STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated April 26, 2003

 

The behavior of the market during the week was beyond comprehension. Though, nothing seems to have gone wrong, in terms of economic fundamentals, the activity in certain scrips forces one to believe that some manipulative forces were in full action. This was evident from large trading volume in PTA, Pakistan International Airline and FFC-Jordan. Another interesting feature was sudden rise in the daily trading volumes of companies like Nishat Mills, D. G. Khan Cement.

 

 

 

Two factors, visit of UN Arms Inspectors to Pakistan and the SBP's proposed regulation regarding investment of commercial in equities, were said to have caused massive selling. However, none of these could be termed a plausible reason for panic selling. There ought to be some other reasons that certainly demand thorough probe by the regulators. Though, one should not talk about the rumors, but there was a rumor that a leading broker sold some large holdings that triggered massive selling in general.

While one have all the reasons to believe that the proposed prudential regulations of the central bank are aimed at strengthening the commercial sector, the proposal to reduce the investment of commercial banks in equities does not look timely. Since the banks are suffering from 'surplus liquidity crisis' at present the move may not be good. However, the central bank must discuss the issue, at length, with the players, to ensure adequate returns to banks and avoid massive selling of equities.

It may be of some interest to read the comments of Aqib Mehboob Elahi, Head of Research, AKD Securities. He says, "Since the SBP chose to define equity in this document as the total tier-I capital, we can safely assume that capital base includes tier-II capital as well. In that scenario, we do see only minor trimming in commercial banks' equities holdings, and that too over an extended period of time. In fact, we quite like the proposal to limit investment as the last thing we would like to see is depositor funds to be used as speculative funds by the banks."

ENGRO CHEMICAL PAKISTAN

The overall demand for urea during the first quarter of year 2003, declined by 21% compared to the corresponding period of previous year on account of pre-stocking by dealers in December 2002. However, the company's sales for the quarter increased by 8% to 167,000 tonnes. The company also achieved an all time record production of 240,500 tonnes during the quarter. Net profit for the quarter was Rs 234 million compared to Rs 140 million for the corresponding quarter of 2002. The increase in sales is mainly attributable to higher urea sale volume, efficiencies in fuel gas consumption and lower financial charges. However, the benefit was partially offset by recognition of presumptive tax on imported products as against normal tax in first quarter of year 2002. The loss from NPK operations for the quarter was Rs 4 million as compared to a loss of Rs 30 million for the corresponding period of last year. The operations at two of its subsidiaries were satisfactory. Engro Vopak is expected to post Rs 72 million profit after tax for the quarter and Engro Ashai's profit is also expected to be higher as compared to the first quarter of 2002. However, earings of the sector are expected to come under pressure if the GoP asks the manufacturers to curtail urea prices without offering corresponding incentives.

FAYSAL BANK

The bank was prompt in announcing its first quarter results of year 2003. It has posted Rs 634 million profit before tax as compared to a profit of Rs 253 million for the corresponding period of year 2002. Profit after tax went up from Rs 135 million to Rs 557 million. At the end of the quarter deposits were Rs 24 billion as against deposits of Rs 22 billion at the end of year 2002. Business figures also show significant upward trend, going up from Rs 6.5 billion to Rs 11 billion. The bank is also implementing a branch expansion programme to bring the total number of branches to 39 by the end of year 2003.

TRI-PACK FILMS

According to a report by IP Securities, the performance of the company over the past three years is a depiction of consistent growth pattern. The recently released quarterly results also support this. The company has posted Rs 59 million net profit as compared to a profit of Rs 48 million for the corresponding period of year 2002. The company is engaged in the manufacturing of BOPP films mainly used for packaging of consumer products. During the year 2002, the continuous up keeping and consistent longer job runs resulted in operations of the production lines at full capacity. The company had posted Rs 248 million profit for the year 2002 and also distributed 30% dividend. The company is expected to post profit around Rs 300 million for the year 2003. The company enjoys income tax exemption for a period of eight years beginning commercial production on June 01, 1995.

 

 

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

P.T.C.L.A

25.80

23.95

24.40

216,394,000

Hub PowerXD

35.40

34.05

34.35

148,883,500

Sui North Gas

26.95

25.75

26.45

120,794,500

Pak.PTA Ltd.

9.10

7.75

8.85

79,305,500

P.I.A.C. (A)

11.20

10.05

10.85

57,709,500

P.S.O. SPOT

218.35

201.50

204.85

50,331,000

FFC JORDAN

12.35

11.10

11.15

28,362,500

D.G.K.Cement

14.75

13.30

14.00

21,964,000

M.C.B.

34.80

31.40

32.35

14,597,000

Nishat MillsXB

21.35

19.50

20.25

8,584,500