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AKD Research [email protected]

+92-21-111-253-111

Weekly Review

The outgoing week marks as the 5th consecutive week, where KSE-100 closed in green. The market maintained its bullish momentum in the first three trading sessions, however witnessed consolidation in the latter part of the week, closing at 37,608pts, up 0.74% WoW. Market ru-

mors on fines on cement companies as well as profit taking dragged the cement sector under pressure in last two trading sessions. Major news during the week included: (i) Current account

deficit in Jun’20 clocking in at US$96mn, down 90% YoY, taking the full year CAD to US$2.9bn, down 78%YoY, (ii) LSM declining 25% YoY in May’20, (iii) $750m agreements signed with WB, AIIB under RISE programme, (iv) GoP considering to withdraw generalized subsidies, and in-

creasing electricity tariff to pass-on the impact and, (v) formulation of Oil Refining and Mar-keting Policy 2020. The incentives in draft package would be applicable to all new 'state of the

art' deep conversion (not second hand/relocated) oil refinery projects of minimum 100,000 bpd refining capacity to be set up anywhere in the country. Accordingly, the ban imposed by OGRA on retail development by Oil Marketing Companies (OMCs) in relation to lack of storage capaci-

ty in the regional context shall be lifted. The KSE-100 average traded volumes during the week declined 4.5%WoW to 407.2mn shares where stocks which generated large volumes included:

1) HASCOL (111.31mn shares), 2) UNITY (105.16mn shares), 3) TRG (94.46mn shares), 4) KEL (79.85mn shares) and MLCF (75.27mn shares). Major gainers from KSE-100 were: 1) SHEL (+21.4%WoW), 2) SERT (+21.2%WoW), 3) ANL (+11.5%WoW) and 4) KAPCO (+11.0%WoW),

whereas laggards dragging the index lower were: 1) ARPL (-6.2%WoW), 2) PAEL (-6.4%WoW), 3) DGKC (-6.4%WoW), and 4) PMPK (-6.9%WoW).

StockSmart

AKD Equity Research / Pakistan

Pakistan Weekly Update

Important disclosures including investment banking relationships and analyst certification at end of this report. AKD Securities does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.

Important disclosures

Copyright©2020 AKD Securities Limited. All rights reserved. The information provided on this document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject AKD Securities or its affiliates to any registration requirement within such jurisdiction or country. Neither the information, nor any opinion contained in this document constitutes a solicitation or offer by AKD Securities or its affiliates to buy or sell any securities or provide any investment advice or service. AKD Securities does not warrant the accuracy of the information provided herein.

www.akdsecurities.net

AKD Securities

TREC Holder & Registered Broker

Pakistan Stock Exchange

REP-019

Find AKD research on Bloomberg

(AKDS<GO>), firstcall.com and Reuters Knowledge

Major board meetings in the upcoming week include: FFC and EFERT. The KSE-100 may contin-ue to witness consolidation on the onset of Eid holidays and roll over week, given a 10% rally over the past 1M.

24 July 2020

Outlook

Top-5 Volume Leaders

Symbol Volume (mn)

HASCOL : 111.31

UNITY : 105.16

TRG : 94.46

KEL : 79.85

MLCF : 75.27

Source: PSX & AKD Research

Indic e s KSE- 10 0 KSE- 3 0

This week 37,608 16,315

Last week 37,331 16,148

Change 0.74% 1.04%

Indic e s KMI- 3 0 Allsha re

This week 59,948 26,719

Last week 60,265 26,741

- 0.53% - 0.08%

Mkt Ca p. PkRbn US$ bn

This week 7,073 42.30

Last week 7,079 42.47

Avg. Da ily Turnove r ('mn sha re s)

This week 407.23

Last week 426.44

Change - 4.5%


Index & Volume Chart KSE100 Gainers & Losers

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AKD Securities Limited

24 July 2020

StockSmart


This Week’s Daily Reports

2

INDU & HMB: Result Previews, (AKD Daily, Jul 24, 2020)

Weakest quarterly sales yet, pull INDU’s 4QFY20: INDU is expected to announce FY19 results (on 10th Aug’20) with NPAT expected to rest at PkR5.6bn (EPS: 71.2/sh) depleting 59%YoY, continuing its cumulative annual YoY slide in earnings to a second consecutive year (FY18 was when earnings peaked). Core drivers pulling profitability lower include: 1) sticker-shock (stark rise in prices for older variants), coupled with broader dampeners for consumer durable spending and COVID-19 outbreak leading to the lowest quarterly vehicles sales in history, pull-ing full year net sales down by 41%YoY, 2) softening operational leverage coupled with PkR devaluation against US$, pressuring GM to rest at 9.3% vs. 12.2% for FY19, and 3) other in-come from ST investments (at PkR31.9bn, 46.1% of total assets) having an tapered contribu-tion (expected to decline 19%YoY), as returns compress following monetary easing. On a se-quential basis, 4QFY20E EPS of PkR7.84/sh is expected, moving +172%QoQ/-82%YoY where the final year DPS of PkR2.5/sh would take full year DPS to 25.5/sh.

