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FY19 Budget Review

Federal Budget FY19

Popular and ambitious

Research Entity Number – REP-085 www.jamapunji.pk

April 2018

http://www.jamapunji.pk/

http://jamapunji.pk/

FY19 Budget Review

Executive Summary

The PML-N’s government’s 6th Federal Budget, since its came to power in 2013, understandably has a populist tilt to it, given there are

only a few months to go until General Elections. There is clear support for the Agriculture sector where more than 60% of the

population resides in rural areas. There is also acknowledgement that more needs to be done to revive exports which could lead to an

extension of the Exporters Package going forward. That said, we see tweaks being made to this Budget as the year progresses where

fiscal deficit target of 4.9% of GDP appears too ambitious, GDP growth target of 6.2% demands a lot from manufacturing growth and

weak import cover (currently<2.5m) will likely again lead to an IMF program.

For the stock market, there are clear positives. Although CGT has seen no change and inter-corporate dividends ostensibly continue to

face tax, steps to eliminate bonus tax and reintroduce advance adjustable WHT on brokers are definite positives. At the same time,

measures to improve tax collection in the property sector may potentially see some funds flow towards capital markets which could

also serve to boost the KSE-100. On balance, we see the Pakistan market cheering the Budget come Monday even though some

announced measures were widely expected.

For the corporate sector, overarching steps are mainly positive. While Super Tax will continue for the next few years (at 3% for

companies and 4% for Banks), it will be progressively reduced by 1ppt per annum and eventually eliminated. There are significant

reductions in corporate income tax as well; after reducing from 35% in the last few years to 30% at present, companies will now see a

1ppt per annum reduction where the tax rate is envisaged at 25% by FY23. Lower corporate income tax rate will counter impact of

continuing super tax, especially for non-bank companies. Further steps such as (i) extension in tax credit on BMR activities and (ii) lower

threshold for minimum profit distribution are also encouraging for growth-oriented companies.

Sectors with a positive impact include: Fertilizer, Textiles, Consumer & Chemicals.

Sectors with a negative impact include: Autos, Banks, Cements.

We have incorporated the revised corporate taxation regime (including gradual phase-out of super tax) in our financial models and

Target Prices in this document reflect the same. With banks continuing to facing a flat 35% income tax rate, imposition of super tax

over the next few years results in TP cuts. Non-bank companies witness a lift in their Target Prices, all else the same.

FY19 Budget Review

Measures for Capital Market

Budget Steps Impact Comments

Bonus tax removed Positive

Ever since its imposition in FY14, corporates have refrained from issuing bonus shares. This

affected returns on those stocks which didn’t pay cash out very well. Growth oriented and cash-

strapped companies will likely compensate their shareholders with more bonus issuances.

Super tax to be gradually

removed Negative

Double-edged sword. Super tax to be reduced from by 1ppt each year from 4%/3% for

banks/non-banks in 2018. Clear timeline on phased withdrawal of super tax is good. However,

incorporation of super tax over the next few years will lead to cuts in our EPS estimates.

Corporate tax rate to be

reduced by 1ppt each

year to 25% by 2023

Positive This is a clear positive for non-bank companies; it will counter impact of super tax over the next

few years and aid in raising valuations.

5% additional tax if profit

distribution < 20% Neutral to Positive

This was previously 7.5% punitive taxation in case of < 40% distribution. The change is a good

measure for growing companies which would opt for high retention ratios. However, market

reaction from lower cash payouts would depend on sectors – it could be positive for sectors

where growth is sought but not for all.

Tax credit on BMR until

FY21 Positive

Another positive for growing companies as they can avail 10% tax credit on capex related to

BMR activities. This will further lower tax rates for the corporate sector and enhance profitability.

WHT on brokers made

adjustable Positive

The previous Budget made advance adjustable WHT of 0.02% on brokers part of the final tax

regime. This negatively impacted profitability for brokerage firms already facing a challenging

environment. Reversion back to adjustable WHT would provide relief.

Our view

The Budget is positive for corporate profitability, aside from Banks, with lower taxes to spur earnings. Furthermore, lower payout requirements

and tax credit on BMRs set the stage for more expansions. Market-specific measures should induce an immediate-term lift in the KSE-100.

FY19 Budget Review

Sectors: Positive Impact

Sectors Budget Impact Key Measures Analyst Comments

Fertilizer Positive

Uniform rate of 2% on all fertilizers would now be applicable.

Rate of sales tax on feed gas has now been reduced to 5% from

10%. Rate of sales tax on LNG has now been reduced to 0% from

5%. All subsidies will now be handled by provincial governments.

GIDC collection is budgeted at PRs100bn vs. collection of

PRs15bn in the current FY.

Handling of subsidies by provincial government suggest that

pricing cap of PRs1400/bag on Urea may eventually be removed.

This is a clear positive as Urea manufacturers would likely pass on

the impact of PRs106/bag of previous price declines and

PRs69/bag in terms of subsidy & sales tax adjustments. Additional

cash subsidy by provinces would be positive for offtakes.

Textile Positive

New Export Package for non-traditional and value-added exports

in pipeline, monthly payments of refunds, ERF maintained at 3%,

export-oriented sectors remain zero-rated, CD on raw materials

withdrawn/ reduced, 11% custom duty on Synthetic filament

withdrawn, extension of tax credits up to 2021 for BMR at 10% of

investment.

The positives of the previous budgetary measures are maintained

for FY19. ERF maintained at 3% in face of expected interest rate

increases in the economy will be positive and so will be

expeditious release of refunds. Importantly, additions to the

existing Textile Package going forward could add to positives.

Chemicals Positive

Withdrawal of CD on two catalysts for use by PTA industry i.e.

Hydrogen Bromide (11%), and Palladium-on-carbon (3%),

together with reduction in custom duty of coal imports.

Removal of custom duty on coal imports could be earnings

positive for energy intensive chemical production processes (Soda

Ash, Polyester, etc) – positive for ICI. Withdrawal of CD of catalysts

for PTA industry is positive for LOTCHEM.

Consumer Positive

Sales tax exempted and CD on animal feed for dairy farms

reduced from 10% to 5%. Sales tax reduced from 7% to 5% on

agriculture machinery. 3% CD withdrawn on imported bulls for

breeding purposes and CD exempted on bovine semen. CD on

ethylene film reduced to 16% from 20% for Liquid Food

Packaging Industry.

