STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated July 10, 2004

 

The announcement regarding offer price and subscription dates for the public offer of shares of Pakistan Petroleum Limited (PPL) have provided a new impetus to Pakistan's equities market. The opening price on the first day of provisional trading and its subsequent movement was a pleasant surprise for all. Although, there was a forecast that response to public offer of PPL would be enormous, but the initial response has been beyond expectations. However, there is a piece of advice to

 

 

 

 

the new bread of 'IPO investors' that they must abstain from entering into provisional trading. If one out of ten was the successful applicant to Bank Alfalah IPO, PPL may create yet another record. Saying this, it is also important to remind that investors must remember that only the holders of new computerized national identity cards are eligible for submitting the applications for the proposed IPO. In the past bankers to the issue had been accepting applications with the old cards.

Lately a bearish spell has been witnessed in cement and automobile sectors and bullish sentiments were evident in commercial banks. May be that the speculators were able to identify the picks from the sector. The speculators have duly benefited after the dividend announcement by NIT. The open-end fund has announced Rs 2.55 per unit dividend for the fiscal year ended June 30, 2004. The banks expected to benefit the most are said to be National Bank of Pakistan, Bank of Punjab and Faysal Bank. One factor must be kept in mind that there have been suggestions that minimum paid-up capital requirement for banks should be enhanced. In case the central bank decides to go for the enhancement, the much anticipated cash dividend may not be there.

NATIONAL BANK OF PAKISTAN

The bank had posted better than expected net earnings of Rs 971 million showing a robust growth on the back of strong NIM and fee, commission and brokerage income. The earnings through after tax dividend income from NIT units holdings provides an upside of Rs 1.50/share, which translates to projected bottom line to a sturdy figure of Rs 4.6 billion.

FAYSAL BANK

Apart from reporting better growth in advances portfolio the dividend income from NIT holding would further boost the income of the bank. Faysal Bank had posted lower than expected net earnings in the first quarter of year 2004 after registering an impressive bottom line of Rs 2.12 billion for the year 2003 due to massive exposure taken in the stock market. Dividend income from NIT holding is expected to add renewed interest in the scrip.

BANK OF PUNJAB

The bank has a sizeable holding of more than 150 million NIT units and it is expected to earn an after tax dividend income of Rs 365 million, which would transcend to upside of nearly Rs 2/share in the EPS for the year 2004. The bank has posted robust net earnings of Rs 146 million in the first quarter of 2004. Keeping in mind the first quarter results and heavy dividend income the scrip is expected to attract the attention of investors.

OGDC

The scrip has emerged to be more or less the top volume leader at the Karachi Stock Exchange. Lately, the rumours have been in circulation that the largest oil & gas exploration company has hit dry well, which may affect its earning and in turn dividend payout. The weak holders became a little panicky. Most of the analysts are of the view that hitting a dry well should not be cause of concern and earnings of the company remains robust. As compared to international standard OGDC has an enviable success rate. On top of every thing the sky rocketing international prices of crude oil are expected to provide further boost to OGDC's earnings.

HUBCO

The company has recently announced that the faulty generator, which was expected to start functioning in the second half of August, is likely to start functioning in end September. Some of the analysts are of the view that this delay in the repair and commissioning of the generator will not have any effect on earnings and payout of the company. The earnings expectations remain around Rs 4.5 to Rs 4.7 per share for the year ending June 30, 2004. HUBCO ran on a load factor of 26% in year 2003 and even lower load factor is expected for the year 2004 due to WAPDA's inclination towards relying more on in-house generation, particularly cheaper hydel power. Besides, HUBCO has an insurance cover for the damages and for any interruption in business caused by the failure. The only factor having the potential to affect the price of the scrip is the rising T-Bills and PIB yields, as the scrip should be measured against these because of its dividend paying nature. The recent fall in the quoted price has further improved the expected cash yield for the stock. The expected final cash dividend of Rs 1.8/share translates into an annualised yield of above 11% at the current price.

 

 

Company High  Low Closing Week's Turnover

Oil&Gas Dev.XD

67.45

66.95

67.10

146,235,200

B.O.Punjab

63.95

56.80

63.95

143,802,000

National Bank

71.70

68.00

71.70

116,971,800

D.G.K.Cement

59.00

58.10

59.00

76,256,500

I.C.I.

95.65

88.55

95.65

69,950,600

Sui North Gas

65.75

64.75

65.50

39,241,900

M.C.B.XD

54.70

51.85

54.70

36,078,000

Sui South Gas

33.00

32.60

32.85

26,251,000

Fauji Cement

16.55

16.35

16.35

20,210,500

P.S.O.XD

256.65

255.25

256.65

6,411,700