STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated July 19, 2003

 

Pakistan has received US$ 798 million foreign direct investment, showing an increase by 65%. The sectors having received the major share are, financial services, oil and gas, transport, chemicals, trade, power, textile, and communication. The largest amount has come in from the UK followed by the USA and United Arab Emirates.The equities market is expected to remain in focus mainly due to over flowing liquidity. On Thursday banks offered bids worth Rs 21.45 billion for one-week T-Bills but Central Bank accepted bids worth Rs 11 billion.

 

 

 

The rate went down from 0.59% to 0.50%. This left the liquidity high and disappointed the market players. They were expecting the interest rate on one-week repo to rise but it slipped even lower.

The change in exposure rules did cause panic selling but the market recovered immediately. The KSE-100 index lost 129 points on Tuesday due to implementation of new rules. It gained 155 points in next two days and breached 3,700 level to close at 3,711 on Thursday.

Securities and Exchange Commission of Pakistan (SECP) made important announcement during the week, initiation of delisting proceeding against 19 companies and unearthing of 39 illegal brokerage houses. The efforts of the Commission deserves appreciation. However, a lot more has to be done. It may not be out of context to reiterate that certain elements are always on a haunt for innocent investors. It is the responsibility of regulators to protect the interest of investors.

CHERAT CEMENT

The recent initiatives by the GoP are positive for the cement sector. Analysts forecast capacity utilization around 68% due to higher demand. Historically capacity utilization has remained between 60 to 65 per cent. However, another important segment is export of cement to Afghanistan. The advantage is higher for Pakistani cement manufacturers who cater to northern Afghanistan. Cherat is now fully converted to coal, which has reduced the cost of fuel by more than 50%. The company has the advantage of a strategic location, close proximity to northern Afghanistan. Cherat is the leading cement exporter to Afghanistan, with a 37% market share. With low manufacturing cost, improved cement prices and a growing market in Afghanistan the company is expected to be the largest beneficiary of export of cement. Analysts forecast Rs 209 million profit after tax for the current year ending June 30, 2004.

PAKISTAN TELECOMMUNICATION COMPANY

The announcement of telecommunication deregulation policy is not expected to adversely impact the earnings to the company. The company does face an immediate threat in the short to medium term. The most fragile area, international business, will remain a strong point for the company. As regards local loop, the potential threat from other operators like Telecard and WordCALL is not expected to a significant. The statement regarding reducing telephone charges for local telephony may sound rhetoric, but can pressurize PTCL to revise tariff downward.

 

 

PAKISTAN INTERNATIONAL AIRLINE

The national carrier has posted Rs 1,553 million profit before tax for January-June 2003 as against a profit of Rs 553 million for the corresponding period of year 2002. The airline has made a down payment of US$ 162 million towards the purchase of Boeing 777 and the first two aircraft will be added to its fleet in January 2004. The airline has announced 20% increase of gross salary of all groups. Besides this, the management has already distributed Rs 200 million as bonus to the employees. An amount of Rs 80 million to Rs 100 million will be spent on the restructuring of retired employees pension fund.

MARI GAS COMPANY

The company has singed Pakistan's first-ever production sharing agreement. The agreement signed with the GoP, related to the petroleum exploration in two blocks located in ultra-deep waters of Indus delta. These blocks are G spread over 7,466 kilometers and H covering 7,130 kilometers. Both blocks are located in Indus Delta south of Karachi at a distance of around 175 kilometers in the water-depth ranging 2,500 to 2,800 meters. These blocks lie in physically challenging environment. A sum of US$ 10 million had already been spent on seismic, geological, geophysical and related works.

SHELL GAS

The company has posted Rs 26.6 million profit before tax for the quarter ending March 31, 2003 as compared to a profit of Rs 17.2 million for the corresponding period of last year. Sales went up from Rs 143.8 million to Rs 182.5 million. However, the advantage of increase in sales was eroded due to hike in cost of goods sold, going up from 114 million to Rs 142 million. Operating expenses also went up from Rs 12.9 million to Rs 16.3 million. Increase in other income and reduction in financial charges improved the bottom line. However provision of Rs 12.9 million for tax reduced the after tax profit to Rs 13.7 million or half of profit before tax.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE)

P.T.C.L.A

31.55

29.85

31.40

395,024,500

Hub Power

40.35

38.50

39.55

368,429,500

P.S.O.

253.70

237.00

253.70

152,619,300

National Bank

31.30

29.40

31.30

43,010,000

Engro Chem

91.25

87.00

89.80

39,493,800

M.C.B.

41.65

39.30

41.65

37,333,500

Fauji Fertilizer

94.80

91.20

94.00

20,409,500

Askari Bank

37.85

30.55

37.85

7,643,000

Shell Pak

442.95

425.50

433.00

1,543,400

Union Bank

16.80

16.00

16.70

542,000