This will lower fodder costs for EFOODS, NESTLE, FFL and ASC, all

of which breed livestock/cattle for farming. Withdrawal of CD on

bulls is positive for FFL - currently importing via Cogent Breeding

Ltd while CD exemption on bovine semen will benefit all dairy

players and ICI. Reduced CD on ethylene film will reduce

packaging cost for all tetra packaged liquid producers (EFOODS,

NESTLE, FFL, SHEZ).

Autos/Parts

& Tractors

Negative for

OEMs

Ban on sales of new vehicles, both local and imported, to non-

filers. CD on electric cars reduced from 50% to 25%, 15% RD

abolished.

Restrictions on non-filer sales appears to be a major negative for

OEMs. Lower taxes on electric cars to be Neutral for local

assemblers.

Positive for

Parts

CD on carbon black reduced from 20% to 16%. Increase of CD on

rickshaw tyres from 11% to 20%. Reduction in GST on agricultural

machinery from 7% to 5%, unchanged for tractors (5%).

Agricultural credit target revised from PRs1.0tn to PRs1.1tn.

Reduced carbon black prices will help tyre companies (GTYR, SRVI)

improve their margins. Higher agri-credit and flat GST should

support growth momentum in tractor sales.

FY19 Budget Review

Sectors: Neutral to Negative


Steel Neutral Rate of sales tax for steel sector is being increased to PRs13/unit

of electricity consumed from PRs10.5/unit at present.

In steel, we believe the increase in sales tax will lead to c.PRs2,000-

2,200/ton increase in input cost which will likely be passed on. This

will thus be Neutral for the sector.

Power Neutral

CD on silicon electrical steel sheets used for transformers reduced

from 10% to 5%. PRs138bn investment for upcoming power

projects (Dasu, Neelum Jhelum, Tarbela ext IV and Jamshoro coal

power plants). GoP has allocated PRs140bn (up 31%YoY) as

subsidy for WAPDA and KEL.

Energy expenditure to spur uplift in generation. Higher subsidies

for WAPDA and KEL to rationalize tariffs and improve cash-flows

when circular debt buildup worsens. Imposition of super tax would

have a negative 1% EPS impact on KAPCO’s bottom-line for FY19.

Oil & Gas Neutral

Budgeted petroleum levy of PRs300bn. Decline in GST on import

of LNG to 12% from 17%. Standard sales tax (17%) would now be

applicable on Furnace Oil.

Higher allocation suggest that petroleum product prices would be

inflationary. OMC margins would not be affected.

Banks Neutral to

Negative

1%pa reduction in Super Tax from existing 4% to 0% by 2023.

Reduction in WHT for non-filers on banking transactions from

0.6% to 0.4%. Resident banks having foreign branches can no

longer adjust foreign-source loss against Pakistan-source income

and claim tax relief. Large bank borrowing envisaged in

macroeconomic targets.

Clarity on Super tax is positive but gradual phase out will still see a

cut in our estimates from CY19F to CY22F. Banks with foreign

operations will no longer be able to claim tax deductions on losses

from foreign branches, which could potentially be negative for UBL

and HBL. Large bank borrowing – if from commercial banks – may

potentially coincide with more attractive yield offerings on PIBs.

Moreover, removal of tax on bonus issuances is a positive for Banks

in particular.

Cements Neutral to

Negative

Total PSDP earmarked at PRs1,030bn. Duty on coal import to

reduce from 5.5% to 4% while custom duty on the same to

reduce from 5% to 3%. Federal Excise Duty on cement is being

increased from PRs1.25/kg to PRs1.50/kg.

Target PSDP should continue the support infrastructure growth.

However, out of PRs1,030bn federal PSDP, only PRs800bn will be

contributed by the government with the rest assumed from other

sources. While coal - which is currently c.50% of COGS - will see

lower duties, bottom line impact may be limited (c.1.5%) which will

be offset by the FED increase. This FED change will necessitate c.

PRs15/bag price increase to keep margins intact.

FY19 Budget Review

Miscellaneous Sectors


Tobacco Neutral to

Negative

FED on local cigarettes to be raised in respect of Tier-1, Tier-2 and

Tier-3 categories to PRs3,964, PRs1,770 and PRs848/1000cigs (up

from PRs3,740, PRs1,670 and PRs800 respectively).

Will increase retail prices for PMPK, PAKT, KHTC as it will likely be

passed through to consumers. Could impact demand negatively

but not materially.

Paints Negative Increase of CD on Di-octyl Terephthalate (DOTP) from 3% to 20% Negative for paint manufacturers that use DOTP in paints,

lacquers, inks, adhesives, and sealants (BERG, AKZO)

Real Estate Negative

Tax on REIT dividends to be reduced to 5% from 12% previously.

Government has abolished DC rates but will have right to purchase

at double the declared value. Prohibition of non-filers to purchase

property costing more than PRs4mn.

For REITs it will allow investors to earn higher return. But overall,

the policy is a downer for Real estate as it will curb speculation.

We suspect that the policy would spur genuine real estate

demand but prohibition of non-filers will supposedly pose a huge

risk to overall real estate activities in the country.

Telecom Positive

CD on optical fiber, cable filing compound, fiber reinforced plastic

reduced to 5%, RD slashed on optical fiber cables from 20% to

10%.

Will reduce capex for PTC if they look towards enhancing fiber-

optic cable network

Cables Positive Reduction of concessionary rate of CD from 10% to 5% on silicon

electrical steel sheets for manufacturing transformers.

As per PAEL’s mgmt., silicon sheet makes up c.7% of RM

purchased. We expect input cost reduction for PAEL to have a

positive effect on the bottom line.

Media Positive Fiscal Package for film industry: Reduction in CD and sales tax to

3% and 5% respectively on film equipment imports

Will be beneficial for HUMNL particularly aimed towards Hum

Films.

FY19 Budget Review

Pakistan Market

FY19 Budget Review

Super Tax to be gradually phased out

Market Structure I: Lower corporate tax rate to counter super tax

Corporate tax rate to go to 25% Corporate tax rate to be reduced: Corporate income tax rate will be

reduced by 1ppt per annum to 25% by FY23.

