Updated Mar 08, 2003


The review of this week's index movement indicates that the 'sucker's rally' has not ended. The Badla providers, who were willing to provide money for COT despite high rate, seem to be asking the clients for settlement. Some market analysts say that the situation has arisen only because, some clients were not in a position to pick up the deliveries. These transactions had to be squared through sale and recovery of shortfall from their deposits with the brokers.




A large number of brokers, active at Karachi Stock Exchange, are not happy the permission was granted for the establishment of ECN. They have also expressed their intention to approach the court of law. It seems that due to the delay in the appointment of new SECP chairman, the brokers have started talking loud for building anti-ECN opinion.


While PIA's plea to raise domestic tariff by around 15% does make some sense in the backdrop of increasing oil prices, the GoP may resist this double digit increase fearing criticism by the opposition. Reportedly, PIA is incurring substantial losses in its domestic operations and wants to curtail these losses by increasing the tariff. However, many analysts are of the view that PIA's losses are not only due to hike in fuel charges. Its losses are mainly due to widespread inefficiencies and extravaganzas. The low level of services even does not justify the existing fairs.


The Board of Directors approved 33% interim dividend for the year ending June 30, 2003, a little above the market expectation. Analysts believe that the pay out will entirely utilize the amount of last installment received from WAPDA. The Rs 1.2 billion installment was the last installment of the entire Rs 5.3 billion receivable from WAPDA. With last installment received from WAPDA, company's extraordinary cashflow has normalized. Analysts forecast a total pay out of 55 to 55 per cent for the full year. Currently the scrip is traded at a discount. The Scrip still offers attractive dividend yield.


The company has posted Rs 167 million gross profit for July-December 2002 period as against Rs 134.7 million profit for the corresponding period of previous year. The higher profit was mainly due to increase in sales, going up from Rs 512.6 million to Rs 603.8 million. However, the advantage was mostly eroded due to increase in selling and distribution expenses, going up from Rs 94.4 million to Rs 117.7 million. The other factors responsible for erosion of the advantage were the increase in financial charges and decrease in other income. Also due to higher provision for tax, profit after tax improved, from Rs 15 million to Rs 17.2 million.


The problem ridden Modaraba seems to be plunging deeper in problems. For the October-December 2002, quarter revenue was as little as Rs 6 million as against expenses amounting to Rs 20.8 million resulting in loss of Rs 14.8 million. The Modaraba had posted Rs 6.5 million loss for the corresponding period of year 2002. The interesting thing is that the Modaraba had posted Rs 0.330 million loss before tax for July-December 2001 period but tax provision of over Rs 6.6 million resulted in Rs 6.94 million loss after tax for the period. For July-December 2002 period the Modaraba has posted over Rs 12 million loss after tax, without any provision for tax. It was mainly due to the fact that for July-December 2002 revenue came down but there was increase in expenditure as compared to corresponding period of year 2001.




The decline in gross sales during July-December 2002 resulted in Rs 53 million loss after tax as compared to a loss of Rs 29 million for the corresponding period of year 2001. Gross sales came from Rs 749 million to Rs 858 million. Gross profit declined from Rs 81.7 million to Rs 72.9 million. Operating profit went down from Rs 69 million to Rs 42 million. This decline was mainly due to reduction in other income, going down from Rs 21 million to Rs 7 million.


The company has posted Rs 103 million profit before tax for July-December 2002 period as compared to Rs 88.6 million profit for the corresponding period of year 2001. While there was improvement in gross profit, the reduction in financial charges can be termed the key factor responsible for the higher profit. With the increase in sales gross profit improved from Rs 208 million to Rs 134 million. However, the benefit was mostly eroded due to hike in operating expenses, going up from about Rs 23 million to Rs 51 million. Other income went up from Rs 23 million to Rs 32 million. Financial charges came down from Rs 14 million to slightly more than Rs 4 million. Despite an increase in capital, due to issue of 10% bonus shares last year, EPS improved from Rs 0.64 for the year 2001 to Rs 1.00 for the year 2002.







HUB POWER 36.60 34.95 34.95 256,441,000


20.95 20.95


PSO 196.25 189.00 190.50


ENGRO CHEMICAL 90.95 87.05 90.95


FFC JORDON 11.15 10.30 10.30 15,896,000
I.C.I 46.10 42.85 42.85


DEWAN SALMAN 13.35 12.80 12.80


FAUJI FERTXD 76.50 74.00 74.05


SHELL PAKXD 356.90 338.00 338.00


IBRAHIM FIB.XD 17.50 16.90 17.00