STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Feb 22, 2003

 

At the best this week can be termed "suckers rally". The market was driven by the news regarding privatization of PSO. The pre-bid meeting of PSO overshadowed the results announced by the two commercial banks. Some activity was also witnessed in PSF sector mainly due to the hike in PSF prices. The market anxiously awaits NBP results. The announcement of half-yearly results by Lucky 

 

 

 

Cement indicated busting of "cartel" that had prevailed for a number of years.

The KSE members were unhappy on the grant of permission for setting up of the ECN. However, the news should have not shocked them because the concept of ECN was talked at length. It may be another thing that some of the "big brokers" may feel that they missed the opportunity to become the sponsor of ECN. Some analysts believe that the brokers' fraternity has over-reacted to the establishment of ECN.

Some analysts also believe that the pace of demutualization of stock exchanges is largely dependent on the appointment of new chairman. They believe that Dr. Shamahad seems to be the favorite as her prime mandate would be to accelerate the process of demutualization and making ECN functional on priority.

PAKISTAN STATE OIL COMPANY

Finally the much-awaited pre-bid meeting was held February 19, 2003 and was attended by all the three prospective bidders. The Privatization Commission also fixed April 26, 2003 as the bidding date. The bidding date seems to be realistic keeping in view the situation in the Middle East. This puts to an end the speculation that had engulfed the market for almost a month, resulting in wild swings in its share price. The statement issued by the Commission stating "bidding is envisaged on April 26 after resolving certain issues" might raise a few eyebrows.

MUSLIM COMMERCIAL BANK

According to Aqib Elahi Mehboob, Head of Research, ADK Securities, "The painful restructuring undertaken by the management of the bank during the latter part of the 1990s continued to payoff in year 2002." Profit after tax was up 57% to Rs 1.74 billion, slightly higher than the market expectations. Primarily lower NPL provisioning drove the profitability growth and the other contributors included gains on investment as well as lower tax rate applicable to commercial banks. The bank managed to pay 25% dividend and also issue 25% bonus shares that was a rare phenomenon in the recent banking history.

PICIC COMMERCIAL BANK

The bank has posted Rs 319 million profit after tax for the year ending December 31, 2002. The bank has achieved a record breaking performance since it was taken over by PICIC in February 2001. The bank has also qualified the requirement of State Bank of Pakistan by increasing its paid-up capital to one billion rupee. Deposits went up by 300% from Rs 5 billion in year 2001 to Rs 21 billion for the year under review. Advances surged by 130%, from Rs 4.53 billion to Rs 11 billion. The most remarkable feature has been the 50% decline in non-performing loans. The bank has announced issue of 30% bonus shares. The bank has received permission to add another 22 branches that will increase the total number of branches to 64 by the end of year 2003.

 

 

LUCKY CEMENT

The cement manufacturing company has released its half year results ending December 31, 2002 posting Rs 123 million profit after tax as against Rs 86.8 million profit for the corresponding period of year 2001. A 42% growth in profit was mainly due to: 1) tremendous growth of nearly 20% in sales due to higher volumes, 2) a 650 bps improvement in gross margin due to the plant conversion from furnace oil to coal, and 3) declining in operating expenses. The increase in volume was due to higher lifting by the dealers. Though the gross margins have improved, further improvement depends on company's ability to overcome its operating inefficiency of the plant. The tax exemption enjoyed by the company has expired and the company would have to pay 35% corporate tax onwards.

NATIONAL REFINERY

The increase in crude oil price seems to have adversely affected gross margin of the refinery. During the second quarter of financial year 2002-03 sales increased by 37% but cost of goods sold registered 43% hike. Gross profit for the quarter was Rs 450 million as against Rs 602 million for the corresponding period of previous year. The drop in gross profit can be attributed to sharp rise in crude oil without corresponding increase in prices of its main products, furnace oil and high speed diesel. However, a 271% increase in other income, a 51% decrease in operating expenses and a 31% decline in financial charges led to a 16% increase in profit after tax. Analysts forecast a full year EPS of Rs 13 as compared to an EPS of Rs 11 for the year 2002. This would translate into an EPS growth of 12%. The potential payout of Rs 7 per share would translate into an expected dividend yield of 9.5% that would still be lower to what other blue chips offer.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

Hub Power

35.70

34.80

35.60

223,464,000

Pak.PTA Ltd.

8.85

7.90

8.85

114,792,500

P.S.O.

191.75

184.00

189.50

109,123,700

P.T.C.L.A

22.05

21.25

21.40

79,180,500

National Bank

26.65

25.85

26.40

20,425,000

M.C.B.

34.55

33.95

33.95

12,615,500

Dewan Salman

13.55

13.35

13.55

10,252,000

PICIC Comm Bank

20.55

19.10

20.30

4,521,000

Ibrahim Fib.

18.35

17.70

17.75

2,074,000

Shell Pak

375.00

368.00

368.00

187,900