stock smart weekly (mar 28, 2014)

AKD Research [email protected]

009221 111 253 111

Weekly Review

After initial weakness which was led by profit taking by foreign institution, particularly in

OGDC and MCB, the market posted recovery with the KSE-100 Index closing for the

week at 27,116 points, up by 1.3%WoW. However, volumes stuttered as the average

daily traded volume declined by 18.5%WoW to 154mn shares. Major news flow during

the week included 1) Disbursement of US$556mn from the IMF, 2) World Bank to provide

Pakistan with US$1.7bn loan for different energy and infrastructure projects including the

Dasu Hydro Power Project, 3) significant debt of PkR530bn raised through the PIB auc-

tion as against a target of PkR60bn and 4) PPL discovery 11.2mmcfd tight gas in

Naushahro Firoz block (PPL has 90% stake in the block). Within the AKD Universe, ma-

jor gainers during the week were HBL(+15.7%WoW), ABL (+14.9%WoW) and UBL

(+12.7%WoW) while major losers during the week included SNGP (-7.6%WoW), SSGC (-

5.1%WoW) and NML (-4.5%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©2014 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 Member: Karachi Stock Exchange

Find AKD research on Bloomberg (AKDS<GO>), firstcall.com and Reuters Knowledge

Investors are likely to focus on the CPI reading next week to gauge any potential change

in SBP’s stance on interest rate going forward. The textile sector, particularly spinning

heavy players are likely to stay under pressure in strong PkR scenario. While banks are

expected to perform well in the aftermath of better banking spreads.

Outlook

Index & Volume Chart

Source: KSE & AKD Research

Universe Gainers & Losers

28 March 2014

Top-5 Volume Leaders

Symbol Volume (mn)

FABL : 60.12

BOP : 44.86

SMBL : 37.89

EFERT : 27.36

TRG : 27.29 ‐11.0%

‐7.0%

‐3.0%

1.0%

5.0%

9.0%

13.0%

17.0%

HBL

ABL

UBL

HMB

EPCL

DGKC

NCL

NML

SSGC

SNGP

27,116

27,165

26,82226,670

26,391

‐

50,000

100,000

150,000

200,000

250,000

300,000

24‐M

ar

25‐M

ar

26‐M

ar

27‐M

ar

28‐M

ar

(Shrs'000)

26,000

26,200

26,400

26,600

26,800

27,000

27,200

27,400

(Index)

Ready Volume (LHS) KSE100 Index (RHS)

Indices KSE-100 KSE-30This week 27,116.13 19,200.54

Last week 26,765.49 18,990.38

Change 1.31% 1.11%

Indices KMI-30 AllshareThis week 44,488.95 20,379.22

Last week 44,606.35 20,026.10

Change -0.26% 1.76%

Mkt Cap. PkRbn US$bnThis week 6,573.10 67.05

Last week 6,460.62 65.80

Change 1.74% 1.89%

Avg. Daily Turnover ('mn shares)This week 154.00

Last week 188.87

Change -18.46%

0

100

200

300

400

500

600

700

Mar

-13

Apr

-13

May

-13

Jun-

13Ju

l-13

Aug

-13

Sep-

13O

ct-1

3N

ov-1

3D

ec-1

3Ja

n-14

Feb-

14M

ar-1

4M

ar-1

4

(mn) (Index)

15,00016,300

17,60018,90020,20021,500

22,80024,10025,400

26,70028,000

Volume (LHS) KSE- 100 Index

AKD Securities Limited 28 March 2014

StockSmart Pakistan Weekly Update

This Week’s Daily Reports

2

Mar 28, 2014

Mar 27, 2014

Mar 26, 2014

ICI_Growth intact but over priced, (AKD Daily, March 28, 2014)

ICI posted a strong result in 1HFY14 reporting earnings of PkR835mn (EPS: PkR9.04), up by 26%YoY despite a relatively subdued 4%YoY growth in the topline to PkR18,541mn. The growth in earnings was driven primarily by sharp improvement in profitability of the Soda Ash division due to a better energy mix during 1HFY14. Going forward, earn‐ings growth is likely to be driven by heavier reliance on coal as the coal boilers for the Soda Ash division have already come online. Whereas coal boilers in the PSF division are expected to come online by 1HFY14. Further growth may be driven by aggressive expansion in the Life Sciences business where the company has signed a deal with Uni‐brands (Pvt.) Ltd for the import and marketing of their products. At current levels, the scrip is trading at FY14F and FY15F P/E of 15.48x and 10.57x, respectively. We believe that strong growth in earnings is overly priced in the market as the stock offers a down‐side of 9.6% to our upward revised Dec’14 TP of 311/share. Reduce!