Analyst Comments

This is a significant positive. It will help to counter the effects of super

tax continuation over the next few years while also raising terminal year

valuations in our financial models.

Super tax: Not only has super tax been continued for FY18, it is also

budgeted for the next 3/2 years for banks/non-banks (progressively

reducing by 1% every year)

Analyst Comments

We like that timeframe has been imposed for phase-out of super tax.

However, incorporation of super tax over the next few years - even at

progressively lower rates – will lead to cuts in our EPS estimates. Will

impact Banks more as they will not a cut in normal income tax rate.

4%

3%

2%

1%

3%

2%

1%

0%

2018 2019 2020 2021

Banks Non-Banks

20%

25%

30%

35%

40%

45%

FY

97

FY

99

FY

01

FY

03

FY

05

FY

07

FY

09

FY

11

FY

13

FY

15

FY

17

FY

19F

FY

21F

FY

23F

Source: Tradingeconomics.com

FY19 Budget Review

Bonus issuances should normalize now

Some candidates for bonus issuances

Market Structure II: Bonus issuances but possibly lower cash payouts

Bonus tax removed: Taxation on bonus issues has been removed,

after first being imposed in FY14.

Analyst Comments

This is a sensible and much needed move. Companies with cash-flow

concerns e.g. PSO and gas utilities embroiled in circular debt, or

companies in losses e.g. FFL, will likely avail this measure to

compensate for low cash payouts. The measure will also be positive for

Banks.

5% additional tax if payout less than 20%: Punitive tax has been

relaxed to 5% from 7.5% while minimum payout ratio has been

lowered to 20% from 40% earlier.

Analyst Comments

This is a positive measure, given many sectors have recently

undertaken expansions. Market will likely ignore cash payout cuts for

growing sectors. In case of Auto companies, however, where sales are

slowing, cuts may be taken negatively.

83

64 63

49 45

65

22 18

24 26

0

20

40

60

80

100

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

No of companies issuing bonus

Tax imposed

LUCK PSO ASL HUMNL

MARI AKBL PNSC SITC

BAFL PIBTL PRL GADT

BAHL ATRL SYS NBP

HCAR FFL NCPL BYCO

NRL JSCL CEPB

FY19 Budget Review

Brokerage operating revenue has reduced*

Market Structure III: Adjustable WHT for brokers is welcome

Further expansions to be encouraged (Capex)

*Based on selected brokerage firms

Tax credit for BMR extended by 3yrs: Earlier, tax credit on BMR was

expiring in FY19. It will now extend until FY21.

Analyst Comments

This will encourage further BMR activities not just via debottlenecking

exercises but potentially also via brownfield expansions. Some sectors

that could benefit include Cements, Steel, Autos and Textiles,

WHT on brokers: Advance adjustable WHT of 0.02% on brokers again

made adjustable

Analyst Comments

Last year’s budget made this part of the final tax regime. It will now

revert to being adjustable. This is a welcome relief for the brokerage

industry already operating under a challenging environment given the

drop in traded activity. -

100

200

300

400

500

600

700

1QCY18 1QCY17

PRsmn

1QCY18 1QCY17

965

2,000

3,786

13,500

14,000

17,500

25,000

ISL

ASTL-SITE

MUGHAL

CHCC

KOHC

LUCK-Pezu

PIOC

PRsmn

FY19 Budget Review

Pakistan Economy

FY19 Budget Review

Growth momentum carries risks and external front is weak

Headline targets

GDP growth target for FY19 is 6.2%, which is ambitious as it assumes

7.6% growth in Manufacturing.

6% CPI target will be tested given rising oil prices and recent c. 10%

PKR depreciation.

Fiscal deficit target of 4.9% is optimistic given rising debt burden,

development expenditure and uptick in interest rates.

Holistic overview

Agriculture sector growth will be tested by challenges on water

availability. However, incentives for farmers would be positive.

Construction activity will likely persist despite flattish PSDP

disbursement because recent growth has been led by private projects

mostly. However, hardening macros could slow demand.

Key factor will be the effectiveness of potentially another Exports

package. The Finance Minister expects Fx reserves to rise by Jun’18 but

it is difficult to see this taking place.

Analyst Comments

Populist budget focused on the Agriculture sector – unsurprising given

only a few months are left till elections. There are limited incentives for

the manufacturing and services sectors. Given challenges on the external

front, the GoP may shortly announce an updated Exports Package.

Falling import cover needs immediate reprieve

Key macro indicators

0.0

1.0

2.0

3.0

4.0

5.0

6.0

-

5,000

10,000

15,000

20,000

Jan

-13

Au

g-1

3

Feb

-14

Sep

-14

Mar

-15

Oct

-15

Ap

r-1

6

Oct

-16

May

-17

No

v-1

7

Jun

-18

Dec

-18

SBP Reserves (US$mn) -LHS SBP Import Cover (mths)

(%) FY16 FY17R FY18P FY19P

GDP growth 4.6 5.4 5.8 6.2

- Agriculture 0.2 2.1 3.8

- Industry 5.7 5.4 5.8

- Services 5.7 6.5 6.4

CPI (YoY) 2.9 4.2 4.5 6.0

Tax to GDP 12.6 12.5 13.7 13.9

Fiscal deficit to GDP 4.3 4.2 4.1 4.9

C/A deficit to GDP 1.0 1.7 4.1

Investment to GDP 14.1 14.5 14.8

Exports to GDP 9.1 8.2 8.5

Net Debt to GDP 64.5 63.3

Source: Economic Survey FY18

FY19 Budget Review

Fiscal deficit target unlikely to be met

Resources: Optimistic revenue target

Tax revenue collection is budgeted to be up 18%YoY (14% of GDP) in

FY19F to PRs4,888bn. Target growth is optimistic in light of cuts in

direct taxes and expected 14% jump in indirect taxes. However, it

remains to be seen how effective the tax amnesty and tough measures

on non-filers are in increasing the tax base.

Non-tax revenue is projected to decrease by 9%YoY but the sources

of this decline have not been separately identified. External Receipts

are also projected to reduce.

Expenditure: Current expenditure on the rise

Total expenditure is projected to rise by 11%YoY (21% of GDP), but it

will not be led by development spending. Current Expenditure is

projected to rise 24%, where the 6% expected growth in debt servicing

looks to be an optimistic estimate given rising interest rates and

increased borrowing in recent years.

