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| Monday, 28 February 2005 |
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[HNB Stockbrokers' weekly market review] Market remains resilient The market remained flat for most part of the week, with the ASPI hovering around the 1720 point mark. The ASPI rose on Thursday to 1726.8 points, but marginally fell again on Friday. The ASPI closed on Friday at 1720.1 points, up 0.32% or 5.5 points compared to the week before. The MPI showed a declining trend for the week, after climbing to 2375 points on Monday. The MPI closed on Friday at 2351.8 points down slightly by 0.7 points or 0.03% compared to the week before. Investor interest remained on Rs. 1 par value counters such as Nawaloka, Royal Ceramics and Tess Agro. However, the amounts traded were substantially lower. Approximately 49.9 million Nawaloka shares traded compared to 79.5 million shares traded the week before. The counter contributed around 321.2 million to the week's turnover, trading at a high of Rs. 7 and a low of Rs. 5.50 to close at Rs. 6.75. Approximately 11.6 million Royal Ceramics counters traded. The counter closed at Rs. 4.25 per share, up by Rs. 0.50. Tess Agro saw around 13.4 million of its shares being traded. The counter closed the week at Rs. 1.75 per share. The total turnover for the four trading days stood at Rs. 1.58 billion. The average daily turnover was Rs. 395 million, 9.2% less than the daily average of the previous week. Interest on JKH counters remained high amid expectations of strong corporate profits with approximately 1.8 million shares traded, contributing around Rs. 252.2 million to the total turnover. JKH on Friday announced a 10% 2nd interim dividend for FY2005. The counter closed at Rs. 138.25 on Friday. LIOC managed to stay among the top 5 volumes traded with approximately 2.7 million shares being traded. The share price was seen falling marginally to close at Rs. 50.00 per share on Friday. Foreign investors remained net sellers amounting to Rs. 88.4 million. Foreign purchases stood at Rs. 147.2 million, while foreign sales stood at Rs. 235.6 million. On Tuesday foreign sales rose to Rs. 108.7 million, which was mainly due to a transaction in JKH shares. Foreign participation was 12.1% of total activity. Among the most heavily traded stocks were Nawaloka, Tess Agro, Royal Ceramics, LIOC and Fort Land. Despite political tensions indices held its ground even though some volatility was observed throughout the week. Most corporate results released during the week, showed the certainty in earnings growth. The market would continue its upward trend with considerable volatility due to macro developments. The volatility would create clear trading opportunities at the market place. We advise investors to look for opportunities for bargain hunting. Durdans results 3Q FY 2005 The 9 months results of Durdans Hospital for FY2005, showed the net profit rising by 43.9%, compared to the corresponding period of last financial year, to stand at Rs. 74.3 million. The major contributor to the bottom line growth was, the 31.8% growth in group revenue, which stood at Rs. 664.6 million. The 3rd-quarter, revenue stood at Rs. 248.2 million showing 34% increase, compared to the corresponding period of the previous financial year. Leading to an increase in laboratory income for Durdans. Apart from this as highlighted in our previous update, the hospital is enjoying high occupancy rates, averaging around 95%-100%. The gross profit for the 9 month period stood at Rs. 373.9 million, which is an increase of 30.1% compared to the same period of last year. Gross margins however remained more or less static quarter on quarter. Gross margins for the 2nd-quarter stood at 55.5%, while the 3rd-quarter saw gross margins slightly up standing at 55.9%. The gross margins for the 9 month period of FY2005 stood at 56.3%, which is very much in line with our projected gross margin of 56.7%, for the full year of FY2005. The operating profit for the period stood at Rs. 99 million, showing an increase of 39.3% compared to the corresponding period of last financial year. However, the group's administration cost showed an increase of 31.3%, to stand at Rs. 244.3 million for the 9 month period. Meanwhile quarter on quarter we saw an increase in administration costs of 11.8% to stand at Rs. 89.9 million. With expansion plans on the cards and the hospital planning to provide new services in the near future. We expect the company to perform well in the medium to long-term. Apart from this as highlighted in our previous report the forward earnings multiples, for the company are expected to be favourable, showing a declining trend during the coming years. The forward multiples are to fall from 8.2x in FY2005 to 7.2x in one
year's time. Thus we retain our rating for Durdans as a Long Term Buy. |
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