Fertilizer Numbers_2MCY14 urea sales up 6.6%, (AKD Daily, March 27, 2014)

FAs per the latest numbers released by National Fertilizer Development Center (NFDC), urea sales for 2MCY14 have clocked in at 997.6k tons as against 936.1k tons sold in the same period last year, depicting growth of 6.6%YoY. As for DAP, the phosphate based fertilizer’s offtake during the same period grew by impressive 67.4%YoY and was re‐corded at 128.1k tons versus 76.5k tons in the corresponding period previous year. Blessed with the luxury to operate both its plants, Engro Fertilizer’s (EFERT) remained the only major player to post impressive offtake growth (62.5%YoY) with urea sales of 335.7k tons. Apart from EFERT, FATIMA remained the only other major manufacturer with positive urea offtake growth. Cumulative local urea offtake was realized at 743.4k tons, up 13.6%YoY. With ample availability of locally manufactured urea, sales of im‐ported urea faltered by 9.7%YoY to 254.1k tons in the aforementioned period. During the period under review, sector’s DAP sales posted impressive figures as well, growing by 67.4%YoY to 128.1k tons as against 76.5k tons sold during the same period last year. We believe higher DAP sales can be due to potential price increase going forward. On individual basis, DAP sales of FFBL came off by 15.2%YoY to 37.2k tons following lower production due to gas curtailment. EFERT’s DAP offtake grew by 112.6%YoY to 37.8k tons during the period under review.

Pakistan Economy_Mar’14 CPI projected at 8.2%YoY, (AKD Daily, March 26, 2014)

With the SBP maintaining the DR at 10% in the last MPS but expectations persisting that interest rates may come off over the next 3m‐6m, inflation data is likely to retain investor attention. In this regard, we expect Mar'14 CPI to clock in at 8.2%YoY, which implies a sequential increase of 0.65%MoM. This is corroborated by the SPI trend which has depicted a 2%MoM increase. The sequential increase in price pressures is expected to arise on the back of higher food inflation and clothing & footwear even as other heavyweights in the CPI basket are expected to remain flat. As a result, the 9MFY14 CPI average should clock in at 8.6%YoY, leading up to a projected FY14 CPI average of 8.5%YoY. Considering the positive real interest rate stands at ~1.5%, we see interest rates coming off in the next MPS particularly as: 1) PkR‐US$ has stabilized with 1.7%FYTD depreciation, 2) successful approval of the second EFF tranche of US$555mn, and 3) further buildup in FX reserves (currently at US$9.65bn, implying import cover of 2.75 months). Within this backdrop, ENGRO, NML and DGKC can potentially outperform. Furthermore, with new regulatory directives entailing NIMs are largely shielded from interest rate fluctuations, we would take any weakness in Banks to build positions in names such as BAFL and NBP.

27,075

27,100

27,125

27,150

27,175

27,200

27,225

27,250

27,275

27,300

9:15

9:59

10:4

3

11:2

6

12:1

0

12:5

3

13:3

5

14:1

8

15:0

2

15:4

6

16:3

0


Mar 24, 2014

26,850

26,889

26,928

26,967

27,006

27,045

27,084

27,123

27,162

27,201

9:30

10:2

1

11:1

3

12:0

4

12:5

5

13:4

7

14:3

8

15:3

0

26,700

26,718

26,736

26,754

26,772

26,790

26,808

26,826

26,844

9:30

10:0

8

10:4

6

11:2

5

12:0

3

12:4

1

13:1

9

13:5

7

14:3

5

15:1

3

Mar 25, 2014

26,375

26,413

26,451

26,489

26,527

26,565

26,603

26,641

26,679

9:30

10:2

2

11:1

3

12:0

4

12:5

5

13:4

6

14:3

8

15:2

9

26,440

26,471

26,502

26,533

26,564

26,595

26,626

26,657

26,688

9:30

10:1

5

11:0

0

11:4

4

12:2

9

13:1

3

13:5

8

14:4

2

15:2

7



This Week’s Daily Reports

3

Feb' 14 Textile Exports, (AKD Daily, March 25, 2014)

