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AKD Research [email protected]

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Weekly Review

Poor earning reads in the backdrop of stretched valuations aided bears to stage a comeback, putting an end to 8-week winning streak. The market participants largely ignored positive news on the macro front (record-high monthly remittances, fitch affirming long term rating at “B-“, with a stable outlook), with benchmark KSE-100 index losing 669pts (-1.7%WoW) to close at 39,621.59pts. Commercial banks lost 1.3%WoW on weaker than expected earning reads (i.e. MCB & ABL). E&Ps went down 0.7%WoW on gov’t approval of the divestment plan (i.e. OGDC & PPL). Power companies shed 5.6% on potential downward revision in re-turns following signing of MoU between the gov’t and IPPs. Market activity significantly de-clined during the week, with average daily turnover shrinking to 440.7mn shares (down 24.1%WoW). Other key news impacting the market during the week were: i) Fitch has affirmed Pakistan’s long-term foreign-currency Issuer Default Rating (IDR) at “B-” with a sta-ble outlook, ii) Remittances hit the record high monthly level in Jul’20, with the country re-ceiving US$2.76bn (up 36.5%YoY), iii) Textile exports soared 14.4%YoY to US$1.27bn in the Jul’20, with garments, knitwear, bed-wear, and towel exports rising 18.04%YoY, 20.4%YoY, 25.3%YoY, and 21.4%YoY, respectively, iv) Industrial sectors are reportedly mulling over re-view petition on the recent verdict of the Supreme Court on GIDC, v) the gov’t has raised PkR38.8bn through the auction of PIBs, with the cut-off yields rising 83/8/0/23/15bps to 8.2%/8.45%/8.99%/9.98%/10.55% on 3/5/10/20yr paper, respectively. Performance-wise, top gainers amongst the KSE-100 constituents were i) SSGC (+12.4%WoW), ii) SNGP (+11.6%WoW), iii) FCEPL (+11.0%WoW), iv) EPCL (+5.2%WoW), v) AGP (+4.6%WoW), while i) HUBC (-10.2%WoW), ii) FFBL (-9.0%WoW), iii) EFERT (-6.3%WoW), iv) HASCOL (-5.9%WoW), and v) FML (-5.9%WoW) were the major laggards.

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

Amidst lack of any major trigger, the market is expected to trade in a range bound territory.

With earnings season in full swing from next week onwards, stock specific movement cannot

be ruled out. Major names slated to announce their earnings next week include DAWH,

GLAXO, ISL, SYS, BAFL, ACPL, CHCC, FATIMA, POL, APL, BOP, ABOT, and NBP. Moreover, pro-

gress on IPP negotiations particularly with regards to payment details could keep listed IPPs

in the limelight.

21 August 2020

Outlook

Top-5 Volume Leaders

Symbol Volume (mn)

TRG : 110.43

UNITY : 101.57

HASCOL : 92.25

PRL : 91.71

PIBTL : 90.27

Source: PSX & AKD Research

Indic e s KSE- 10 0 KSE- 3 0

This week 39,622 17,177

Last week 40,291 17,538

Change - 1.66% - 2.06%

Indic e s KMI- 3 0 Allsha re

This week 63,725 27,859

Last week 64,483 28,134

- 1.18% - 0.98%

Mkt Ca p. PkRbn US$ bn

This week 7,361 43.72

Last week 7,435 44.27

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

This week 440.75

Last week 580.98

Change - 24.1%


Index & Volume Chart KSE100 Gainers & Losers

40,123 40,184 40,154

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AKD Securities Limited

21 August 2020

StockSmart


This Week’s Daily Reports

2

Pakistan Cement: FY20 to end on a rough note, (AKD Daily, Aug 21, 2020)

AKD Cement universe’s profitability is expected to remain in negative territory for 4QFY20 despite slight improvement in prices as COVID-19 related disruptions eat into profitability. Overall, FY20 turned out to be a dismal year with AKD cement universe posting LAT of PkR5.6bn against PAT of PkR18.9bn for FY19.

Declining coal prices and decrease in interest rate is expected to provide some buffer as effec-tive coal prices declined by 13.7%QoQ to average at USD69.3/ton for 4QFY20 while SBP de-creased interest rates by 400bps to provide relief to local industry.

