STOCK WATCH

 

 

By SHABBIR H. KAZMI
Updated Sep 18, 2004

 

A delegation of stock brokers and heads of three stock exchanges led by Arif Habib, Chairman, Karachi Stock Exchange, met Prime Minister Shaukat Aziz on Friday. While the expectations were that the brokers' fraternity would be able to convince the Prime Minister to abolish Capital Value Tax (CVT), it seems they did not succeed. Arif Habib also raised the issue pertaining to CVT and explained its implications on the market activity. It is believed that the Prime Minister assured all the possible support, including substantive dialogue on CVT issues. The Prime Minister also observed that the matter has already been settled and if there was any thing not 

 

 

 

 

being implemented as agreed, the Chairman KSE should send him the details in writing, which would be discussed with open mind.

It seems that the brokers' fraternity is not supporting the idea of imposition of tax on shares bought and also sold on the same day. However, the general consensus is, "If government accepts this demand, it would be the greatest disfavor to the investors. While there is tax on capital gains, there are all types of taxes being collected from the investors."

CHERAT CEMENT

Cherat Cement announced its financial results for the year ended June 30, 2004 (Wednesday). Its Board of Directors also approved distribution of 40% dividend among the shareholders and issue of 25% Bonus Shares. The results are above market expectations mainly due to reduction in financial charges and higher sales revenue from export of cement. The company has posted Rs 426 million profit after tax as against Rs 10 million registered during last year. According to a KASB Securities report, there are three factors that caused this significant growth in the company's: 1) a 38% increase in sales revenue owing to 12% increase in sales volume and better retention price for both local sales and exports, 2) 140bps improvement in gross margins from coal conversion and 3) a 36% reduction in financial charges. Historically, Cherat Cement's earning numbers and payouts are exceptionally better than all other cement companies. However, these numbers should not used to gauge the over all performance of the sector. According to an AKD report, the company will be expanding its production capacity by 240,000 tons in 2006, raising its total capacity to one million tons. Having a one billion rupee expansion project in the pipeline, the company had decided to retain a portion of its earnings, and issue 25% Bonus Shares. Besides utilizing a portion of retained earnings, the company is also expected to partly finance the expansion project through debt.

FAUJI CEMENT

The company announced its financial results for the year ended June 30, 2004 on 8th September. The results portray a complete reversal of fortune. Ever since its establishment 2004 is the first profitable year for the company. The company has posted Rs 314 million profit after tax as against Rs 531 million net loss for the previous year. The results were termed 'far below market expectations'. This variation was due to 1) write-off of deferred cost and 2) taxation. Taking advantage of an earning year and financial restructuring, the company also managed to clean its slate. The exercise will result in lowering the fixed operating leverage, which will eventually have a positive impact on bottom line of the company. According to a KASB report, three factors have contributed towards the turnaround of the company. These are: 1) financial restructuring resulting in a 50% decline in financial charges, 2) reduced dependence on furnace oil boosting gross margin by 32%, and 3) increase in exports by 113%.

 

 

PAKISTAN OILFIELDS

The company has posted Rs 2,495 million profit after tax for the year ended June 30, 2004 as compared to Rs 2,428 million for the previous year, registering a growth of 3% only. The Board of Directors approved distribution of 125% dividend among the shareholders. The results were termed 'inline with market expectations'. According to an AKD report, the top line improved by 4% purely on the back of higher oil prices, whereas there was no volume growth. On the cost side, prior year's royalty expenses increased the cost by 9%. This was further exacerbated by increase in write-offs pertaining to exploration, cost was up 64%. However, lower other expenses and higher other income helped in containing the adverse impact. Commencement of commercial production from TAL field, expected to come online in October this year, will contribute towards much needed volume growth. However, lower production from existing fields will partly erode the benefit. Nevertheless, production from TAL field will diversify the revenue base. The second profitability driver for the company would be the movement in international oil prices, as output prices are linked to that. Exploration cost write-offs are expected to increase due to aggressive policy being followed by the company.

Company High  Low Closing Week's Turnover

Pak Petroleum Ltd.

112.80

108.50

112.80

215,776,100

Oil&Gas Dev.

62.25

59.10

59.80

130,521,700

D.G.K.Cement

55.85

54.20

54.95

97,257,500

P.T.C.L.A

39.25

38.40

39.15

55,330,000

Hub Power

32.05

30.70

32.05

50,029,000

National Bank

68.40

67.60

67.80

38,071,400

M.C.B.

47.85

47.00

47.70

20,046,100

Sui South Gas

27.70

27.15

27.25

14,399,500

Pak Oilfields

201.00

197.50

198.25

10,068,700

Cherat Cement

85.40

79.45

85.00

1,202,700