According to details released by the Pakistan Bureau of Statistics (PBS), textile exports for the month of Feb’14 increased by 3%MoM to US$1.131bn bringing 8MFY14 textile exports to US$9.155bn, up 8.28%YoY. The benefit of GSP Plus status is yet to material‐ize. This is evident from the sequential decline in exports of higher value added prod‐ucts. We believe benefits of the EU GSP Plus status will commence from 4QFY14 as it will take some time to break away the market share of other textile manufacturers e.g. Bangladesh that already have duty free access. Though we believe the realized value for exporter will fall in PkR terms due to sharp appreciation of the PkR we expect the impact to be front end loaded as margins are likely to rationalize in the long run. We maintain our liking for NML and highlight this as an opportunity to build fresh positions in the stock. NML offers an upside of 13% from current levels to our TP of PkR137.5/share.

Pakistan Market_The OGDC conundrum, (AKD Daily, March 24, 2014)

With the PkR appreciating by 7.2% against the US$ from its CYTD bottom, there was an element of concern that currency gains could tempt foreign investors to book profits where Friday's net sell of US$4.7mn (primarily in Oil & Gas sector; likely OGDC which came off by 4.4%) was the highest in a single day in this calendar year. With Franklin Templeton looking to liquidate a small fund (173k shares of OGDC; 266k shares of MCB as of Sep‐13) coupled with likely profit taking in its larger Asia fund, we believe panic (unjustified) may have ensued even for local shareholders. That said, OGDC's recent underperformance may also be a function of its planned secondary offering (GDR/local SPO) on concerns over consequent supply‐demand mismatch. While this may keep a lid on OGDC's near‐term share price performance, a potential local SPO may provide an attractive entry point/opportunity to lower average holding cost. With the company's fundamentals unchanged, we maintain our Buy stance based on our target price of PkR302/share.



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

Regional Valuations (2014)