LUCK and FCCL are the only two companies from our universe to remain in green by the end of FY20 where cost efficiency plays in favor of LUCK while low leverage helped FCCL sustain in times of price competition.

Re-iterating LUCK (TP: PkR693.5/sh, 15.1% upside) and MLCF (TP: PkR41.9/sh, 20.8% up-side) as our top picks, we maintain a favorable outlook on the sector on the back of en-couraging demand numbers which opens up room for local players to increase prices in the medium term.

Pakistan Auto: Entrants fire the first shots, (AKD Daily, Aug 20, 2020)

Passing a key milestone for the auto assembling space, major entrants launched CKD variants and expanded product range in the Passenger Car segment, in shifts not scene since late 90’s when imported pickups/4X4’s were first offered as CBUs by OEMs.

We analyze repercussions of these overtures, drawing lessons for variant segmentation, ex-pected spillovers for consumers trading up from the premium sedan (1.8L+) to Sports Utility/Crossover segment now occupying the middle-ground between more powerful 4x4 offerings.

Launch of the Yaris variant by INDU places this trim dead center of 1.3L variants on offer from HCAR, PSMC – and the 1.5L City and City Aspire premium trims, placing HCAR in a tough spot, as ~60% of its offtake is for the City, which in turn, is on the tail-end of its life cycle.

Major aspects to monitor for competitive dynamics going forward are OEM’s approach to price hikes (prominent for new entrants due to scant localization) in the face of cost inflation, and the buildup of sales/after sales infrastructure cementing footprints across the country.

We await INDU’s quarterly briefing and release of detailed accounts for listed players to up-date our stance on the sector, which has witnessed strong price performance recently on ex-pectations of renewed demand post COVID-19. On a broad note, new entrants have fired the first shot in a new phase of competition in the space with consumers emerging as clear win-ners.

ASTL: Improved fundamentals but valuations stretched, (AKD Daily, Aug 19, 2020)

We update our earnings estimates for ASTL, downward revising for FY20F (LPS: PkR3.64 vs. PkR2.63 previously) incorporating short term disruption due to COVID-19 while upward revis-ing 16-24% over the remaining investment horizon (i.e. FY21-FY25F), accommodating sooner than expected recovery in demand following supportive policy backdrop and changes in macro assumptions (i.e. interest rate cuts).

Consequently, our revised rollover Jun’21 TP comes at PkR56 per sh, implying Neutral stance, with a capital upside of 12.6% from the last close.

In line with other cyclicals, ASTL rallied 121% from its YTD low in late Mar’20 on the back of supportive policy backdrop both in terms of macro (i.e. 625bps reduction in policy rate) and sector-specific (i.e. Construction package). The market has prematurely priced in nascent im-provement in fundamentals, in our view, with the stock now trading at FY21/FY22F PE of 31.7/10.1 (x), leaving little upside from the current price level.

For 4QFY20, we expect ASTL to report a net loss of PkR341mn (LPS: PkR1.15) vs. a net loss of PkR191mn (LPS: PkR0.64) in 4QFY19 The earnings deterioration is primarily due to corona mandated closure of business for half of the quarter, leading to 61%YoY decline in topline. Margin at the gross level, however, is expected to normalize (GM: 9.6% in 4QFY20 vs. 5.9% in 4QFY19) due to one-offs recorded in SPLY. Cumulatively, the company is expected to record

Aug 17, 2020

Aug 21, 2020

Aug 20, 2020

Aug 18, 2020

39,700

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21 August 2020

StockSmart


This Week’s Daily Reports

3

net loss of PkR1,029mn (LPS: PkR3.47) vs. a net profit of PkR33mn (EPS: PkR0.11), where volumetric decline (-8%YoY) and higher financing cost (+78%YoY) are key earnings dampen-er.

