STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Feb 08, 2003

 

During the week market remained range-bound but movement was erratic. Announcement of half-yearly results by HUBCO created positive sentiments but the scrip price came under pressure due to profit taking. The market is expected to remain subdued during the next week due to holidays.

 

 

 

The SECP has issued a directive to the management of all the three stock exchanges to improve conduct of brokers to safeguard the interest of investors. This yet another attempt by the regulators to do what the stock exchanges should have been doing at their own.

HUBCO

The excitement due to form the half-yearly results has subsided to a considerable extent with the reports that the company will announce the dividend in March/April. The strong fundamentals and attractive dividend yield continue to charm investors. Even in the currently oversold situation, it is the scrip that quickly recovers from heavy selling pressure. Investors quickly grab the opportunity of 'Buying on dips' whenever it arises. This is visible from the fact that the scrip has consistently outperformed the index for the past three months and has appreciated by 30% since November1, 2002. During the first quarter the improved gross margins resulted in a marginally higher EPS. For the first half of year 2003 the company is expected to post Rs 4.5 billion profit after tax as against Rs 2.9 billion profit for the corresponding period of year 2002. The appreciation of rupee is expected to affect the earnings marginally while reduced O&M costs would result in cost saving. Analysts forecast for around Rs 5 dividend for the year ending June 30, 2003.

NISHAT MILLS

The company has registered 17% growth in profit after tax for the first quarter of year 2003 as compared to the corresponding period of year 2002. The company has diversified its product mix more towards value added items. It is one of the few companies that have maintained its profitability even during the weak environment for the local producers of textiles and clothing. With the future industry dynamics looking strong, the company is expected to benefit a lot and the signs have started to appear. The surge in export of value added products has led to a 20% growth in sales. Since the textile industry is exposed to higher risk due to seasonal and cyclical fluctuations, the company has adopted a conservative financing policy that has resulted in a 31% reduction in financial charges.

KOHINOOR INDUSTRIES

The intensity of problems faced by the company seems to be getting serious. The company has posted Rs 142.6 million loss after tax for the year ending September 30, 2002 as compared to Rs 92 million loss for the previous year. The problem appears to be higher cost of goods sold and financial charges. During the year 2002, the gross profit was only 7.8% of sales and highly inadequate to cover operating expenses and financial charges amounting to Rs 146.3 million and Rs 130.8 respectively. However, the real cause of concern is that accumulated losses touched Rs 1,339 million as at September 30, 2002.

AZAM TEXTILE MILLS

The company is adding to its losses mainly due to higher financial charges. It has posted Rs 22 million loss after tax for the year ending September 30, 2002. It had Rs 28 million for the previous year. The other problem seems through high cost of goods sold. On a net sale of Rs 540.8 million the company posted Rs 38.7 million gross profit, not enough to cover operating expenses and financial charges being at Rs 26.8 million and Rs 31.3 million respectively. The accumulated losses as at September 30, 2002 exceeded Rs 225 million.

NISHAT (CHUNIAN)

The company has posted lower gross profit despite increase in sales for the quarter ending December 31, 2002 as compared to the corresponding period of previous year. The EPS plunged from Rs 2.58 to Rs 1.85. Sales went up from Rs 837.8 million to Rs 1,028.8 million. Gross profit came down from Rs 207.7 million to Rs 185.9 million. The gross margin reduced from 24.8% for the corresponding quarter of year 2001 to 18% for the quarter of year 2002 under review. Selling and administration went up from Rs 40 million to Rs 60 million. However, this increase was offset by reduction in financial and other charges, coming down from Rs 65.7 million to Rs 45 million. Another contributing to lower profit was higher provision of tax, an increase from Rs 9.3 million to Rs 12.7 million.

GULISTAN SPINNING MILLS

The company has posted Rs 8 million loss after tax for the year ending September 30, 2002 as against Rs 28.5 million profit for the previous year. The story started with the decline in sales, coming down from Rs 1,617.8 million to Rs 1,456.9 million. Gross profit plunged from Rs 258.5 million to Rs 213.7 million. Gross margin declined from 16% to 14.7 per cent. The company posted Rs 13 million profit before tax for year 2002 as compared to Rs 41 million profit for the previous year. The provision of Rs 12 million for current taxation and another Rs 9 million for deferred taxation pushed the company into red. Therefore, the company was not able to announce any dividend. Last year, shareholders were paid 11% dividend.

 

 

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

35.15

34.60

34.70

227,306,000

P.T.C.L.A

21.95

21.65

21.75

106,634,000

FFC JORDAN

11.80

10.05

11.35

90,785,500

M.C.B.

35.15

34.80

34.85

20,201,000

National Bank

25.45

24.40

25.40

15,837,500

Engro Chem

84.00

83.45

84.00

13,620,800

Fauji Fert

77.25

75.75

75.75

10,998,700

Adamjee Ins

45.55

44.70

45.25

3,782,500

Askari Bank

25.30

24.75

24.75

334,500

Union Bank

9.05

8.55

9.05

80,000