Source: Bloomberg & AKD Universe

270

275

280

285

290

295

300

305

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep

-13

Oct

-13

Nov

-13

Dec

-13

Jan-

14

Feb

-14

Mar

-14

97.0

99.0

101.0

103.0

105.0

107.0

109.0

Mar

-13

May

-13

Jul-1

3

Aug

-13

Oct

-13

Dec

-13

Feb

-14

Mar

-14

SPOT Units 28‐Feb‐14 21‐Feb‐14 WoW CYTD

TRJ‐CRB Points 302.43 301.58 0.28% 7.95%

Nymex (WTI) US$/bbl. 102.59 102.2 0.38% 4.24%

ICE Brent US$/bbl. 109.3 109.71 ‐0.37% ‐1.37%

N. Gas Henry Hub US$/Mmbtu 4.6963 6.2144 ‐24.43% 8.11%

Cotton USd/Pound 94.05 93.9 0.16% 4.85%

Gold US$/Tr.Oz 1326.44 1324.28 0.16% 10.02%

Sliver US$/Tr.Oz 21.225 21.851 ‐2.86% 9.02%

Copper US$/MT 7080 7211 ‐1.82% ‐4.01%

Platinum US$/Oz 1446.63 1429 1.23% 5.64%

Coal US$/MT 76.15 76.35 ‐0.26% ‐9.99%

SPOT 28‐Feb‐14 21‐Feb‐14 Chg +/‐ WoW CYTD

Dollar Index 79.691 80.237 ‐0.546 ‐0.68% ‐0.43%

USD/PkR 104.920 104.952 ‐0.032 ‐0.03% ‐0.39%

USD/JPY 101.800 102.510 ‐0.710 ‐0.69% ‐3.33%

EUR/USD 1.380 1.375 0.006 0.41% 0.43%

GBP/USD 1.675 1.662 0.013 0.78% 1.14%

AUD/USD 0.892 0.898 ‐0.005 ‐0.59% 0.08%

NZD/USD 0.839 0.828 0.011 1.29% 2.13%

CHF/USD 0.880 0.888 ‐0.007 ‐0.83% ‐1.41%

CAD/USD 1.106 1.111 ‐0.004 ‐0.40% 4.15%

USD/KRW 1,068 1,072 ‐4.490 ‐0.42% 1.70%

CNY/USD 6.145 6.091 0.054 0.88% 1.50%

Country Bloomberg Code 28‐Feb‐14 21‐Feb‐14 WoW CYTD

Pakistan KSE100 Index 25,783 25,603 0.70% 2.07%

Srilanka CSEALL Index 5,940 5,937 0.05% 0.47%

Thailand SET Index 1,325 1,304 1.62% 2.05%

Jakarta JCI Index 4,620 4,646 ‐0.56% 8.10%

Malaysia FBMKLCI Index 1,836 1,831 0.27% ‐1.68%

Philippines PCOMP Index 6,425 6,308 1.85% 9.09%

Vietnam VNINDEX Index 586 571 2.79% 16.22%

Hong Kong HSI Index 22,837 22,568 1.19% ‐2.01%

Singapore FSSTI Index 3,111 3,100 0.35% ‐1.79%

Brazil IBX Index 19,497 19,520 ‐0.12% ‐8.44%

Russia RTSSTD Index 9,741 10,035 ‐2.93% ‐4.28%

India SENSEX Index 21,120 20,701 2.03% ‐0.24%

China SHCOMP Index 2,056 2,114 ‐2.72% ‐2.82%

S&P SPX Index 1,859 1,836 1.26% 0.60%

DJIA INDU Index 16,322 16,103 1.36% ‐1.54%

NASDAQ Composite CCMP Index 4,308 4,263 1.05% 3.15%

UK UKX Index 6,810 6,838 ‐0.41% 0.90%

German DAX Index 9,692 9,657 0.36% 1.46%

Qatar DSM Index 11,772 11,872 ‐0.85% 13.41%

Abu Dhabi ADSMI Index 4,959 4,915 0.89% 15.58%

Dubai DFMGI Index 4,220 4,183 0.90% 25.24%

Kuwait KWSEIDX Index 7,693 7,737 ‐0.58% 1.90%

Oman MSM30 Index 7,114 7,167 ‐0.74% 4.09%

Saudi Arabia SASEIDX Index 9,107 8,989 1.31% 6.69%

MSCI EM MXEF Index 966 959 0.75% ‐3.62%

MSCI FM MXFM Index 617 613 0.63% 3.81%

EPS Growth PE(x)

Pakistan 25% 8.37

Indonesia 13% 11.50

Malaysia 18% 12.69

Philippines 9% 14.97

Vitenam 15% 15.32

India 17% 14.13

China 15% 6.84

% ROE Divd Yld

Pakistan 21.55 5.80

Indonesia 18.68 2.32

Malaysia 13.47 3.37

Philippines 14.85 2.46

Vitenam 17.85 n.a

India 16.07 1.77

China 14.25 4.01

5



Chart Bank

FIPI Flows for the week

(4,226)

(943)

3,115

701

‐

(5,000)

(4,000)

(3,000)

(2,000)

(1,000)

‐

1,000

2,000

3,000

4,000

24‐Mar 25‐Mar 26‐Mar 27‐Mar 28‐Mar

(US$'000)

Advance to Decline Ratio

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

Mar‐13

May‐13

Aug‐13

Oct‐13

Dec‐13

Mar‐14

AKD Universe vs. KSE-100 Index

‐5%1%7%

13%19%25%31%37%43%49%55%

Mar‐13

Jun‐13

Sep‐13

Dec‐13

Mar‐14

KSE‐All Share Index AKD Universe

LIPI Flows for the week

Ind., 0.10

Co., (1.43)

Bank/DFI,

(1.83)

NBFC, 4.70

M.Funds,

(11.11)

Others,

(1.33)(4.00)

(2.00)

‐

2.00

4.00

6.00

8.00

10.00

(US$mn)

Earnings Yield vs. T-Bill (12M) Differential

(4.0)

(2.0)

‐

2.0

4.0

6.0

8.0

10.0

12.0

Jun‐07

Dec‐07

Jul‐08

Feb‐09

Sep‐09

Mar‐10

Oct‐10

May‐11

Dec‐11

Jun‐12

Jan‐13

Aug‐13

Mar‐14

(%)

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

‐15%‐5%5%

15%25%35%45%55%65%75%

Jan‐13

Feb‐13

Apr‐13

May‐13

Jul‐13

Sep‐13

Oct‐13

Dec‐13

Feb‐14

Mar‐14

KSE100

MSCI EM

MSCI FM

6

AKD Securities Limited StockSmart Pakistan Weekly Update

AKD Universe Valuations

Market PER Chart 2014F

Source: AKD Research

Market P/BVS Chart 2014F



28 March 2014

Jul-

05

Sep-

06

Dec

-07

Mar

-09

Jun-

10

Sep-

11

Dec

-12

Mar

-14

15

11

8

4

(x)