HMB 2QCY20 earnings likely to clock in at PkR1.59/sh, +5.6%QoQ: Previewing 2QCY20 earn-ings for Habib Metropolitan Bank (HMB), we expect NPAT of PkR1.73bn (EPS: PkR1.59) in the ensuing quarter vis-à-vis PkR/sh 1.48/1.60 reported in 1QCY20/2QCY19. The repricing gain (though limited due to sticky deposit cost base for the bank) and bank’s PIB book becoming relevant given the sharp decline in interest rates should drive net interest income during the quarter, +27.5%QoQ/+34.6%YoY as NIMs inch up to 2.9% vs. 2.5% in the previous quarter. Moreover, HMB has taken aggressive part in SBP-related financing schemes in the past (Mar’20: 17.2% of net advances), higher financing growth in the backdrop of COVID-related SBP schemes cannot be ruled out, additionally supporting NII during 2QCY20. This should com-pensate for a possible decline in non-interest income as trade activity was disrupted in earlier part of 2QCY20 amid measures imposed worldwide to combat COVID-19. Resultantly, C/I moved slightly down to 51.3% as against last 5 qtr avg. of 53.0%. We have conservatively as-sumed cost of provisioning of 0.25% taking cue from bank’s tendency to subjectively provide for potential problem cases vs. 0.1% in 1QCY20. Hence, 1HCY20 NPAT is expected to clock-in at PkR3.37bn (EPS: PkR3.07) as against NPAT of PkR3.36bn (EPS: PkR3.05) in the same period last year.

HUBC & FFC: Result Previews, (AKD Daily, Jul 23, 2020)

FFC to post 2QCY20 earnings of PkR4.01/sh: Fauji Fertilizer Company Limited (FFC) is expected to post 2QCY20 NPAT of PkR5.1bn (EPS: PkR4.01), flattish YoY, but up 20% QoQ. This takes 1HCY20 NPAT to PkR9.4bn (EPS: PkR7.36), up 5% YoY. The sequential increase in earnings comes on the back of (i) 14% QoQ higher topline, led by 16% uptick in urea offtake, (ii) 1.3ppt higher gross margins of 38%, and (iii) 32% QoQ lower finance cost, courtesy lower discount rate. However, 32% QoQ decline in other income is expected to contain the earnings growth. On cumulative basis, the increase in earnings is expected on the back of: (i) 5ppt YoY higher gross margins of 37%, despite 5% YoY lower topline (urea price decline), and (ii) 33% YoY lower other expenses. However, 27% YoY decline in other income may offset the positive spillovers of aforementioned factors on the bottom line to some extent. FFC is also expected to an-nounce a second interim cash dividend of PkR2.5/sh, taking 1HCY20 payout to PkR5.0 vs. PkR5.35 in the same period last year. Our TP of PkR127/sh implies a total return of 25% at last close - Buy.

4QFY20 earnings for HUBC to arrive at PkR4.89/sh: We expect Hub Power Company Ltd (HUBC) to post 4QFY20 NPAT of PkR6.3bn (EPS: PkR4.89), up 2.4xYoY, but down 12%QoQ. This will take the FY20 earnings to PkR24.6bn (EPS: PkR18.93), up 2.2xYoY. After a dry spell in terms of payout, HUBC is also expected to announce final cash dividend of PkR2.0/sh, based on Ener-gy Sukuk II payment in Jun’20. The increase in FY20 earnings will be driven by: (i) uptick in gross profits due to PkR devaluation, and (ii) PkR9.23/sh or approximately 50% of FY20 earn-ings contribution from its 46% owned CPHGC plant. On the flipside, 56% YoY higher finance cost is expected to keep the bottomline growth in check. For 4QFY20 alone, the sequential decline is expected on the back of lower gross profits and decline in contribution of CPHGC to the NPAT, which may outweigh the impact of lower finance cost. We have a Buy stance on HUBC with our TP of PkR160/sh, where the dividend payout may be trigger price performance.