Fiscal deficit is anticipated to drop from 5.5% projected in FY18 to 4.9%

in FY19 but this looks tough. Tax relief measures will be balanced by

lower PSDP (which is budgeted at PRs800bn vs PRs750bn to be

disbursed in FY18). However, we think large budgeted bank borrowing

in excess of PRs1,000bn is instructive.

Resources (PRsbn) FY18B FY18P FY19B YoY

Tax Revenue 4,330 4,147 4,889 18%

Non-Tax Revenue 980 845 772 -9%

Gross Revenue Receipts 5,310 4,992 5,661 13%

(Less: Provincial Share) 2,384 2,316 2,590 12%

Net Revenue 2,926 2,676 3,070 15%

Net Capital Receipts 553 595 443 -25%

External Receipts 838 1,230 1,118 -9%

Estimated Provincial Surplus 347 347 286 -18%

Bank Borrowing 390 586 1,015 73%

Total Resources 4,752 4,926 5,160 5%

Privatization Proceeds 50 0 0 0%

Expenditure (PRsbn) FY18B FY18P FY19B YoY

Defence 920 999 1,100 10%

Total Debt Servicing 1,363 1,526 1,620 6%

Others - Social Protection,

Housing, Environment etc 1,481 1,345 2,060 53%

Current Expenditure 3,764 3,870 4,780 24%

Development Expenditure 1,340 1,063 1,152 8%

Total Expenditure 5,104 5,361 5,932 11%

Subsidies 139 148 175 18%

Source: Ministry of Finance, IMS Research

FY19 Budget Review

Sectors Outlook

FY19 Budget Review

Fertilizer

Key measures

Uniform rate of 2% GST on all fertilizers would now be applicable, down from 5% on Urea,

c. 3% or PRs100/bag on DAP, PRs98/bag on CAN and PRs167/bag on NP.

Rate of sales tax on feed gas is being reduced to 5% from 10%

Rate of sales tax on LNG has is being reduced to 0% from 5%. There is also 3% relief on

value added tax on LNG imports.

All subsidies will now be handled by provincial governments.

GIDC collection is budgeted at PRs100bn vs. collection of PRs15bn in the current FY.

Agri credit target is fixed at PRs1.1tn.

Analyst Comments

Handling of subsidies by provinces suggest

pricing cap of PRs1400/bag on Urea eventually

be removed. This is positive as Urea

manufacturers would likely pass on

PRs106/bag in terms of previous price declines

and PRs69/bag related to subsidy and sales tax

adjustments. Decline in sales tax on inputs is

inline with output sales tax, thus no cash-flow

would be stuck in shape of ST receivables.

Additional cash subsidy to farmers by

provinces would be positive for offtakes (e.g.

Punjab government is currently providing

coupon based subsidy at PRs150/bag on DAP).

Budget Impact: Positive

Mkt Cap TP Upside EPS (PRs) PE (x) PB (x) DY (%) ROE (%)

Fertilizer Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

FFC 99.5 1,095 95.0 (4.5) S 9.4 10.2 10.6 9.7 4.0 3.8 8.0% 8.8% 38% 39%

FFBL 43.9 355 47.0 7.0 N 4.0 5.5 10.9 8.0 2.7 2.3 3.4% 4.6% 25% 29%

ENGRO 316.9 1,436 331.9 4.7 N 26.4 28.3 12.0 11.2 0.9 0.9 8.2% 8.2% 8% 8%

FATIMA 33.8 614 29.5 (12.9) S 3.9 4.0 8.6 8.4 1.4 1.3 6.7% 5.9% 16% 15%

EFERT 72.5 838 72.9 0.5 N 8.0 8.3 9.0 8.7 2.3 2.3 11.0% 11.0% 25% 26%

Fertilizer 10.3 9.6 1.6 1.5 8.1% 8.3% 15% 16%

N = Neutral, B = Buy & S = Sell

FY19 Budget Review

Textile

Key measures

The government has hinted an addition in Exports Package announced in Jan’17 for non-

traditional and value-added exports.

Retained measures include: (i) zero rating status (ii) duty free import of textile machinery

(iii) mark up on Long Term Finance Facility at 5% and (iv) mark up of Export Refinance

Facility at 3%. The maintenance of financing rates in the face of interest rate reversal

(KIBOR expected to increase 1.25bps to 7.5% in FY19) will bode well for the sector.

Pending sales tax refunds are expected to be cleared in a phased manner over next 12

months post Jul’18, which will improve liquidity of the sector.

Minimum wage of labor has been maintained at PRs14,000.

Extension of tax credits at 10% of investment for BMR and expansions extended up to

FY21.

No relief in electricity/gas rates contrary to APTMA proposal

Analyst Comments

Broadly, these measures should help textile

companies in improving export

competitiveness, technical upgradation, and

ultimately improve margins and volumes.

Super tax of 3% will however trim textile

sector earnings where KTML has largest ratio

of local-to-overall sales amongst Textile

players under coverage.



Textile Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

NML 151.2 460 181.0 19.73 B 16.2 14.6 9.3 10.4 0.6 0.6 3.3% 3.3% 6% 6%

NCL 53.6 111 63.0 17.54 B 8.7 7.5 6.2 7.1 1.1 1.0 6.3% 4.9% 18% 15%

KTML 69.7 180 94.8 35.95 B 7.0 9.8 10.0 7.1 1.6 1.5 5.0% 5.6% 16% 21%

Textile 8.8 8.8 0.8 0.7 4.2% 4.1% 9% 8%


FY19 Budget Review

Consumer

Key measures

Sales tax exempted and CD reduced from 10% to 5% on animal feed for dairy farms

Sales tax reduced from 7% to 5% on agriculture machinery

3% CD withdrawn on imported bulls for breeding purposes

CD exempted on bovine semen

CD on ethylene film reduced to 16% from 20% for Liquid Food Packaging Industry

Lower corporate tax rate from 30% presently to 25% by 2023

Super tax reduced by 1% p.a. from existing 3% to 0% by FY21

Analyst Comments

Reduction in both sales tax and CD will reduce

fodder costs for EFOODS, NESTLE, FFL and

ASC, all of which breed livestock/cattle for

farming. Withdrawal of CD on bulls is positive

for FFL (currently importing via Cogent

Breeding Ltd). Reduced CD on ethylene film

will reduce packaging cost for all tetra

packaged liquid producers (including EFOODS,

NESTLE, FFL, SHEZ). LT impact of lower

corporate tax rate will counter continuation of

Super tax, allowing 4% upward revision in

earnings for EFOODS and a 6% revision in our

Dec’18 TP.