Jul‐05

Sep‐06

Dec‐07

Mar‐09

Jun‐10

Sep‐11

Dec‐12

Mar‐14

(x)3.5

2.6

1.7

0.8

28‐Mar‐14 2011A 2012A 2013A/E 2014F 2015F

EPS (PkR) 8.04 8.74 9.55 11.91 13.65

EPS chg (%) 24.30 8.67 9.28 24.71 14.62

EPS chg (%) Ex‐Financials 25.15 8.76 16.62 28.70 15.41

Book Value per Share (PkR) 37.64 43.07 49.25 55.27 61.63

Payout (%) 52.26 50.30 50.11 48.53 48.58

Valuations

Price to Earnings (x) 12.39 11.41 10.44 8.37 7.30

Price to Book (x) 2.65 2.31 2.02 1.80 1.62

PER (x) Ex‐Financials 13.09 12.04 10.32 8.02 6.95

P/BVS (x) Ex‐Financials 3.16 2.78 2.36 2.05 1.83

Price to CF (x) 20.50 25.44 8.30 20.17 11.34

Earnings Yield (%) 8.07 8.77 9.58 11.95 13.70

Dividend Yield (%) 4.22 4.41 4.80 5.80 6.65

EV / EBITDA (x) 7.74 6.81 6.07 5.31 4.71

Profitability

Return on Equity (%) 21.37 20.29 19.40 21.55 22.15

Return on Assets (%) 3.85 3.58 3.77 4.17 4.31

Chg in Sales (%) 17.34 17.57 5.67 12.59 10.84

Gross Margin (%) 23.41 21.77 22.90 22.45 23.02

Operating Margin (%) 14.47 12.85 13.49 13.48 14.35

Net Margin (%) 11.38 10.52 10.88 12.05 12.47

7


AKD Universe Active Coverage Cluster’s Valuations

28 March 2014


Stocks Symbol Price TP Stance EPS (PkR)

PE(x) PB (x) DY (%)

(PkR) (PkR) 12A 13A/E 14F 12A 13A/E 14F 12A 13A/E 14F 12A 13A/E 14F

Automobile and Parts

Indus Motors INDU 396.9 384.29 Neutral 54.7 42.7 49.1 7.3 9.3 8.1 1.8 1.8 1.6 8.1 6.3 6.3

Pak Suzuki Motors PSMC 196.5 194.99 Neutral 11.9 22.5 23.0 16.5 8.7 8.5 1.0 0.9 0.9 1.3 2.0 2.5

Construction and Materials

DG Khan Cement DGKC 91.1 106.95 Accumulate 9.4 12.6 12.9 9.7 7.3 7.0 1.2 0.8 0.8 1.6 3.3 3.6

Chemicals

Engro Polymer Chemicals EPCL 15.6 16.49 Accumulate 0.1 1.1 1.1 134.6 14.7 13.6 1.6 1.5 1.3 ‐ ‐ ‐

ICI Pakistan Limited ICI 346.1 310.52 Reduce 10.5 7.4 22.2 32.8 46.5 15.6 3.3 3.0 2.5 1.6 0.6 2.0

Lotte Chemical Pakistan Ltd. LOTCHEM 7.2 8.53 Accumulate 0.0 (0.3) 0.6 n.m n.m 12.2 0.9 0.9 0.8 ‐ ‐ 3.5

Engro Corporation ENGRO 186.7 196.20 Accumulate 2.6 18.7 22.9 71.6 10.0 8.2 2.2 1.3 1.2 ‐ ‐ ‐

Engro Fertilizers Limited EFERT 49.1 55.45 Accumulate (2.3) 4.2 5.6 (21.7) 11.6 8.7 4.0 2.9 2.2 ‐ ‐ ‐

Dawood Hercules Limited DAWH 82.3 71.83 Reduce 2.0 9.2 13.1 40.3 8.9 6.3 2.0 n.a n.a 1.2 ‐ ‐

Fauji Fert. Bin Qasim Ltd. FFBL 42.4 49.33 Accumulate 4.6 6.0 6.6 9.1 7.1 6.4 3.1 2.5 2.5 10.6 13.0 14.7

Fauji Fertilizer Company FFC 110.2 138.62 Buy 16.4 15.8 16.4 6.7 7.0 6.7 6.4 5.8 5.6 14.1 14.5 14.7

Fatima Fertilizer FATIMA 31.5 35.09 Accumulate 2.9 4.1 5.0 10.8 7.8 6.3 2.3 2.0 1.7 6.4 6.4 6.4