Jul 24, 2020

Jul 23, 2020

Jul 20, 2020

Jul 21, 2020

37,500

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24 July 2020

StockSmart


This Week’s Daily Reports

3

Pakistan Economy: Usual suspects keep inflation choppy, (AKD Daily, Jul 22, 2020)

Initial price data for Jul’20 indicates headline inflation to gain further momentum, with the monthly reading estimated at 8.64%YoY vs. 8.59%YoY in the preceding month and 8.4%YoY in Jul’19, where flat headline number is a consequence of higher base.

On a MoM basis, however, inflation is likely to soar 1.88%MoM – the largest MoM increase since Jan’20, when inflation rose to a multi-year high. Food inflation due to an increase in certain commodity prices and transport inflation following the upward reversal in gov’t ad-ministered POL product prices are two major sources, driving headline inflation higher.

From a monetary policy vantage, the 100bps rate cut in emergent MPC meeting in late Jun’20 has pretty much rendered Jul’20 a moot point, where we expect the MPC to hold interest rates steady. The resurgence of inflationary pressures further supports our view of status quo in the upcoming routine MPC meeting.

Over the medium term, after an aggressive easing of cumulative 625bps and with the real interest rates in the zero to negative range, we expect the central bank to be on a ‘long pause’. That said, better than expected improvement in the external account as seen in the outgoing quarter may create room for further monetary action, though unlikely.

Pakistan Banks: MCB, HBL & UBL_ 1HCY20 Result Previews, (AKD Daily, Jul 21, 2020)

The result season for the banking sector is to commence soon with HBL due to hold its BoD meeting on Jul 24’20. In this backdrop, we estimate 1HCY20 earnings for the Big-3 private banks at PkR37.2bn, +58.6%YoY with 2QCY20 earnings (PkR21.6bn, +38.6%QoQ/92.2%YoY) growth driven by HBL. We expect these banks to skip dividends for the 2QCY20 under direc-tives from the Central Bank.

For HBL, we expect 1HCY20 earnings of the bank to clock in at PkR12.2bn (EPS: PkR8.5), +3.1xYoY given normalization in admin costs post US windup in 1QCY20 (the bank pre-booked US related costs of PkR4bn or PkR1.7/sh in 1QCY20 as per management).

1HCY20 earnings for United Bank Limited (UBL) is estimated to clock in at PkR10.6bn (EPS: PkR8.66) +16.0%YoY where sharp cut in interest rates has brought bank’s PIB book (28.0% of deposits) back from the brink driving NII up 27.4%YoY.

MCB Bank Limited (MCB) is likely to post an NPAT of PkR7.9bn (EPS: PkR6.64) in 2QCY20 as against PkR/sh 5.58/4.6 reported in 1QCY20/2QCY19 driven by repricing factor overshadow-ing increase in minimum deposit rate on saving deposits.

Pakistan OMCs: Investment package best thing since sliced bread, (AKD Daily, Jul 20, 2020)

In an acknowledgement of deep rooted inefficiencies in the regulatory system governing mid and downstream oil investments in the country, a stream of news reports over the week have raised the likelihood of a major investment package of tax reliefs, relaxation of regulations and margin autonomy for the space

For OMCs key initiatives of a material nature include relaxation of limits on provincial retail expansion (previously tied to provincial storage CAPEX) and the removal of ECC/Cabinet approval as a pre-condition for annual OMC margin hikes minimizing the negative burden of delayed hikes

Refinery sector packages are demarcated between Greenfield expansions and Brownfield expansions of at least 100,000bpd providing exemption on taxes incurred on CAPEX (inclusive of import duties), 20yr income tax holiday amongst other incentives (provision for easing single point mooring for offloading crude

We believe the long cycle CAPEX investment in the nation’s mid-stream infrastructure face hurdles to materialization, unless pricing reforms. That said, national oil companies (Aramco, PARCO) in a bid to guarantee end market demand, may consider investment re-gardless as accompanying crude supply contracts confirm offtake in a market of increasing prominence.

Policies specifying pathway to deregulation will be a step in the right direction, in our view, as deregulation will ensure competitiveness while also decreasing the uncertainties regard-ing inventory/exchange losses, increasing the earnings quality of the companies.