Consumer Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

EFOODS 100.8 668 76.0 (24.6) S 1.1 1.4 91.6 71.8 4.2 4.0 0.0% 0.0% 5% 6%

Consumer 16A 17A 16A 17A 16A 17A 16A 17A 16A 17A

UPFL 9,000.0 479 N.C 207.2 220.2 43.4 40.9 30.7 305.4 4.1% 2.3% 71% 747%

FFL 37.4 171 N.C (1.8) (4.3) n.m n.m 8.8 4.0 0.0% 0.0% -43% -46%

NESTLE 12,600.0 4,942 N.C 261.2 322.9 48.2 39.0 64.8 123.3 3.4% 2.5% 134% 316%

NATF 345.0 309 N.C 7.5 9.5 46.2 36.3 14.4 11.2 0.8% 1.2% 31% 31%

ASC 27.6 34 N.C 2.5 (0.2) 10.9 n.m 1.0 1.0 0.0% 0.0% 9% -1%

PAKT 2,235.0 4,939 N.C 40.6 37.5 55.1 59.6 44.0 33.8 1.1% 1.3% 80% 57%

Consumer 91.6 71.8 4.2 4.0 0.0% 0.0% 5% 6%

N.C = Not Covered, N = Neutral, B = Buy & S = Sell

FY19 Budget Review

Autos, Parts & Tractors

Key measures

Ban on sales of new vehicles, both local and imported, to non-filers.

Custom duty on carbon black (used for tyre manufacturing) reduced from 20% to 16%.

Increase in custom duty on rickshaw tyres from 11% to 20%.

Increase of custom duty on aluminum auto parts scrap from 30% to 35%.

Minimum payout ratio decreased from 40% to 20% to avoid further taxation. Punitive tax

in case this condition is not met is also reduced from 7.5% to 5%.

Custom duty on electric cars reduced from 50% to 25%, 15% regulatory duty abolished.

CKD electric vehicles to face lower custom duty of 10% from 50% earlier .

Reduction in GST on agricultural machinery from 7% to 5%, unchanged for tractors (5%).

Agricultural credit target increased from PRs1.0tn in FY18 to PRs1.1tn in FY19.

Analyst Comments

Restrictions on non-filer sales appears to be a

major negative for OEMs. PSMC and HCAR

may reduce their cash dividends due to lower

threshold of minimum 20% payout.

Tyre companies (GTYR and SRVI) will benefit

from reduced carbon black prices and increase

in CD on rickshaw tyres. Higher agri-credit and

flat GST should support growth in tractor sales.

Reduction in GST on agri-machinery will be

immaterial for MTL/AGTL as only 2-3% of

revenues come from such sales.

Budget Impact: Negative for OEMs - Positive for Parts


Autos Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

INDU 1,888.7 1,284 1,954.1 3.5 N 184.3 206.7 10.2 9.1 4.1 3.6 6.6% 7.4% 40% 40%

HCAR 479.8 593 592.8 23.5 B 47.1 55.9 10.2 8.6 4.0 3.1 3.8% 4.6% 39% 36%

PSMC 484.7 345 507.5 4.7 N 50.9 54.0 9.5 9.0 1.3 1.2 4.1% 4.4% 13% 13%

AGTL 738.7 370 714.5 (3.3) S 65.8 69.7 11.2 10.6 13.9 11.0 6.7% 7.5% 124% 104%

MTL 1,314.3 503 1,536.9 16.9 B 133.8 134.0 9.8 9.8 6.9 6.5 9.1% 9.1% 71% 66%

GTYR 179.4 93 230.0 28.2 B 15.3 16.5 11.8 10.9 2.5 2.2 3.3% 4.5% 21% 20%

Autos 10.2 9.3 3.7 3.2 6.1% 6.8% 36% 35%


FY19 Budget Review

Steel

Key measures

Sales tax paid on the basis of consumption of electricity is being increased from

PRs10.5/unit to PRs13/unit for the upcoming fiscal year.

Generally, steel producers adjust input tax on Raw materials (Scrap) with electricity bills.

The increase implies that the tax paid will increase by PRs2.50/unit of electricity consumed.

Development budget of PRs474bn set aside for Diamer-Bhasha and allocations to Dasu

Dam, Neelam Jhelum and Tarbela IV are the relevant projects – positive for rebar demand.

RD on rebar seems to have been left at existing levels, contrary to market expectations,

which suggested withdrawal of RD on rebars.

Analyst Comments

In steel, we believe the increase in sales tax will

lead to c.PRs2,000-2,200/ton increase in price of

rebars which will likely be passed on. This will

thus be Neutral for the sector. Moreover, RD on

rebars seems to have been kept intact amid

earlier rumors of withdrawal. This implies strong

pricing power for local producers for the next

year as well.

Budget Impact: Neutral


Steel Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

ISL 112.8 425 164.0 45.4 B 10.0 17.1 11.2 6.6 5.0 3.7 4.4% 7.1% 45% 56%

MUGHAL 67.6 147 93.2 37.9 B 4.6 9.3 14.7 7.3 2.7 2.4 3.0% 4.8% 18% 33%

ASTL 81.9 210 122.6 49.7 B 5.5 15.4 15.0 5.3 2.0 1.6 2.7% 7.6% 13% 31%

Steel 12.7 6.3 3.2 2.6 3.7% 6.8% 25% 41%


FY19 Budget Review

Power

Key measures

Allocation for subsidy to WAPDA & KEL has been increased 31%YoY to PRs140bn as tariff

differential subsidy.

Allocation of PRs138bn for power sector for Dasu Power Project (4,320MW), Tarbela Ext 4

(1,410MW), Jamshoro coal-fired project (2x600MW) and Neelum Jhelum (969MW).

Taxation changes : (i) Super tax is to be continued FY19 onwards; albeit with a reduction of

1% per annum (ii) 1% reduction in corporate tax rate from 30% to 25% in FY23 (only

KAPCO affected).

