STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated May 24, 2003

 

During the week the KSE-100 index improved its previous highest by touching 3,100 level but closed at 3,081 due to profit taking. Now the analysts are looking at 3,200 level before announcement of budget. All the economic indicators hint towards further gains in index but not without minor surges. Investors should not expect upward movement of index in a straight line. Despite increase in share prices of leading scrips dividend yields would be robust due to improved corporate earnings.

 

 

 

However, the only concern is the widening breach between treasury and opposition on LFO. The opposition says it would not allow the government to present Federal Budget 2003-04 in the National Assembly. If it happens, may God forbid, then approval of the budget from the lower and upper houses will be in doldrums. In such a scenario there will be no options but to dissolve the National Assembly. While the credibility of present government is at stake, opposition will be the biggest looser, if the assemblies were dissolved.

Keeping the demand and supply gap of quality scrips, the government must take two immediate steps listing of good performing state owned enterprises on stock exchanges and offer 10 to 15 per cent shares of these entities to general public. The GoP should also off load another 10% shares of already listed companies. On the one hand it will help the government to mobilize funds from sale of shares and on the other hand contain upward movement of quoted prices of shares of blue chips. This announcement, with explicit schedule, must be made at the earliest.

KOHINOOR POWER COMPANY

The company has posted Rs 0.585 million operating loss for the third quarter ending March 3, 2003 as against a profit of Rs 1.555 million for the corresponding period of previous year. The analysis of nine months performance shows massive decline in profit, despite increase in sales. This decline is attributed to hike in cost of sales due to higher prices of fuel oil during the period. Sales went up from Rs 233.5 million to Rs 269.7 million. As against this cost of sales hiked from Rs 221.6 million to Rs 268.2 million. As a result the company posted Rs 2.9 million loss after tax during the period under review as compared to profit of Rs 9.6 million. However, the company is expected to recover the loss during the fourth quarter.

DANDOT CEMENT COMPANY

The company has posted Rs 96 million loss after tax for the third quarter ending March 31, 2003 as compared to a loss of Rs 63 million for the corresponding period of last year. As a result loss after tax for the nine months period exceeded Rs 268 million. The loss after tax for the corresponding period of last year was nearly Rs 110 million. The losses of the company are attributed to lower sales and higher cost of goods sold. Sales declined from Rs 564 million to Rs 421 million. Cost of sales went up from Rs 548 million to Rs 599 million. The good part of the story is that that management was able to bring down financial cost from Rs 112.5 million to Rs 91.6 million. The real cause of concern is that unless the company brings its cost of goods sold down substantially, it will continue to add losses to accumulated losses already touching Rs 1,681 million.

GHARIBWAL CEMENT

The company has posted Rs 65.8 million loss after tax for the third quarter ending March 31, 2003 as against a loss of Rs 10.9 million for the corresponding period of previous year. Sales during the quarter amounted to Rs 10 million and cost of sales were Rs 55.3 million leading to gross loss of Rs 45.4 million. A closer look at the financial results for nine months period of ongoing financial year shows even a more alarming situation. Not only there was a substantial decline in sales but cost of goods sold was higher than sales. Net sales came down from Rs 687 million to Rs 408 million. As a result the company posted Rs 106 million operating loss for the nine months as against an operating profit of Rs 6 million for the corresponding period of previous year. It is appreciable that despite difficult working condition management of the company was able to bring down operating expenses and financial charges.

 

 

BESTWAY CEMENT

As compared to the above-mentioned two cement plants, Bestway is based on the latest technology and also uses gas instead of furnace oil. Therefore, it was able to face the adverse prevailing situation in a better manner. Production of clinker and cement increased and dispatches were also higher. As a result the average capacity utilization during the nine months of ongoing financial years improved to 78% as compared to 60% for the corresponding period of previous year. However, pressure on cement prices did not allow the company to reap higher profit. Gross profit for the nine months period came down from Rs 399.2 million to Rs 285.5 million. Operating expenditure and financial charges were also higher as compared to figures of corresponding period of last year. As a result EPS came down from Rs 0.79 to Rs 0.14.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

P.T.C.L.A

26.15

25.45

26.10

192,739,000

Hub Power

35.40

34.75

35.25

153,335,000

D.G.K.Cement

18.35

15.75

18.35

108,947,500

Sui North Gas

32.15

30.80

32.00

80,579,000

P.S.O.

216.00

206.10

214.25

70,653,500

Lucky Cement

14.35

12.80

14.35

39,770,000

Sui South Gas

20.95

18.75

20.95

15,703,500

Fauji Fert

86.50

82.80

86.50

13,770,500

Engro Chem

81.40

79.10

81.40

12,848,200

Shell Pak

392.90

377.60

392.90

1,719,900