STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Feb 01, 2003

 

During the week the KSE-100 index movement continued to exhibit high level of volatility. In the past week issue of notices to brokers by the SECP made the analysts believe that the KSE exposure monitoring system was not working effectively and efficiently. As the criticism mounted, Managing Director of the Exchange issued a clarification that only proved an old saying, 'where there is smoke, there is a fire'.

 

 

 

As the financial results have started poring in, the probability of greater activity is expected. However, the HUBCO dividend controversy needs to be looked at. The statement by the HUBCO CEO regarding the interim dividend was uncalled for. After the resolution of dispute the approval from lenders was not necessary. However, due to some technical reasons, the IPP was once again required to seek permission from the lenders. This was a routine matter and should have not been publicized in the media. Some analysts, say, "The statement of HUBCO CEO was used by the speculators to cause selling pressure only. If one can recollect the huge COT investment in HUBCO had become a source of concern."

ENGRO CHEMICAL PAKISTAN

The financial results for the year ending December 31, 2002 are a pleasant surprise and much above the market expectations. The company's revenue increased by 33% due to record sales of urea, DAP and NPK fertilizers. While the company was able to maintain its urea market of 20%, it also succeeded in enhancing its DAP market share from 13% to 27% as compared to previous year. The company also surpassed its previous highest production and set a new record of production of 852,000 tonnes of urea. Even though the company achieved record production and sales, higher dividend from Engro Vopak, lower financial charges and reduction in NAP and seeds business, the increase in profit after tax was limited to 6% compared to year 2001. The favouravle events were substantially offset by full year impact on expiry of the 1993 tax holiday on the earnings of expansion and provision of additional taxation on imported products. The Board of Directors have proposed a final dividend of 35%, bringing the cumulative payout for the year to 75% for the year 2002. The Board also approved issue of 10% bonus shares.

FAUJI FERTILIZER COMPANY

Despite posting a lower profit the dividend payout improved from 85% for the previous to 90% for the year ending December 31, 2002. The decline in profit is attributed to lower other income as well as higher financial charges. Sales went up from Rs 11.92 million to Rs 16,787 million due to merger of Saudi Pak Fertilizer into the company and 2.4% hike in urea price. The decrease in other income and increase in financial charges were due to injection of funds into Fauji-Jordan Fertilizer Company and acquisition of Saudi Pak Fertilizer. To undertake these two transactions the company had to liquidate some of its investment and acquire loans to the tune of Rs 8 billion. Liquidation of investment and declining interest rates is expected to cause further reduction in other income.

SAPPHIRE TEXTILE MILLS

As a result of decline in profit after tax for the year ending September 30, 2002, the Board of Directors approved payment of 15% dividend. The company had paid 50% dividend for the year 2001. The story started with the decline in sales, coming down from Rs 5,356.8 million to Rs 4,984.5 million. The increase in cost of goods sold also led to reduction gross profit, coming down from Rs 810.7 million to about Rs 452 million. However, it is worth noting that despite posting Rs 140 million profit after tax, the Board decided to distribute only Rs 30 million among the shareholders. The un-appropriated profit carried forward to balance sheet was as high as Rs 935 million.

SAPPHIRE FIBRES

The company was able to maintain sales for the year ending September 30, 2002 around the level of previous year. However, the hike in cost of goods sold plunged gross profit. Cost of sales went up from Rs 2,542 million to Rs 2,814 million. Gross profit came down from Rs 617.7 million to about Rs 339 million. Profit after tax came down from Rs 339 million to Rs 139 million. The Board of Directors approved distribution of 15% dividend for the year 2003 amounting to Rs 26 million. The un-appropriated profit carried forward amounted to Rs.932 million.

 

 

RELIANCE COTTON SPINNING MILLS

Contrary to the performance of the above mentioned two companies of the Group, Reliance was able to improve its profit after tax for the year ending September 30, 2002 mainly due to reduction in financial charges. Though there was only marginal increase in sales, the hike in cost of goods sold caused reduction in gross profit, coming down from Rs 120 million to Rs 104 million. However, profit before tax improved at the back of decline in financial charges. Profit after tax improved from Rs 40.3 million to Rs 51.8 million. It is worth noting that despite increase in profit, dividend recommended for the year 2002 was 12.5% as against a payout of 17.5% for the previous year.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

37.80

34.75

34.75

411,982,500

P.T.C.L.A

24.35

22.65

22.65

218,471,000

FFC JORDAN

12.45

10.85

10.85

131,817,500

P.S.O.

212.25

190.95

190.95

119,899,100

Engro Chem

94.10

87.80

87.80

58,478,400

I.C.I.

54.95

51.60

52.25

50,106,100

National Bank

27.40

25.10

25.10

35,397,000

Fauji Fertilizer

85.00

75.05

75.05

30,959,900

M.C.B.

38.15

34.10

34.10

14,416,500

Shell Pak

403.00

375.00

391.00

2,484,200