Analyst Comments

Energy expenditure to spur uplift in

generation. Higher subsidies for WAPDA and

KEL to rationalize tariffs, which could be

positive as the government uses it to contain

rising circular debt buildup. Imposition of

super tax would have a negative 1% EPS

impact on KAPCO’s bottom-line for FY19.



Power Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

HUBC 102.4 1,025 139.4 36.1 B 8.8 10.9 11.6 9.4 3.9 3.4 6.8% 6.8% 34% 37%

KAPCO 59.8 455 62.9 5.2 N 14.3 14.4 4.2 4.2 1.5 1.4 18.4% 18.4% 35% 33%

NPL 31.7 97 36.5 14.8 N 9.3 10.2 3.4 3.1 0.7 0.6 12.6% 12.6% 21% 20%

NCPL 28.9 92 29.2 1.2 N 8.6 9.0 3.4 3.2 0.9 0.8 10.4% 13.9% 28% 25%

Power 6.6 6.0 2.1 1.9 10.5% 10.7% 32% 31%


FY19 Budget Review

Oil & Gas

Key measures

The government has budgeted petroleum levy of PRs300bn vs. PRs170bn in previous budget.

Consequently, maximum Petroleum levy is now being replaced with PRs30/liter on all petroleum

products (retail prices). Maximum PL on LPG is set at PRs20,000 per ton.

Decline in GST on import of LNG to 12% from 17%.

Standard sales tax (17%) would now be applicable on Furnace Oil from 20%.

New and existing refineries which opt for 100kbpd expansion along with deep conversion units

would get tax holiday status of 10yrs.

Dividend from PSEs budgeted at PRs76bn vs. PRs80bn from previous budget.

Analyst Comments

Higher PL allocation suggests that petroleum

product prices would be inflationary. OMC

margins would not be affected; however,

Petroleum Division could raise its revenues from

POL products through higher PL.

Decline in GST on FO would merely be an input

tax adjustment for consumers, however, it

would be positive for consumers of electricity.

Existing refineries like PARCO and BYCO, if they

install deep conversion units, would be eligible

for tax exemption. This should be a long term

positive to promote investments in the sector.



Oil & Gas Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

OGDC 168.3 6,259 182.0 8.2 N 17.4 19.4 9.7 8.7 1.3 1.2 5.6% 5.9% 14% 14%

PPL 214.7 3,661 241.0 12.3 N 24.5 27.7 8.7 7.7 1.8 1.6 5.6% 6.5% 20% 21%

POL 666.0 1,363 590.0 (11.4) S 50.1 63.3 13.3 10.5 4.9 4.8 7.2% 9.0% 37% 46%

Oil & Gas 9.7 8.5 1.6 1.5 5.8% 6.5% 17% 17%

OMCs 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

PSO 341.1 962 431.0 26.3 B 51.1 51.2 6.7 6.7 0.9 0.9 5.9% 5.9% 14% 13%

APL 632.1 453 720.0 13.9 N 66.6 67.3 9.5 9.4 3.0 2.9 8.5% 8.9% 32% 31%

HASCOL 319.1 400 267.9 (16.1) S 11.1 12.7 28.7 25.2 4.2 4.0 2.4% 2.7% 15% 16%

OMCs 8.8 8.7 1.4 1.3 5.8% 5.9% 16% 15%


FY19 Budget Review

Banks

Key measures

Successive 1% reduction in Super Tax from existing 4% to 0% by 2021 and consequent

reduction in ETR from 39% currently to 35% by CY21F.

Reduction in withholding tax for non-filers on banking transactions from 0.6% to 0.4%,

Resident banks having foreign branches can no longer adjust foreign-source loss against

Pakistan-source income and claim tax relief.

Banks to collect 1% advance tax from filers (3% for non-filers) for card transactions

resulting in outward remittances.

Exemption from FED on commission paid by SBP for handling banking services for the

federal and provincial governments.

Analyst Comments

Continuation of Super tax would lead to c. 5%

negative impact on earnings for CY19F and 2-

4% hit on TP. Banks with foreign operations

will no longer be able to claim tax deductions

on losses from foreign branches: potentially

negative for UBL and HBL. However, NBP, BOP

and BOK may benefit from FED exemption on

carrying out treasury operations on behalf of

the SBP.

Budget Impact: Neutral to Negative


Banks Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

MCB 210.8 2,160 221.3 5.0 N 21.2 22.9 10.0 9.2 1.5 1.4 7.8% 8.1% 15% 16%

UBL 199.8 2,116 191.0 (4.4) S 17.1 22.6 11.7 8.8 1.3 1.3 6.5% 6.8% 11% 14%

HBL 196.5 2,493 215.7 9.8 N 19.3 24.4 10.2 8.0 1.4 1.3 5.1% 6.1% 14% 16%

BAFL 52.7 732 50.9 (3.3) S 6.2 7.1 8.5 7.4 1.0 0.9 3.8% 4.7% 12% 13%

ABL 102.5 1,015 98.4 (4.0) S 11.2 12.4 9.2 8.3 1.0 1.0 6.8% 7.8% 11% 12%

Banks 10.1 8.5 1.3 1.2 6.2% 6.9% 13% 15%


FY19 Budget Review

Cement

Key measures

Increase in FED to PRs1.50/kg from PRs1.25/kg

Federal PSDP has been allocated at PRs1.03tn from FY18’s initial allocation of PRs1.01bn.

However, we flag that the federal govt. would only be contributing PRs800bn while

PRs230bn will contributed by other sources (e.g. private-public partnership).

Customs duty on all types of coal has been rationalized at 3% from 5%.

Import duty on coal to be cut from 5.5% to 4%.

Analyst Comments

Although PSDP budget has been maintained at

PRs1tn, government contribution is just

PRs800bn. Increase in FED implies cost push of

c. PRs15/bag which will partially be offset by

reduction in coal duties. In a rising competition

scenario from new expansions, effect of higher

FED may potentially be absorbed by

manufacturers given recent run-up in prices and

leaner demand period in coming months.