24 July 2020

StockSmart


4

Commodities

International Major Currencies

Source: Bloomberg

Source: Bloomberg

Major World Indices’ Performance

Source: Bloomberg

TRJ-CRB Index

Source: Bloomberg

PkR/US$ Trend

Source: Bloomberg

SPOT Units 24-Jul-20 17-Jul-20 WoW CYTD

TRJ-CRB Points 142.7628 140.8271 1.37% -23.16%

Nymex (WTI) US$/bbl. 41.28 40.59 1.70% -32.39%

ICE Brent US$/bbl. 43 43.12 -0.28% -35.26%

N. Gas Henry Hub US$/Mmbtu 1.63 1.74 -6.32% -22.01%

Cotton USd/Pound 67.65 68.2 -0.81% -13.66%

Gold US$/Tr.Oz 1894.31 1810.42 4.63% 24.85%

Sliver US$/Tr.Oz 22.6525 19.3274 17.20% 26.89%

Copper US$/MT 6570 6456 1.77% 6.85%

Platinum US$/Oz 919.43 840.24 9.42% -4.88%

Coal US$/MT 54.7 55 -0.55% -31.37%

SPOT 24-Jul-20 17-Jul-20 Chg +/- WoW CYTD

Dollar Index 94.623 95.942 -1.319 -1.37% -1.83%

USD/PkR 167.255 167.291 -0.035 -0.02% 7.98%

USD/JPY 106.280 107.020 -0.740 -0.69% -2.15%

EUR/USD 1.161 1.143 0.018 1.58% 3.52%

GBP/USD 1.276 1.257 0.019 1.50% -3.77%

AUD/USD 0.709 0.700 0.009 1.30% 0.94%

NZD/USD 0.663 0.656 0.007 1.11% -1.63%

CHF/USD 0.924 0.939 -0.014 -1.52% -4.38%

CAD/USD 1.342 1.358 -0.016 -1.15% 3.34%

USD/KRW 1,201 1,205 -3.600 -0.30% 3.91%

CNY/USD 7.017 6.992 0.025 0.36% 0.78%

Country Bloomberg Code 24-Jul-20 17-Jul-20 WoW CYTD

Pakistan KSE100 Index 37,608 37,331 0.74% -7.7%

Srilanka CSEALL Index 5,065 4,989 1.54% -17.4%

Thailand SET Index 1,341 1,360 -1.37% -15.1%

Indonesia JCI Index 5,083 5,080 0.07% -19.3%

Malaysia FBMKLCI Index 1,590 1,596 -0.42% 0.1%

Philippines PCOMP Index 6,003 6,089 -1.40% -23.2%

Vietnam VNINDEX Index 829 872 -4.92% -13.7%

Hong Kong HSI Index 24,705 25,089 -1.53% -12.4%

Singapore FSSTI Index 2,580 2,618 -1.49% -20.0%

Brazil IBX Index 43,300 43,515 -0.49% -11.0%

India SENSEX Index 38,129 37,020 3.00% -7.6%

China SHCOMP Index 3,197 3,214 -0.54% 4.8%

S&P SPX Index 3,236 3,225 0.34% 0.2%

DJIA INDU Index 26,652 26,672 -0.07% -6.6%

NASDAQ Composite CCMP Index 10,461 10,503 -0.40% 16.6%

UK UKX Index 6,136 6,290 -2.46% -18.7%

Germany DAX Index 12,893 12,920 -0.20% -2.7%

Qatar DSM Index 9,368 9,311 0.62% -10.1%

Abu Dhabi ADSMI Index 4,261 4,274 -0.31% -16.1%

Dubai DFMGI Index 2,053 2,053 0.00% -25.8%

Kuwait KWSEIDX Index 6,633 6,633 0.00% 0.0%

Oman MSM30 Index 3,564 3,450 3.29% -10.5%

Saudi Arabia SASEIDX Index 7,427 7,427 0.00% -11.5%

MSCI EM MXEF Index 1,078 1,055 2.14% -3.3%

MSCI FM MXFM Index 472 481 -1.88% -19.5%

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24 July 2020

StockSmart


Chart Bank

FIPI Flows for the week

Advance to Decline Ratio

AKD Universe vs. KSE-100 Index

LIPI Flows for the week

Average PIB and E/Y differential

KSE-100 vs. MSCI-EM & MSCI-FM

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(US$'000)

Ind., 6.85

Co., 7.34

Bank/DFI, (6.58)

NBFC, 0.20

M.Funds, (0.39)

Ins , 7.01

Others , (0.92)

Prop. Trading , (4.24)

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KSE-All Share Index AKD Universe

6

AKD Securities Limited StockSmart


Market PER Chart 2021

24 July 2020

AKD Universe Valuations

Source: AKD Research

Market P/BVS Chart 2021


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24-Jul-20 2017 2018 2019 2020F 2021F