Food Producers

Engro Foods Limited EFOODS 116.8 80.92 Sell 3.4 0.3 2.6 34.5 424.4 44.9 8.9 7.8 6.7 ‐ ‐ ‐

Oil & Gas

Oil & Gas Development Co. OGDC 247.5 302.09 Buy 22.5 21.1 28.9 11.0 11.7 8.6 4.0 3.3 2.7 2.9 3.3 4.7

Pak Oilfields POL 540.8 612.57 Accumulate 50.1 45.8 59.1 10.8 11.8 9.1 3.6 3.7 3.4 9.7 8.3 8.5

Pakistan State Oil PSO 422.2 345.59 Reduce 36.7 50.8 91.5 11.5 8.3 4.6 2.1 1.7 1.3 1.3 1.2 2.4

Electricity

Hub Power Co. HUBC 52.4 72.19 Buy 7.1 8.8 7.0 7.4 5.9 7.5 2.0 1.8 2.0 11.4 15.3 17.2

Kot Addu Power Company KAPCO 59.0 64.00 Accumulate 6.9 8.4 8.0 8.6 7.1 7.4 2.2 2.1 2.1 11.7 12.7 13.1

Fixed Line Telecommunication

Pakistan Telecommunication PTC 30.7 29.71 Neutral 2.2 3.1 4.2 13.7 9.9 7.3 1.3 1.3 1.2 ‐ 7.3 9.8

Personal Goods

Nishat Mills NML 117.3 137.54 Accumulate 10.0 16.6 18.7 11.7 7.1 6.3 1.1 0.7 0.6 3.0 3.4 4.1

Banks

Allied Bank Limited ABL 97.0 86.99 Reduce 11.4 14.2 11.0 8.5 6.8 8.8 2.0 1.7 1.6 6.1 5.7 6.2

Bank AlFalah BAFL 26.9 32.0* Accumulate 3.4 3.5 3.8 8.0 7.8 7.1 1.2 1.1 1.1 7.4 7.4 5.6

Habib Bank Limited HBL 170.2 149.99 Reduce 17.0 17.1 19.1 10.0 9.9 8.9 1.7 1.6 1.5 4.0 4.7 5.3

MCB Bank Limited MCB 250.1 245.48 Neutral 18.8 19.7 20.9 13.3 12.7 11.9 2.6 2.4 2.2 4.3 5.1 5.3

National Bank of Pakistan NBP 54.5 59.99 Accumulate 7.3 2.5 7.4 7.5 22.0 7.4 0.8 0.7 0.7 11.2 3.7 10.1

United Bank Ltd UBL 163.2 150.03 Reduce 15.6 15.8 16.5 10.4 10.4 9.9 2.0 1.8 1.7 5.2 5.2 5.5

* TP for BAFL rises to PkR33.8/share upon successful Warid stake sale

8



AKD Universe Coverage Cluster’s Performance


Stocks Symbol Price 1 Year 1 Year

28-Mar-14 1M 3M 6M 12M CYTD High Low

KSE-100 Index 27116.13 5.2 7.4 21.1 51.1 7.3 27104.70 17492.00

Industrial Engineering

Al-Ghazi Tractor AGTL 207.93 -24.3 -1.5 2.6 -1.0 -2.1 273.49 197.00Millat Tractors MTL 462.80 -4.6 -3.7 -4.7 -1.2 -4.1 519.58 433.73

Automobile and Parts

Indus Motors INDU 396.89 11.2 18.8 19.8 34.5 19.2 398.10 282.00Pak Suzuki Motors PSMC 196.51 23.5 34.3 40.4 100.3 27.7 167.70 97.29

Construction and Materials

DG Khan Cement DGKC 91.07 4.5 6.8 25.8 33.4 6.2 96.43 61.23Lucky Cement LUCK 313.14 -3.9 5.0 35.9 87.5 4.4 321.67 160.97

Chemicals

Engro Polymer Chemicals EPCL 15.62 4.1 17.0 14.5 55.3 16.5 16.66 9.29ICI Pakistan Limited ICI 346.05 15.5 36.5 93.4 154.3 36.8 326.31 135.37Lotte Pakistan PTA Limited LOTCHEM 7.21 9.7 0.8 4.5 -0.3 -1.8 8.89 6.46Daw ood Hercules DAWH 82.26 -1.1 46.9 59.7 58.5 46.6 85.56 37.88Engro Fertilizers Ltd. EFERT 58.82 -1.4 n.a n.a n.a n.a 56.85 29.66Engro Chemical ENGRO 186.69 -1.1 16.1 31.7 45.5 17.9 187.38 103.25Fatima Fertilizer FATIMA 31.47 10.0 10.0 22.3 46.3 10.2 30.16 21.29Fauji Fert. Bin Qasim Ltd. FFBL 42.38 -3.2 -4.3 11.6 13.0 -3.3 45.42 36.90Fauji Fertilizer Company FFC 110.19 1.3 -3.2 5.5 1.2 -1.6 119.52 101.37

