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PSO may post Rs4.1bn profit for 2002-03

KARACHI, Aug 11: Pakistan State Oil Company Limited (PSO) is expected to post profit of Rs4.1 billion for the year ended June 30, 2003 and distribute cash dividend at Rs6 per share , a poll of four leading brokerage houses taken on Monday suggested.

The company board is scheduled to meet on Tuesday at 9:30 in the morning to sign-off annual audited accounts and approve the appropriations.

While analyst are putting forth a consensus forecast on final dividend of Rs6, which including the interim at Rs9 already paid, would take the full year payout to Rs15 per share, the sticking point is whether or not the company would come up with a bonus issue as well.

Last year, the company had declared a bonus at 20 per cent and until early trading on Monday, most analysts were sanguine that a repeat bonus was in the offing.

The 10-rupee share in PSO has gained 34 per cent in the past one- month, rising from Rs235 to Rs316. The share had galloped 22 per cent in the last two weeks, in absolute terms, so as to outperform the KSE-100 index by 7 per cent. At least a major part of the price rise was attributed by dealers to bonus expectations. But the stock slipped 4 per cent or by Rs9.25 on trading in 22 million shares on Monday to close at Rs306.75.

“The decline in the price on Monday was on the back of rumours or inside information that the board was to skip the bonus,” says Mohammad Sohail, head of research at InvestCap.

Other brokerages that were projecting earnings and cash dividend also quite close to Rs4.1 to Rs4.3 billion and dividend between Rs6 to 7 per share include Jahangir Siddiqui & Co. Ltd; Taurus Securities and Capital One Equities.

Taurus Securities observed that the OMC had shown hefty earnings of Rs3.2 billion in the first nine months of the current year; one of the reason for improvement in distribution margin of 3.5 per cent on HSD (up from 3 per cent last year).

Analysts at Jahangir Siddiqui & Co. Ltd. said that PSO's profitability was expected to depict massive surge on the back of inventory gains and higher rupee margins. For financial year 2002, the company had made full year earnings of Rs3.2 billion and paid Rs13 per share in cash dividend tied to a bonus issue at 20 per cent.

Analysts at JS & Co commented that the investor interest in PSO had been flared up owing to headway in privatization; robust profitability; payout expectations and plans to set up a refinery. The Privatization Commission has already communicated that the bidding for sale of PSO would be held in October.

Analysts at Capital One Equities said that among the prospective bidders, Fauji Foundation was one of the active parties for this major transaction. “However, it would not be easy for the foundation to raise funds as recently it has been involved in Fauji Jordan Fertilizer Company's endowment and had major association with Fauji Fertilizer in Pak Saudi Fertilizer's merger with FFC,” says Humaira Zaheer at First Capital, adding that MIDROC-Saudi Arabia has also shown a great deal of interest in bidding for PSO.

Kuwait Petroleum Company, which takes care of over 71 per cent of Pakistan's diesel import needs every year, was also being looked upon as a strong contender, owing to its corporate bonding with the OMC, especially since the deregulation in 2001.

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