EPS (PkR) 5.82 6.48 7.70 7.40 7.55

EPS chg (%) (15.24) 11.33 18.76 (3.87) 2.03

EPS chg (%) ex-E&P (24.93) 6.73 (0.50) 27.90 17.60

Book Value per Share (PkR) 41.89 44.59 49.40 53.69 57.87

Payout (%) 55.32 49.43 42.43 43.43 52.86

Valuations

Price to Earnings (x) 8.60 7.76 6.91 7.77 7.41

PER (Ex-Banks & E&Ps) (x) 8.76 8.03 8.87 9.54 7.17

Price to Book (x) 1.19 1.12 1.02 0.94 0.93

Price to CF (x) 11.68 8.80 12.03 9.39 6.04

Earnings Yield (%) 11.63 12.88 14.47 12.87 13.49

Dividend Yield (%) 7.14 6.61 6.68 6.62 8.35

EV / EBITDA (x) 6.21 6.16 5.35 4.52 4.60

Profitability

Return on Equity (%) 13.90 14.54 15.58 13.15 12.89

Return on Assets (%) 2.25 2.29 2.45 2.09 2.03

Chg in Sales (%) 16.05 17.88 21.76 (1.53) (4.08)

Gross Margin (%) 35.96 35.14 34.08 34.12 36.39

Operating Margin (%) 24.83 24.40 24.03 23.08 24.38

Net Margin (%) 11.24 10.62 10.36 9.64 10.62

7



AKD Universe Active Coverage Cluster’s Valuations

24 July 2020


Stock Symbol Price TP Stance

(PkR) (PkR) 19A 20F 21F 19A 20F 21F 19A 20F 21F 19A 20F 21F

Automobile and Parts

*Indus Motors INDU 1,323.69 1,375.00 Sell 174.49 68.27 74.68 7.59 19.39 17.72 2.60 2.40 2.22 8.7 1.9 2.3

Pak Suzuki Motors PSMC 200.15 130.00 Sell (35.45) (38.81) 1.73 n.a n.a 115.60 0.63 0.72 0.72 - - 0.2

Cements

DG Khan Cement DGKC 98.22 104.98 Sell 3.67 (6.39) 5.89 26.73 n.a 16.68 0.61 0.64 0.61 1.0 - 1.2

Lucky Cement LUCK 531.53 635.85 Buy 32.44 8.50 25.86 16.39 62.51 20.56 1.82 1.81 1.66 1.2 - 1.0

Maple Leaf Cement MLCF 30.42 39.89 Buy 2.24 (3.09) 3.34 13.58 n.a 9.10 1.09 1.01 0.91 1.6 - 1.6

Fauji Cement Company FCCL 19.71 18.38 Sell 2.05 (0.09) 1.32 9.63 n.a 14.98 1.30 1.31 1.29 7.6 - 5.3

Pioneer Cement Limited PIOC 68.81 50.12 Sell 3.48 (5.74) (0.32) 19.78 n.a n.a 1.17 1.31 1.32 - - -

Cherat Cement Co CHCC 106.05 65.61 Sell 9.98 (9.53) 2.39 10.63 n.a 44.29 1.59 1.89 1.81 0.9 - -

Engineering

*Amreli Steels Ltd. ASTL 40.57 49.00 Buy 0.11 0.29 2.74 367.11 140.46 14.80 0.98 0.98 0.93 - - -

Fertilizers

*Engro Corporation ENGRO 306.09 331.10 Buy 28.69 47.72 52.27 10.67 6.41 5.86 0.90 0.78 0.68 7.8 8.6 8.6

Engro Fertilizers Limited EFERT 64.02 55.51 Sell 12.63 8.75 8.31 5.07 7.32 7.70 1.98 1.93 1.91 20.3 12.5 12.5

Fauji Fert. Bin Qasim FFBL 19.51 30.02 Buy (6.34) 0.14 1.55 n.a n.a 12.59 2.67 2.62 2.17 - - -

Fauji Fertilizer Company FFC 110.98 127.00 Buy 13.45 15.17 16.07 8.25 7.31 6.91 3.97 3.57 3.15 9.7 10.8 10.8

Fatima Fertilizer FATIMA 28.27 34.43 Buy 7.54 5.98 4.67 3.75 4.73 6.05 0.81 0.73 0.68 7.1 8.3 6.5

Oil & Gas

Oil & Gas Development OGDC 114.71 172.20 Buy 27.53 24.90 20.72 4.17 4.61 5.54 0.66 0.59 0.54 9.6 7.2 5.9

Pak Oilfields POL 391.89 379.00 Sell 59.44 55.58 44.63 6.59 7.05 8.78 1.77 1.57 1.43 12.8 10.2 8.9

Pakistan Petroleum PPL 98.00 143.40 Buy 27.18 18.92 17.05 3.61 5.18 5.75 0.75 0.69 0.63 2.0 - 4.1

Hascol Petroleum HASCOL 13.48 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Attock Petroleum APL 315.30 400.35 Buy 39.79 16.37 29.73 7.92 19.26 10.60 1.66 1.69 1.52 6.3 2.6 5.7