Budget Impact: Neutral to Negative


Cements Price (US$mn) PRs (%) Stance 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

DGKC 140.8 534 172.0 22.1 B 21.5 17.6 6.6 8.0 0.8 0.7 5.3% 5.0% 12% 9%

LUCK 651.6 1,823 629.8 (3.4) S 46.9 50.2 13.9 13.0 2.0 1.8 3.0% 2.2% 14% 13%

MLCF 69.7 358 86.9 24.8 B 7.8 9.6 8.9 7.2 1.4 1.3 5.0% 8.6% 15% 18%

CHCC 125.2 191 147.0 17.4 B 12.6 14.7 9.9 8.5 1.9 1.7 4.0% 4.8% 19% 20%

FCCL 27.7 330 25.9 (6.3) S 2.1 3.3 12.9 8.5 1.8 1.7 4.5% 9.0% 14% 20%

ACPL 178.4 177 246.7 38.3 B 23.4 24.3 7.6 7.3 1.5 1.3 7.8% 8.1% 19% 17%

KOHC 150.6 201 257.8 71.2 B 18.6 24.3 8.1 6.2 1.4 1.2 5.0% 6.3% 17% 19%

Cements 10.5 9.6 1.5 1.4 4.1% 4.5% 14% 14%

U-R = Under Review, N = Neutral, B = Buy & S = Sell

FY19 Budget Review

Miscellaneous Sectors

Key measures

Chemicals: Withdrawal of CD on two catalysts used by PTA industry i.e. Hydrogen Bromide (11%), and Palladium-on-carbon (3%) is

expected to be marginally positive for LOTCHEM. Reduction in custom duty of coal imports from 5% to 3% – positive for energy

intensive chemical production processes (Soda Ash) - and tax credit for BMR and expansions extended to FY21 should support ICI’s

upcoming milk manufacturing facility.

Media: Fiscal Package for the film industry proposes reduction in CD and sales tax to 3% and 5% respectively on imports of film

equipment. This will play out positively for HUMNL, particularly Hum Films.

Tobacco: Increased FED tiers and a health levy of PRs10/kg on tobacco, although negative, are expected to be passed through to

consumers without significant demand destruction.

Real Estate: Tax on REIT dividends to be reduced to 5% from 12% previously, which will allow larger participation, Positive for

Dolmen City REIT (DCR). However, the broader Real Estate sector could face tough times given GoP push to raise taxation from this

segment.

Telecom: Reduced CD (5%) and RD on Optical Fiber Cables from 20% to 10% will benefit PTCL, particularly as they plan to increase

their fiber optic footprint having recently signed fiber leasing agreement in 2017 with Telenor Pakistan.

Budget Impact: Mixed

FY19 Budget Review

As of

Mkt Cap

(US$Bn)

Price

(PRs)TP (PRs) Upside Stance 2018F 2019F 2018F 2019F 2018F 2019F 2018F 2019F 2018F 2019F 2018F 2019F

E&P

OGDC 6.3 168.3 182.0 8.2 Neutral 17.4 19.4 9.7 8.7 1.3 1.2 6% 6% 14% 14% 5.8 5.3

PPL 3.7 214.7 241.0 12.3 Neutral 24.5 27.7 8.7 7.7 1.8 1.6 6% 7% 20% 21% 4.2 3.8

POL 1.4 666.0 590.0 (11.4) Sell 50.1 63.3 13.3 10.5 4.9 4.8 7% 9% 37% 46% 6.9 5.6

Banks

ABL 1.0 102.5 98.4 (4.0) Sell 11.2 12.4 9.2 8.3 1.0 1.0 7% 8% 11% 12% n.a n.a

MCB 2.2 210.8 221.3 5.0 Neutral 21.2 22.9 10.0 9.2 1.5 1.4 8% 8% 15% 16% n.a n.a

HBL 2.5 196.5 215.7 9.8 Neutral 19.3 24.4 10.2 8.0 1.4 1.3 5% 6% 14% 16% n.a n.a

UBL 2.1 199.8 191.0 (4.4) Sell 17.1 22.6 11.7 8.8 1.3 1.3 7% 7% 11% 14% n.a n.a

BAFL 0.7 52.7 50.9 (3.3) Sell 6.2 7.1 8.5 7.4 1.0 0.9 4% 5% 12% 13% n.a n.a

Cement

DGKC 0.5 140.8 172.0 22.1 Buy 21.5 17.6 6.6 8.0 0.8 0.7 5% 5% 12% 9% 7.8 4.7

LUCK 1.8 651.6 629.8 (3.4) Sell 46.9 50.2 13.9 13.0 2.0 1.8 3% 2% 14% 13% 7.1 7.1

MLCF 0.4 69.7 86.9 24.8 Buy 7.8 9.6 8.9 7.2 1.4 1.3 5% 9% 15% 18% 5.6 5.3

CHCC 0.2 125.2 147.0 17.4 Buy 12.6 14.7 9.9 8.5 1.9 1.7 4% 5% 19% 20% 7.44 7.61

FCCL 0.3 27.7 25.9 (6.3) Sell 2.1 3.3 12.9 8.5 1.8 1.7 5% 9% 14% 20% 6.6 4.8

ACPL 0.2 178.4 246.7 38.3 Buy 23.4 24.3 7.6 7.3 1.5 1.3 8% 8% 19% 17% 5.6 4.0

KOHC 0.2 150.6 257.8 71.2 Buy 18.6 24.3 8.1 6.2 1.4 1.2 5% 6% 17% 19% 4.3 4.2

Fertilizer

FFC 1.1 99.5 95.0 (4.5) Sell 9.4 10.2 10.6 9.7 4.0 3.8 8% 9% 38% 39% 7.1 7.4

EFERT 0.8 72.5 72.9 0.5 Neutral 8.0 8.3 9.0 8.7 2.3 2.3 11% 11% 25% 26% 4.6 4.7

FFBL 0.4 43.9 47.0 7.0 Neutral 4.0 5.5 10.9 8.0 2.7 2.3 3% 5% 25% 29% 8.0 5.4

FATIMA 0.6 33.8 29.5 (12.9) Sell 3.9 4.0 8.6 8.4 1.4 1.3 7% 6% 16% 15% 5.3 5.4

ENGRO 1.4 316.9 331.9 4.7 Neutral 26.4 28.3 12.0 11.2 0.9 0.9 8% 8% 8% 8% 6.6 7.5

April 27, 2018 EPS (PRs) PER (x) PBV (x) DY (%) ROE (%) EV/EBITDA (x)

