Updated Aug 16, 2003


The KSE-100 index lost 181 points during the week and closed at 4142 level. This decline can be attributed to a number of factors, i.e. profit taking, KSE's reminder to brokers to comply with margin requirements and above all massive selling in PSO. Many investors had accumulated PSO shares hoping a bonus issue and as soon after the results were announced selling was triggered. The market is still highly over-bought and further technical correction is expected in the forthcoming weeks. It is also believed that applications for listing of OGDC and Pakistan Steel have not been moved as yet. Investors are desperately waiting for the offer for sale of shares of NBP, PIA and SSGC.





The company has posted Rs 4.03 billion profit after tax and also announced 70% final dividend for the year ending June 30, 2003. The company has earned the highest-ever profit before tax of Rs 6.21 billion. The total dividend for the year came to 160% representing a payout of Rs 2.74 billion. Sales for the year amounted to Rs 206.37 billion, up by 13.2% as compared to previous year. This increase was mainly due to increase in POL prices due to Iraq war. The overall consumption of POL products in the country registered a negative growth of 4.5% owing to reduced consumption of furnace oil, going down by 15% as compared to last year. This was due to increased supply of gas to thermal power plants and improved hydel generation. Whereas motor gasoline, diesel Jet A-1 and kerosene recorded a 2.6% growth as against a decline of 1.6% for the previous year. The company has achieved 42% share in motor gasoline. Whereas its market share in diesel increased to 60%. According to company sources, inventory gains vanished during the year and profit was mainly due to cost effective imports/supplies, efficient operation and innovative and aggressive marketing.


For the last three years the company has been effectively meeting its line expansion plan. Recently the management has announced to add another 690,000 fixed lines to its network over the next 18 months. The actual installed lines as on June 30, 2003 stood at 4.9 million as compared to 4.3 million lines twelve months ago.. The utilization also improved to more than 81%. The line expansion has been the driving force in maintaining the growth momentum in revenue of the company. This will help the company in meeting the challenges due to deregulation. The company has also announced to add another 190,000 lines using the new wireless technology, which requires lesser infrastructure cost and is more efficient means for providing telecommunication service in remote areas.


The upbeat at the cement sector has significantly impacted the share price of the company. The scrip has appreciated by 96% since January 2003. It has been traded at a PER of 23.5x, which is far above the market PER of 9.5x. Analysts forecast the full year 2003 net income to touch Rs 220-250 million and a possible dividend payout of around 7%. The nine-months results remained sluggish across the board. However, a positive point was that net retention price of company was relatively better than its competitors, during the first half. However, the situation deteriorated later on due to decline in cement prices. The reduction in cement price may not affect rention price of the company in the long run. The company is expected to further benefit from its full conversion to coal firing system. At 100% coal consumption the company is likely to save around Rs 425 million during the year 2003-04. However, it is too premature to talk about the bottom line improvement, keeping in view the GoP's pressure on cement manufacturers to reduce retail price.


Since January 1, 2003 price of the scrip has appreciated by 186%. According to some analysts, due to the typical price hike the scrip does not offer much to its investors in terms of dividend yield. Based on year 2003 dividend forecast, the scrip offers a 4.4% yield. Investors going for a long-term investment plan should also remain cautious at the current price level as the scrip is being traded at a 60% premium from its long term intrinsic value. The company has able to keep its head above the troubled waters. Textile sector was badly hit during 2002 and early 2003 and the major sufferers were the textile exporters. Umer Fabrics was an exception and its exports declined by 40% for the year 2002 as compared to previous year. The prime reasons were rupee appreciation against dollar and impositions of war risk premium. The company is expected to post better results for 2003 at the back of BMR and following cost optimization approach. Reduction in financial charges are also expected to improve bottom line. The real test of Pakistan's textile industry is in its readiness to compete in the global markets after the complete phase out of textile quota regime.









Hub Power 44.80 42.75 42.75 407,991,500
P.T.C.L.A 36.65 34.75 34.75 270,589,500
FFC JORDAN 20.00 18.30 18.30 150,846,000
National Bank 39.90 38.05 38.40 56,817,500
Pak.PTA Ltd. 13.75 12.80 12.80 48,400,500
D.G.K.Cement 39.60 36.90 36.90 42,900,500
M.C.B. 55.00 51.45 52.25 40,535,000
I.C.I. 78.50 73.05 74.00 33,037,500
PICIC Bank 31.75 28.20 30.45 11,187,500
Askari Bank 45.70 41.40 41.40 7,478,500