Pakistan State Oil PSO 174.37 214.62 Buy 22.55 8.24 20.20 7.73 21.17 8.63 0.69 0.69 0.65 5.7 1.1 4.9

Power

Hub Power Co. HUBC 77.09 159.96 Buy 9.37 18.09 20.26 8.23 4.26 3.81 2.54 1.85 1.54 - - 9.1

K-Electric Co. KEL 3.16 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Kot Addu Power KAPCO 23.07 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Cable & Electrical Goods

Pak Elektron Ltd PAEL 28.91 24.40 Sell 1.68 0.21 2.15 17.21 137.67 13.45 0.58 0.57 0.56 - - 3.5

Personal Goods

Nishat Mills NML 90.80 132.00 Buy 16.66 8.78 11.00 5.45 10.34 8.25 0.48 0.47 0.45 4.4 2.5 3.6

*Nishat Chunian Ltd. NCL 35.31 60.53 Buy 13.19 5.87 7.08 2.68 6.02 4.99 0.55 0.53 0.49 11.3 6.4 7.8

Banks

Allied Bank Limited ABL 78.75 88.90 Buy 12.65 13.41 10.29 6.23 5.87 7.65 0.77 0.74 0.73 10.2 11.4 11.4

Bank Al Habib BAHL 57.39 65.00 Buy 10.07 8.18 8.41 5.70 7.02 6.82 1.03 0.92 0.85 6.1 7.0 7.0

Bank AlFalah BAFL 37.26 38.00 Neutral 7.34 6.78 5.61 5.08 5.49 6.65 0.74 0.64 0.61 10.7 8.1 8.1

Habib Bank Limited HBL 116.07 154.40 Buy 10.45 14.47 12.02 11.10 8.02 9.66 0.76 0.71 0.68 4.3 5.2 6.0

Habib Metropolitn Bank HMB 30.36 45.70 Buy 6.34 6.63 6.46 4.79 4.58 4.70 0.67 0.58 0.53 8.2 8.2 8.2

MCB Bank Limited MCB 171.61 211.00 BUY 20.14 18.57 17.29 8.52 9.24 9.93 1.19 1.12 1.05 9.9 9.9 9.9

Meezan Bank Limited MEBL 75.38 100.00 Buy 12.12 11.92 10.09 6.22 6.33 7.47 1.54 1.39 1.31 6.6 8.0 8.0

National Bank of NBP 29.73 45.60 Buy 7.79 7.96 6.81 3.81 3.73 4.36 0.26 0.24 0.23 - - -

United Bank Limited UBL 111.26 160.00 Buy 15.60 15.58 15.70 7.13 7.14 7.09 0.71 0.67 0.64 10.8 10.8 11.7

The Bank Of Punjab BOP 9.17 13.90 Buy 3.12 2.60 1.88 2.94 3.53 4.87 0.51 0.47 0.46 8.2 10.9 10.9

UR - Under Review *earnings estimates are subject to revision due to COVID-19

EPS(PkR) PE(x) PB(x) DY(%)

8


24 July 2020

StockSmart


AKD Universe Coverage Cluster’s Performance


Stocks Symbol Price 1 Year 1 Year

24-Jul-20 1M 3M 6M 12M CYTD High Low

KSE-100 Index 37,607.62 10.5 14.6 -11.8 16.1 -7.7 43,218.7 27,228.8

Automobile and PartsIndus Motors INDU 1,323.69 40.8 47.2 26.5 21.0 13.9 1349.07 700.38Pak Suzuki Motors PSMC 200.15 29.9 30.7 -13.2 4.6 -13.2 290.93 124.21

CementsDG Khan Cement DGKC 98.22 24.5 18.3 26.6 112.2 32.2 104.98 42.31Lucky Cement LUCK 531.53 19.4 16.0 7.1 36.6 24.1 566.47 310.30Maple Leaf Cement MLCF 30.42 21.7 13.8 29.2 51.2 31.5 32.37 13.79Fauji Cement Company FCCL 19.71 18.5 16.4 16.9 37.3 26.7 19.08 11.68Pioneer Cement Limited PIOC 68.81 10.2 28.3 123.5 221.1 125.7 72.11 17.37Cherat Cement Limited CHCC 106.05 25.0 18.6 88.0 226.5 99.9 114.57 24.78