Food Producers

Engro Foods Limited EFOODS 116.79 21.0 11.7 9.1 -8.5 11.8 162.22 80.37

Non Life Insurance

Adamjee Insurance AICL 46.56 11.9 24.9 69.5 88.7 24.6 74.12 23.57

Oil & Gas

Oil & Gas Development Co. OGDC 247.47 -5.7 -10.4 3.4 22.2 -10.5 287.84 197.32Pak Oilf ields POL 540.79 8.3 8.4 22.6 19.4 8.7 539.63 428.73Pakistan State Oil PSO 422.20 17.1 27.0 55.8 108.3 27.1 367.10 184.67

Electricity

Hub Pow er Co. HUBC 52.41 -4.1 -14.1 -17.1 4.5 -13.7 73.42 50.13Kot Addu Pow er Company KAPCO 58.99 2.1 -3.8 -7.6 11.9 -4.5 68.34 49.53

Fixed Line Telecommunication

Pakistan Telecommunication PTC 30.69 4.9 4.6 15.0 54.2 7.9 31.70 17.46

Personal Goods

Nisaht (Chunian) Ltd. NCL 46.40 -12.9 -22.5 -19.4 -4.7 -22.9 68.82 43.31Nishat Mills NML 117.27 -11.2 -8.9 23.7 40.4 -7.8 140.79 69.03

Banks

Allied Bank Limited ABL 97.03 9.7 7.8 23.8 65.6 7.8 94.51 55.01Askari Bank Limited AKBL 17.00 24.5 24.0 27.7 9.0 21.4 16.15 10.76Bank AlFalah BAFL 26.88 -3.4 -1.9 22.1 79.4 -0.6 28.66 14.77Habib Bank Limited HBL 170.15 15.3 15.7 16.6 93.7 12.3 181.57 88.00Habib Metropolitan Bank HMB 27.00 11.1 8.1 24.3 76.5 7.7 26.16 14.61MCB Bank Limited MCB 250.05 2.3 -2.0 -0.7 44.0 -2.2 316.87 183.00Meezan Bank Limited MEBL 38.34 0.9 -1.0 2.5 50.4 -2.6 40.87 24.11National Bank of Pakistan NBP 54.54 -3.7 -6.2 5.1 39.8 -6.1 60.01 37.66United Bank Ltd UBL 163.23 22.4 22.9 18.4 95.5 23.1 154.21 82.16

Absolute Performance (%)

9



Economic Snapshot

Source: SBP, PBS & AKD Research

End Month Data Units Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14

T-bill

3M % 9.42 9.41 9.26 8.93 9.00 9.15 9.47 9.63 9.93 9.92 9.91

6M % 9.44 9.42 9.16 9.01 9.20 9.35 9.68 9.88 10.02 9.98 9.95

12M % 9.46 9.43 9.19 9.03 9.34 9.48 9.81 9.96 10.12 10.05 9.99

PIB 10Y % 11.92 11.25 10.86 11.57 11.97 12.28 12.83 12.93 12.90 12.59 12.80

KIBOR 6M % 9.58 9.60 9.39 9.08 9.15 9.29 9.55 9.52 10.13 10.14 10.15

Discount rate % 9.50 9.50 9.00 9.00 9.00 9.50 9.50 10.00 10.00 10.00 10.00

Inflation

Headline inflation % 5.80 5.10 5.90 8.26 8.55 7.40 9.10 10.90 9.18 7.90 7.90

Core inflation % 8.70 8.10 7.80 8.20 8.50 8.70 8.40 8.50 8.20 8.00 7.80

Food inflation % 5.50 6.50 7.90 9.20 10.30 7.90 9.80 13.00 9.30 7.20 7.60

External Indicators

Export (PBS) US$ (mn)

2,130

2,175

2,197

2,095

1,996

2,622

1,864

1,804

2,275

2,061

2,167

Import (PBS) US$ (mn)

