STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated June 19, 2004

 

During the week the KSE-100 index remained under pressure due to ongoing negotiations regarding the fate of capital value tax. While brokers are willing to contribute their share towards national exchequer they do not support any mechanism that could possibly help in tracking transactions and the amount of capital gains being made. It is also understood that CBR wish to mobilize around Rs 5 billion tax from capital market operations and brokers wish to restrict it to around Rs 1.5 billion. It is difficult to understand brokers' concern about a tax that has to be paid by 

 

 

the investors and not the brokers. They had never pleaded so fervently the withdrawal of tax on dividend income. Therefore, one tends to get a feeling that if CVT and/or tax on capital gains is imposed it would affect the brokers' income and not the return to investors. The KSE has submitted a new set of proposal and it is yet to receive the response from Islamabad.

The initial reports were that response against public offer for shares of PIA was lackluster. However, according to advertisements placed by Privatization Commission, the subscription received amounted to Rs 1.33 billion as against a target of Rs 1.15 billion. The Commission has offered 5% (57.5 million) with green shoe option for equal amount. If one compares the response against offer for PIA shares and the response against offer for shares of OGDC and SSGC, it becomes evident that investors are doing their homework properly and cannot be lured by mega road shows.

Privatization Commission has appointed Global Securities Pakistan as lead manager for initial public offer of shares of Kot Addu Power Company (KAPCO). The GoP, under its divestment plan will offer 10% shares of KAPCO with green shoe option of additional 10% shares. KAPCO is one of the largest IPPs with an installed power generation capacity of 1600MW. The company was privatized in 1996 and management control was transferred to International Power of UK. Subsequently, more shares were sold to International Power and its total stake in the company stands at 36 per cent and the WAPDA owns 64% shares.

The KSE has released the revised list of twenty nine COT eligible securities and fifteen scrips eligible for future trading. The companies declared eligible for future contracts are OGDC, PTCL, PSO, D. G. Khan Cement, Pakistan Oilfields, Hubco, Fauji Fertilizer Bin Qasim, ICP SEMF, NBP, Dewan Salman Fibres, Sui Northern Gas, Maple Leaf Cement, Lucky Cement, Sui Southern Gas and Engro Chemicals.

JDW SUGAR MILLS

The company has posted Rs 35.5 million profit after tax for the first half of current financial year as compared to Rs 33.8 million profit for the corresponding year of last year. There was decline in sales and gross profit but reduction in financial charges helped in containing erosion of profit. Sales declined from Rs 440.6 million to Rs 426.7 million. Gross profit went down from Rs 108.4 million about to Rs 99 million. Operating expenses also went up from Rs 18.9 million to Rs 27 million. Financial charges declined from Rs 51.6 million to Rs 32.3 million. EPS improved from Rs 1.64 to Rs 1.73.

CRESCENT SUGAR MILLS & DISTILLERY

The company has posted Rs 27 million loss before tax for the first half of current financial year as compared to Rs 2.4 million loss for the corresponding period of last year. The higher loss can be attributed to reduction in gross profit, increase in operating expenses and financial charges despite increase in sales. Sales grew from Rs 578 million to Rs 814 million. As against this cost of goods sold went up from Rs 546 million to Rs 802 million. Gross profit came down from Rs 32 million to Rs 13 million. Operating expenses went up from Rs 28 million to Rs 29 million. Financial and other charges grew from Rs 15.9 million to Rs 19.3 million. The decline in other income, going down from Rs 14 million to Rs 8 million also contributed to erosion of bottom line.

CHAKWAL SPINNING MILLS

The company has posted Rs 32.8 million loss after tax for the first half of current financial year as compared to Rs 18.3 million loss for the corresponding period of last year. The increase in loss can be attributed to reduction in sales going down from Rs 365.9 million to Rs 286.5 million. Gross profit declined from Rs 14.6 million to Rs 11.2 million. A reduction in operating expenses and financial charges could not contain decline in loss. Operating expenses came down from Rs 17 million to Rs 11 million. Financial charges came down from Rs 16.5 million to Rs 10.7 million. EPS went down further from a negative Rs 1.62 to negative Rs 2.90

CRESCENT TEXTILE MILLS

Even the growth in sales could not help in containing decline in profit after tax. Sales grew from Rs 2,238 million to Rs 2,484 million. As against this cost of goods sold went up from Rs 1,965 million to Rs 2,230 million. Gross profit came down from Rs 273 million to Rs 254 million. Operating expenses went up from Rs 154 million to Rs 168 million. Reduction in financial and other charges helped in containing further erosion of bottom line. These charges came down from Rs 117 million to Rs 74 million. This enabled the company to post Rs 20 million profit after tax for the period under review as compared to Rs 32 million for the corresponding period of last year. EPS came down from Rs 0.78 to Rs 0.50.