EngineeringAmreli Steel Ltd ASTL 40.57 24.8 22.1 15.7 101.8 12.3 42.78 15.83

FertilizersEngro Fertil izers Ltd. EFERT 64.02 8.4 5.3 -7.6 -1.6 -12.8 78.57 50.72Engro Chemical ENGRO 306.09 6.5 2.0 -10.0 18.4 -11.3 366.00 234.78Fatima Fertil izer FATIMA 28.27 8.5 21.8 7.9 13.5 6.3 28.96 20.82Fauji Fert. Bin Qasim Ltd. FFBL 19.51 26.2 20.3 -4.8 9.4 -0.1 24.54 11.79Fauji Fertil izer Company FFC 110.98 3.4 4.1 4.1 14.7 9.4 112.14 82.71

Cable & Electrical Goods

Pak Elektron Limited PAEL 28.91 28.1 28.2 7.8 78.3 6.8 30.89 14.32

Oil & GasOil & Gas Development OGDC 114.71 1.8 20.4 -20.2 -11.1 -19.4 154.21 75.01Pak Oilfields POL 391.89 11.5 37.2 -12.3 0.0 -12.3 473.43 241.11Pakistan Petroleum Ltd. PPL 98.00 10.2 17.5 -34.6 -28.0 -28.5 151.82 69.13Pakistan State Oil PSO 174.37 18.0 21.1 -18.3 11.4 -9.0 216.54 113.98Attock Petroleum Ltd. APL 315.30 6.5 30.8 -9.1 15.1 -14.7 394.43 211.87Hascol Petroleum HASCOL 13.48 -1.5 -7.7 -41.1 -75.4 -49.9 55.39 10.65

PowerHub Power Co. HUBC 77.09 6.3 2.8 -24.3 4.7 -17.4 103.21 57.40K-Electric Limited KEL 3.16 9.0 9.0 -28.0 -15.3 -27.7 4.77 2.65Kot Addu Power KAPCO 23.07 15.9 -0.6 -20.6 -30.5 -26.8 35.46 15.00

Personal Goods

Nisaht (Chunian) Ltd. NCL 35.31 5.2 15.1 -23.2 22.9 -17.2 47.63 23.78Nishat Mills NML 90.80 17.0 32.0 -22.9 14.0 -14.5 117.81 54.07

BanksAllied Bank Limited ABL 78.75 7.1 -1.2 -20.5 -17.1 -17.6 104.71 66.82Bank AlHabib Limited BAHL 57.39 4.5 1.5 -29.0 -23.2 -24.6 82.00 50.98Bank AlFalah BAFL 37.26 10.5 14.6 -28.6 -9.0 -18.5 52.99 28.79Habib Bank Limited HBL 116.07 18.5 13.9 -31.3 -4.8 -26.3 171.24 94.78Bank of Punjab BOP 9.17 10.0 6.6 -32.7 17.3 -19.1 14.13 7.01Habib Metropolitan HMB 30.36 8.4 8.4 -21.2 -11.6 -16.5 42.00 27.30MCB Bank Limited MCB 171.61 10.7 8.4 -23.6 -1.9 -16.3 224.53 132.89Meezan Bank Limited MEBL 75.38 10.2 16.6 -29.0 -7.7 -20.8 106.21 55.66National Bank of NBP 29.73 12.2 5.5 -33.6 -15.1 -31.3 46.30 25.53United Bank Ltd UBL 111.26 8.3 4.9 -37.8 -25.3 -32.4 181.96 89.44

Absolute Performance (%)

9


24 July 2020

StockSmart


Economic Snapshot

Source: SBP, PBS & AKD Research

End Month Data Units Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

Monetary Rates

T-Bills - 3M % 12.39 12.93 13.43 13.43 13.43 13.43 13.43 13.53 13.43 13.1 n.a n.a n.a

T-Bills - 6M % 12.46 12.98 13.48 13.48 13.48 13.48 13.48 13.48 13.48 13.15 n.a n.a n.a

T-Bills - 12M % 12.6 13.1 13.6 13.6 13.6 13.6 13.6 13.2 13.6 13.26 n.a n.a n.a

PIB 10Y % 13.68 13.67 13.29 12.18 11.3 11.35 11.09 11.04 11.18 10.16 8.47 8.25 8.61

KIBOR 6M % 12.86 13.3 13.82 13.65 13.08 13.48 13.5 11.23 13.23 12.34 12.08 7.75 7.58

Discount rate % 13.75 13.75 13.75 13.75 13.75 13.75 13.75 13.75 13.75 12.0 10.0 9.0 8.0

Policy rate % 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 11.0 9.0 8.0 7.0

Inflation

National CPI Inflation % 8 8.4 10.5 11.4 11.0 12.7 12.6 14.6 12.0 10.2 8.5 8.2 8.6

