STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated June 06, 2003

 

With the KSE-100 index constantly improving its previous best, all eyes are now set at much talked about 3,300 level. No doubt the index has the potential to go beyond this level, investors should not ignore technical correction that has become over due. Till recently the talking point was dividend yield but now some analysts are suggesting that investors should look at cash flow statement, the real ability of any corporate to pay dividend.

 

 

 

Some of the brokerage houses have started evaluating the impact of forthcoming budget on various sectors as most of the facets of budget have become clear by this time. Two important factors having the potential to change market sentiments, exemption on capital gains and tax on dividend income, are being discussed. While it seems certain that exemption on capital gains will be extended for a couple of more years, the SECP supports the view that dividend income should also be exempted from tax.

As the GoP has enhanced the revenue target and also expressed intention to reduce tariff on imported imports, it is yet to be seen how the GoP decides to meet the enhanced revenue collection target. It is expected that the GoP may impose General Sales Tax (GST) on a lot many other products. Interestingly, no one seems to be talking about tax on income from agriculture, may be because country's legislative is still dominated by feudal lords.

KASB BANK

The takeover of bank by the new management seems to have started yielding positive results. The bank has posted Rs 22 million profit after tax for the quarter ending March 31, 2003 as compared to a profit of Rs 5.8 million for the corresponding period of previous year. However, this increase can be attributed to two factors, increase in mark-up/interest income and gains on sale of investment. Income went up from Rs 32 million to Rs 51 million. This increase was mainly due to reduction in interest expense. Gains from sale of investment grew from Rs 9.8 million to Rs 23.3 million. However, the benefit was partly eroded due to increase in administrative expenses, going up from Rs 43 million to Rs 64 million.

MEEZAN BANK

The bank has registered a massive decline in bottom line for the quarter ending March 31, 2003 as compared to the corresponding period of previous year. Profit after tax declined from Rs 59 million to Rs 20 million. The increase in income and reversal of provision against non-performing financing could not help in containing erosion in profit. The plunge in other income and hike in administrative expenses proved too fatal. Income from investment took a nosedive and went down from Rs 57.4 million to meager Rs 7.4 million. Other expenses skyrocketed from Rs 24.5 million to Rs 46.7 million.

 

 

KOHINOOR GENERTEK

The company has posted Rs 0.142 million loss after tax for the quarter ending March 31, 2003 as against a profit of Rs 10.7 million for the corresponding period of previous year. The reversal of this fortune was due to hike in generation cost, going up from 91.4 million to Rs 121.3 million. However, a closer look at nine months of operation does not portrait such gloomy picture. Gross profit for nine months improved from Rs 26 million to Rs 31 million. Management's efforts to contain expenses yielded positive results. There was reduction in operating expenses and financial charges. Operating expenses came down from Rs 8 million to Rs 5 million. Financial and other charges declined from Rs 4 million to 2 million. Surplus on revaluation of equity investment amounting to Rs 2.6 million further improved the bottom line.

PIONEER CEMENT

The over supply of cement, having an adverse impact on sale price had a toll on the earnings of the company and conversion from gas to coal could not help in containing the loss. Sales for the quarter ending March 31, 2003 were Rs 274.6 million and cost of goods sold amounted to Rs. 279.3 million. This led to gross loss of Rs 4.6 million. The company has posted Rs 68.8 million gross profit for nine months as against a profit of Rs. 150.6 million for the corresponding period of previous year. The bottom line was further eroded due to increase in financial charges. Similarly, loss after tax skyrocketed from Rs 18 million to Rs 127 million. The point of concern is that accumulated losses exceeded Rs 803 million as at March 31, 2003.

ESSA CEMENT INDUSTRIES

The company located in the Southern Region also seems to be a victim of over supply of cement. It has posted Rs 1.76 million gross profit for the quarter ending March 31, 2003 as against a profit of Rs 32 million for the corresponding period of previous year. Sales went down from Rs 184.6 million to Rs 133 million. The analysis of nine months operation also exhibits complete reversal of fortune. During the nine months of ongoing financial year the company has posted Rs 25.2 million loss after tax as against a profit after tax of Rs 26.4 million for the corresponding period of previous year. This has also eaten up accumulated profit and pushed the company into red.

 

 

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