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KARACHI         - 021 LAHORE          - 042 ISLAMABAD    - 051 FAISALABAD   - 041 MULTAN          - 061 PESHAWAR    - 0521 CANADA          - 1 KUWAIT           - 965 INDIA               - 91 IRAN                - 98 U.K                   - 44 U.A.E                - 971 U.S.A                - 1

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  STOCK WATCH

By SHABBIR H. KAZMI
Updated Oct 01, 2005

•PTCL deal with Etisalat has not been cancelled, said Etisalat officials.
•Etisalat has already paid $40 million, final payment will be made by October 28.
•SSGC has announced 15 percent final cash dividend or Rs 1.50 per share cash dividend.
•Pakistan would set up oil refineries at Gwadar, said President Musharraf.

The government has granted an extension to Etisalat of the UAE till 28th October to complete the PTCL transaction and takeover the company. The request for extension was accepted after a closed-door meeting of a delegation of Etisalat with Dr. Abdul Hafeez Shaikh, Minister for Privatization and Investment. The requested was formally by the Prime Minister, Shaukat Aziz keeping in view the difficulties faced by Etisalat. Earlier in an unprecedented decision was granted in favor of Etisalat, when the government curtailed the time from 36 months to 18 months for pledging PTCL shares, after completion of the transaction. It is worth noting that other interested bidder had also made the same request during due diligence, which was rejected. In a separate move the CCoP had also approved amendments in the Shareholding Agreement and Share Price Agreement, as recommended by the Financial Advisory Consortium. The Committee has also allowed the Privatization Commission to offload 8.5% 'A' class shares, but refused to give matching rights to Eitsalat, which the company had demanded to enhance its voting power.

The Pakistan Cotton Ginners Association has come out with its first report of the cotton crop for the current year (2005-06). The arrival of cotton bales as of September 15, 2005 has shown a decline of 53.5% bales over the same period last year. The shortage in the arrival of bales can be attributed to recent flood that interrupted arrival as well as damaged the crop. This situation is not expected to continue in the coming months and future cotton arrivals are expected to be at par with last year, although one must take into account loss of 1-1.5 million bales due to bad weather. The expectation for the cotton crop should be around 13 million bales, compared to last year's 14.6 million bales. The cotton price is expected to be lower due to surplus millers stock and an over supply situation, given these two factors cotton prices are expected to hover around Rs 2,200 for this season.

Pakistan has estimated gas reserves of about 28.1 TCF of gas, where the present annual consumption is over 1TCF. With the present growth of 20.54% in gas consumption, Pakistan could face a shortage, due to production constraints, of up to 1500mmcfd of gas by the year 2015. In view of this, timely implementation of the gas pipeline project becomes even more crucial. that the GoP will soon have to go ahead with one of the three options namely 1) Iran/Pakistan/India, 2) Turkmenistan/Afghanistan/Pakistan 3) Qatar/Pakistan. SSGC stands to be the biggest beneficiary should the GoP decide to go ahead with any of the three projects. Previous inconclusive discussions between the potential partner countries have influenced its share, which has been a massive underperformer in the last few months. To make matters worse OGRA denied SSGC the accommodation of capex incurred as per its implementation schedule for (GIREP-II) based on the company's inability to meet the regulatory requirements. However, the emerging scenario is likely to change, as its expansion will inevitably be incorporated and will consequently be reflected in the company's profitability and its share price.

Pakistan Telecommunication Company announced its financial year for the year ended 30th June 2005. It posted Rs 26.61 billion profit after tax (EPS: Rs 5.22) for the year 2005 compared Rs 29.16 billion profit (EPS: Rs 5.72) last year. This shows a decline of 9%. However, the most surprising fact was that the board refrained from announcing the much awaited final dividend. Both the poor result and no dividend had a major share in depressing market sentiment. However, AKD Securities views this decision positive. It believes that it was Etisalat's invisible hand, which forced the GoP from announcing any dividend. Etisalat has started exercising authority on PTCL even without the actual transfer of money for the 26% strategic stake. Not only is this, but the firing of telecom foundation workers, internal restructuring and all indicate towards one single outcome Etisalat Coming! Perhaps when the payment is made and share transfer is complete, Etisalat will announce the delayed final cash dividend.

Callmate also announced its financial results for the year ended 30th June 2005. This translates into an EPS of Rs 8.6 compared to Rs 1.35 for 2004. The company has reported topline and bottomline growth of 128% and 539% respectively. This improvement can be attributed to increased call traffic volume for International incoming and outgoing calls and nation wide dialing. Furthermore, the company's gross margin surged by 1,423 basis points to 35% for 2005 compared to 20.5% in 2004. The increase in margin was largely due to the fact that CTTL is now a licensed LDI operator and no longer operates as an O&M operator for PTCL, where its margins were capped. Along side final results, CTTL announced 10% cash and 10% Bonus issue.

Millat Tractors recently announced its annual result for the year ended 30th June 2005, posting Rs 453.9 million profit after tax compared to Rs 394.6 million for the previous year, registering a growth of more than 15%. The company continued to show robust sales on the back of improved economy and high growth shown by the agricultural sector. The government's increased attention to the sector can be judged from its aggressive agricultural sector credit plan. Credit disbursement to the sector reached the level of Rs 108.6 billion during 2005 against Rs 74 billion last year, a growth of nearly 48%). The company continued with its hefty dividend payout policy and announced a final cash dividend of Rs 15/share along with 30% bonus issue.

 
 

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