Core inflation (Urban) % 7.3 8.2 8.5 8.4 7.7 7.5 7.5 7.9 8.0 7.4 7.7 7.3 7.6

Core inflation (Rural) % 6.7 7.8 8.8 8.8 8.6 8.4 8.1 9 9.4 9.4 9.8 9.7 10.0

Food inflation (Urban) % 7.5 7.9 11.9 15.0 13.7 16.6 16.7 19.5 15.2 13.0 10.4 10.6 12.9

Food inflation (Rural) % 9.1 9.3 12.6 15.0 14.6 19.3 19.7 23.8 19.7 15.5 12.9 13.7 15.2

External Indicators

Export (PBS) US$ (mn) 1,717 1,894 1,859 1,769 2,024 2,011 1,993 1,970 2,140 1,814 957 1,396 1,592

Import (PBS) US$ (mn) 4364 4019 3658 3,785 4,074 3,940 4,037 4,037 4,185 3,316 3,088 2,863 3,715

Trade Deficit (PBS) US$ (mn) (2,647) (2,125) (1,799) (2,016) (2,050) (1,929) (2,044) (2,067) (2,045) (1,502) (2,131) (1,467) (2,123)

Export (SBP) 1800 2228 1,894 1,888 2,189 2,111 2,108 2,052 1,993 1,820 1,407 1,259 1,580

Import (SBP) 3997 4182 3,523 3,326 3,632 3,682 3,791 3,912 3,563 3,321 3,140 2,800 3,561

Trade Deficit (SBP) (2,197) (1,954) (1,629) (1,438) (1,443) (1,571) (1,683) (1,860) (1,570) (1,501) (1,733) (1,541) (1,981)

Home Remittances US$ (mn) 1,646 2,039 1,691 1,748 2,001 1,820 2,097 1,907 1,825 1,894 1,790 1,873 2,466

Current Account US$ (mn) (995) (678) (614) (284) 70 (364) (367) (534) (210) (9) (530) 344 (96)

Banking Sector

Deposits PkR (bn) 14,458 13,747 13,977 14,026 13,912 14,312 14,632 14,673 14,815 15,126 14,476 15,481 16,229

Advances PkR (bn) 8,097 7,991 7,994 7,975 8,019 8,095 8,158 8,164 8,212 8,259 8,217 8,357 8,202

Investments PkR (bn) 7,624 8,731 8,019 9,269 7,918 7,886 8,801 8,366 8,725 9,297 9,794 10,382 10,681

W. A. lending rate % 11.87 12.69 12.99 13.31 13.52 12.74 12.73 13.35 13.23 13.01 12.00 11.57 10.88

W. A. deposit rate % 5.71 6.18 6.47 6.52 6.69 6.73 6.65 6.95 7.00 6.91 6.91 5.11 4.33

Spread rate % 6.16 6.51 6.52 6.79 6.83 6.01 6.08 6.40 6.23 6.10 5.09 6.46 6.55

Public Finance

Tax collection PkR (bn) 508.40 277.30 298.60 383.10 n.a n.a n.a n.a n.a n.a n.a n.a n.a

Direct taxes PkR (bn) 251.00 95.90 88.00 165.30 n.a n.a n.a n.a n.a n.a n.a n.a n.a

Indirect Taxes PkR (bn) 257.40 181.40 210.60 217.80 n.a n.a n.a n.a n.a n.a n.a n.a n.a

Currency

Fx Reserves US$ (mn) 14,477 15,144 15,644 15,228 15,424 16,003 17,930 18,645 18,881 17,098 18,755 16,943 17,971

USDPkR - Interbank PkR/USD 156.41 159.19 158.24 156.33 156.04 155.40 155.01 154.74 154.34 159.02 164.43 160.58 165.53

10



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AKD Research Team

Analyst Tel no. E-mail Coverage

Usman Zahid +92 111 253 111 (693) [email protected] Executive Director Research

Ali Asghar Poonawala +92 111 253 111 (646) [email protected] E&Ps, Cable & Electrical & Automobiles

Hamza Kamal +92 111 253 111 (634) [email protected] Commercial Banks

Umer Farooq +92 111 253 111 (602) [email protected] Pakistan Economy, Textiles & Steel Sector

Shahrukh Saleem +92 111 253 111 (685) [email protected] Cement & OMCs Sector

AIlia Naeem +92 111 253 111 (603) [email protected] Fertilizer & Power Sector

Qasim Anwar +92 111 253 111 (680) [email protected] Technical Analysis

Nasir Khan +92 111 253 111 (639) [email protected] Research Production

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24 July 2020

New Rating Definitions

Buy > 14.5% expected total return (Rf: 8.5% + Rp: 6%)

Neutral > 8.5% to < 14.5% expected total return

Sell < 8.5% expected total return (Rf: 8.5%)

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