for the year under review. The Board of Directors have recommended 10% dividend for the year 2002. The company had paid 15.5% dividend for the previous year.

 

 

CHASHMA SUGAR MILLS

The company has posted Rs 103 million profit after tax for the year ending September 30, 2002 as compared to Rs 61 million loss after tax for the previous year. The sole factor responsible for the reversal of fortune seems to be increase in sales, going up from Rs 712 million to Rs 1,287 million. The increase in sales was due to higher production achieved from bumper sugarcane crop in the area. There was increase in operating expenses and other income. The reduction in financial charges, from Rs 47 million to Rs 33 million also contributed towards improvement of bottom line. The Board of Directors also recommended payment of 30% dividend. The company was not in a position to pay dividend for the year 2001 due to posting loss.

PREMIER SUGAR MILLS

A point to be noted is that despite posting loss, the company has been paying dividend through retained earnings. It has paid 37.5% dividend for the year 2001 and the Board of Directors have approved 30% dividend for the year ending September 30, 2002. The increase in sales during the year 2002 helped the company to bring down its operating loss from Rs 124 million for the year 2001 to Rs 61 million for the year under review. However, profit after tax was around the same level. This was due to decline in other income that came down from Rs 122 million to Rs 67 million. The company has posted Rs 9 million loss after tax for the year 2002.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Sui North Gas

24.65

23.15

24.65

121,664,000

FFC JORDAN

10.55

9.90

10.55

91,452,500

Engro Chem

97.50

94.35

97.50

72,159,900

Dewan Salman

15.95

14.70

15.95

61,156,000

ICI

61.50

56.85

61.50

57,201,700

Fauji Fert

90.40

79.65

90.40

48,548,600

Pak. PTA Ltd.

8.00

7.55

7.75

22,577,000

D.G.K. Cement

14.60

14.00

14.60

6,652,500

Sui South Gas

18.00

17.45

18.00

4,7297500

Ibrahim Fib.

20.35

20.00

20.00

3,999,500