IMS Universe

FY19 Budget Review

IMS Universe

As of

Mkt Cap

(US$Bn)

Price

(PRs) TP (PRs) Upside Stance 2018F 2019F 2018F 2019F 2018F 2019F 2018F 2019F 2018F 2019F 2018F 2019F

OMCs

PSO 1.0 341.1 431.00 26.3 Buy 51.1 51.2 6.7 6.7 0.9 0.9 6% 6% 14% 13% 6.7 6.1

APL 0.5 632.1 720.00 13.9 Neutral 66.6 67.3 9.5 9.4 3.0 2.9 9% 9% 32% 31% 5.8 6.0

HASCOL 0.4 319.1 267.86 (16.1) Sell 11.1 12.7 28.7 25.2 4.2 4.0 2% 3% 15% 16% 9.1 7.0

Steel

ASTL 0.2 81.9 122.6 49.7 Buy 5.5 15.4 15.0 5.3 2.0 1.6 3% 8% 13% 31% 10.0 4.9

MUGHAL 0.1 67.6 93.2 37.9 Buy 4.6 9.3 14.7 7.3 2.7 2.4 3% 5% 18% 33% 10.0 6.1

ISL 0.4 112.8 164.0 45.4 Buy 10.0 17.1 11.2 6.6 5.0 3.7 4% 7% 45% 56% 8.0 5.1

Power

NPL 0.1 31.7 36.5 14.8 Neutral 9.3 10.2 3.4 3.1 0.7 0.6 13% 13% 21% 20% 2.5 1.9

HUBC 1.0 102.4 139.4 36.1 Buy 8.8 10.9 11.6 9.4 3.9 3.4 7% 7% 34% 37% 8.5 7.1

KAPCO 0.5 59.8 62.9 5.2 Neutral 14.3 14.4 4.2 4.2 1.5 1.4 18% 18% 0% 0% 3.2 2.7

NCPL 0.1 28.9 29.2 1.2 Neutral 8.6 9.0 3.4 3.2 0.9 0.8 10% 14% 28% 25% 10.4 8.8

Textiles

NML 0.5 151.2 181.0 19.7 Buy 16.2 14.6 9.3 10.4 0.6 0.6 3.3% 3% 6% 6% 6.6 6.8

NCL 0.1 53.6 63.0 17.5 Buy 8.7 7.5 6.2 7.1 1.1 1.0 6.3% 5% 18% 15% 7.1 8.7

KTML 0.2 69.7 94.8 36.0 Buy 7.0 9.8 10.0 7.1 1.6 1.5 5.0% 6% 16% 21% 7.4 5.6

Autos

PSMC 0.3 484.7 507.5 4.7 Neutral 50.9 54.0 9.5 9.0 1.3 1.2 4% 4% 13% 13% 3.8 3.5

HCAR 0.6 479.8 592.8 23.5 Buy 47.1 55.9 10.2 8.6 4.0 3.1 4% 5% 39% 36% 2.7 1.9

INDU 1.3 1,888.7 1,954.1 3.5 Neutral 184.3 206.7 10.2 9.1 4.1 3.6 7% 8% 40% 40% 3.7 3.1

GTYR 0.1 179.4 230.0 28.2 Buy 15.3 16.5 11.8 10.9 2.5 2.2 3% 4% 21% 20% 7.1 6.2

Tractors

MTL 0.5 1,314.3 1,536.9 16.9 Buy 133.8 134.0 9.8 9.8 6.9 6.5 9% 9% 71% 66% 6.4 6.6

AGTL 0.4 738.7 714.5 (3.3) Sell 65.8 69.7 11.2 10.6 13.9 11.0 7% 8% 124% 104% 7.4 7.2

Chemicals

ICI 0.7 894.4 927.7 3.7 Neutral 39.5 47.4 22.7 18.9 4.4 4.0 2% 3% 19% 21% 12.1 10.2

Miscellaneous

EFOODS 0.7 100.8 76.0 (24.6) Sell 1.1 1.4 91.6 71.8 4.2 4.0 0% 0% 5% 6% 26.4 22.1

ROE (%) EV/EBITDA (x)April 27, 2018 EPS (PRs) PER (x) PBV (x) DY (%)

FY19 Budget Review

IMS Team

Noor Hameed Chief Executive Officer 603 [email protected]

IMS Sales Team Designation Extension Email

Dr. Gohar Rasool Head of International Sales 601 [email protected]

M. Fahad Zia Head of Institutional Sales 213 [email protected]

IMS Research Team Designation Extension E mail Coverage

Raza Jafri, CFA Director Research 301 [email protected] Strategy & Banks

Muhammad Saad Ali, CFA Head of Research 205 [email protected] E&P & Economy

Abdul Samad Khanani Senior Analyst 303 [email protected] Fertilizers & Downstream Oil

Yusra Beg Senior Analyst 305 [email protected] Banks, Consumer & Pharma

Syed Waqas Imam Investment Analyst 102 [email protected] Steel & Cement

Ailia Naeem Investment Analyst 306 [email protected] Textile & Power

Ahmed Raza Investment Analyst 101 [email protected] Automobile, Auto Parts & Tractors

Abdul Wadood Manager Research 302 [email protected]

Ubair Usman Assistant Database 302 [email protected]

Muhammad Rehan Library Incharge 302 [email protected]

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FY19 Budget Review

Copyright©2018 Intermarket Securities Limited. All rights reserved. The information provided on this document is not intended for

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Neither the information, nor any opinion contained in this document constitutes a solicitation or offer by Intermarket Securities or its affiliates

to buy or sell any securities or provide any investment advice or service. Intermarket Securities does not warrant the accuracy of the

information provided herein.

Disclaimer

Research Entity Number – REP-085

We, IMS Research Team, certify that the views expressed in the report reflect our personal views about the subject securities. We

also certify that no part of our compensation was, is, or will be, directly or indirectly, related to the specific recommendations

made in this report. We further certify that we do not have any beneficial holding of the specific securities that we have

recommendations on in this report.

Ratings Guide* Upside

Buy More than 15%

Neutral Between 0% - 15%

Sell Below 0%

*Based on 12 month horizon unless stated otherwise in the report. Upside is the percentage difference between the

Target Price and Market Price.

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