3,909

4,346

3,940

3,814

3,572

3,791

3,281

3,651

3,561

4,137

3,600

Trade Deficit (PBS) US$ (mn)

(1,779)

(2,171)

(1,743)

(1,719)

(1,576)

(1,169)

(1,417)

(1,847)

(1,286)

(2,076)

(1,433)

Home Remittances US$ (mn)

1,216

1,186

1,165

1,404

1,233

1,283

1,348

1,131

1,385 n.a

1,210

Current Account US$ (mn)

(354)

(346)

(163)

46

(575)

(574)

(166)

(572)

285

(464)

164

1,779

2,171

1,743

1,719

1,576

1,169

1,417

1,847

1,286

Banking Sector

Deposits PkR (bn)

6,709

6,950

7,316

7,069

7,174

7,125

7,133

7,309

7,529

7,566

7,599

Advances PkR (bn)

3,857

3,906

3,869

3,788

3,817

3,831

3,921

4,008

4,071

4,127

4,110

Investments PkR (bn)

3,893

3,942

4,129

3,837

3,708

3,873

3,776

4,035

4,070

4,217

4,443

Weighted Avg. lending rate %

11.42

11.49

11.36

11.28

11.11

11.10

11.10

11.13

11.07 n.a n.a

Weighted Avg. deposit rate %

5.23

5.15

5.01

4.97

4.83

4.79

4.90

4.89

5.05 n.a n.a

Spread rate %

6.19

6.34

6.35

6.31

6.28

6.31

6.20

6.24

6.02 n.a n.a

Public Finance

Tax collection PkR (mn)

153,199

173,268

267,608 n.a n.a n.a n.a n.a n.a n.a n.a

Direct taxes PkR (mn)

48,462

60,982


Indirect Taxes PkR (mn)

104,737

112,286


Currency

Reserves (RHS) US$ (mn)

11,812

11,474

11,020

10,287

9,998

9,995

9,525

8,238

8,168

8,017

8,737

USDPkR - Interbank PkR/USD

98.48

98.52

98.94

101.90

104.51

105.24

106.89

107.56

107.13

105.47

104.89

10


DISCLOSURES & DISCLAIMERS

This publication/communication or any portion hereof may not be reprinted, sold or redistributed without the written consent of AKD Securities Limited. AKD Securities Limited has produced this report for private circulation to professional and institutional clients only. The information, opinions and estimates herein are not directed at, or intended for distribution to or use by, any person or entity in any jurisdiction where doing so would be contrary to law or regulation or which would subject AKD Securities Limited to any additional registration or licensing requirement within such jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable and complied by our research department in good faith. Such information has not been independently verified and we make no representation or warranty as to its accuracy, completeness or correctness. Any opinions or estimates herein reflect the judgment of AKD Securities Limited at the date of this publication/ communication and are subject to change at any time without notice.

This report is not a solicitation or any offer to buy or sell any of the securities mentioned herein. It is for information purposes only and is not intended to provide professional, investment or any other type of advice or recommendation and does not take into account the particular invest-ment objectives, financial situation or needs of individual recipients. Before acting on any information in this publication/communication, you should consider whether it is suitable for your particular circumstances and, if appropriate, seek professional advice. Neither AKD Securities Limited nor any of its affiliates or any other person connected with the company accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained therein.

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Analyst Certification We, the AKD Research Team, hereby individually & jointly certify that the views expressed in this research report accurately reflect our per-sonal views about the subject securities and issuers. We also certify that no part of our compensation was, is,or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. We further certify that we do not have any beneficial holding of the specific securities that we have recommendations on in this report.

AKD Research Team Analyst Tel no. E-mail Coverage Naveed Vakil +92 111 253 111 (692) [email protected] Director - Research & Business Development

Raza Jafri, CFA +92 111 253 111 (693) [email protected] Pakistan Economy & Commercial Banks

Anum Dhedhi +92 111 253 111 (637) [email protected] Pakistan Economy

Bilal Alvi +92 111 253 111 (647) [email protected] Textiles, Cements & Chemical

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

Hassan Quadri +92 111 253 111 (639) [email protected] Research Production / Autos

Azher Ali Quli +92 111 253 111 (646) [email protected] Research Production

Nasir Khan +92 111 253 111 (646) [email protected] Research Production

Tariq Mehmood +92 111 253 111 (643) [email protected] Library Operations

28 March 2014

stock smart weekly (mar 28, 2014)

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