NBP & BOP_1HCY20 Result Previews, (AKD Daily, Aug 18, 2020)

NBP earnings estimated at PkR4.6/sh for 1HCY20; dented by higher provisioning expecta-tion: Previewing National Bank of Pakistan’s (NBP) 1HCY20 results, we expect NPAT at PkR9.8bn (EPS: PkR4.6) vs. PkR11.4bn (EPS: PkR5.3) in the same period last year. Potentially higher provisioning costs dents earnings outlook for the bank in 1HCY20. 2QCY20 earnings are expected at PkR2.63/sh, +36.3%QoQ but down 20.6%YoY. The sequential growth in earnings comes at the back of favorable repricing factor (NII +25.0%QoQ) and PIB accumula-tion at higher yields (PIB/deposit: 23.4%) coming into play. Furthermore, we expect strong contribution from Non-funded Income (NFI) driven by FX income and capital gains where fee income is likely to remain flat. Strong delivery in total income is likely to be partially negated by seasonally administrative costs and provisioning expense (cost of provisioning is estimated at 0.6% in 2QCY20 vs. 0.3% in the previous quarter). The management of the bank in recent times has been strategizing on cleaning lending book of the bank, capitalizing on core income growth.

BOP earnings likely to clock in at PkR1.44/sh in 1HCY20: Previewing The Bank of Punjab’s (BOP) earnings for 1HCY20, we expect earnings at PkR1.44/sh vis-à-vis PkR1.47/sh in the same period last year. 2QCY20 NPAT is expected at PkR2.3bn (EPS: PkR0.88), +57.7/15.0% QoQ/YoY potentially driven by repricing gains (SA occupies 47.4% in total deposits) and investment in PIBs at higher yields (PIB/deposits at 31.0% - highest in our universe). Conse-quently NII of the bank is expected to jump 48.2%QoQ/32.5%YoY and overshadowing the decline in Non-funded income of the bank (down 20.6%QoQ but still up 54.3%YoY courtesy capital gains). We do not rule bank continuing with capital gain realization on bonds in 2QCY20 (unrealized gains as of Mar’20 stood at PkR9.35bn or PkR2.16/sh post tax). We have conservatively assumed higher credit costs for the 2QCY20 at 0.5% vs. 0.2% in the previous quarter.

Pakistan Power: Whole new world for IPPs, (AKD Daily, Aug 17, 2020)

In light of recently inked MoUs between the GoP and IPPs operating under 1994 and 2002 power policies, Pakistan’s power landscape has embarked on another crucial chapter, setting it towards on a more sustainable path over the longer term. Understandably, terms of the MoUs combined with contingent cash injection similar to Energy Sukuks I & II are major fundamental events altering our forecasts and valuations.

The 2002 PP IPPs have agreed to ROE of 17% in PkR terms as opposed to USD indexation previously. At these rates, Nishat IPPs may be sustainably able to maintain DPS of PkR2.5 at 17% PkR based ROE, going forward, implying D/Y of 10/15% for NPL/NCPL vs. 3yr PIB rate of 8.3%.

Possibility of termination of existing plants operating at minimal levels is still under negotia-tion with the GoP. Middle-ground in these negotiations could be a one-time settlement of overdue receivables and termination PPA for the remaining period, which could still be a beneficial decision for both IPPs and the overall energy chain.

We look forward to the result of GoP’s reported negotiations in a similar vein, with Chinese sponsors (mostly SOEs) of CPEC projects, proposing a reduction in ROEs (negative for IPPs’ cashflows) and extending debt repayment tenures (neutral for IPPs’ cashflows).


21 August 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 21-Aug-20 13-Aug-20 WoW CYTD

TRJ-CRB Points 149.5051 148.9382 0.38% -19.53%

Nymex (WTI) US$/bbl. 42.22 42.24 -0.05% -30.85%

ICE Brent US$/bbl. 43.62 44.18 -1.27% -34.33%

N. Gas Henry Hub US$/Mmbtu 2.32 2.185 6.18% 11.00%

Cotton USd/Pound 69.6 68.2 2.05% -11.17%

Gold US$/Tr.Oz 1918.72 1953.71 -1.79% 26.46%

Sliver US$/Tr.Oz 26.255 27.505 -4.54% 47.07%

Copper US$/MT 6617.75 6263.5 5.66% 7.62%

Platinum US$/Oz 900.78 960.19 -6.19% -6.81%

Coal US$/MT 55.65 54.3 2.49% -30.18%

SPOT 21-Aug-20 13-Aug-20 Chg +/- WoW CYTD

Dollar Index 93.360 93.335 0.025 0.03% -3.14%

USD/PkR 168.144 167.766 0.378 0.23% 8.55%

USD/JPY 105.820 106.930 -1.110 -1.04% -2.57%

EUR/USD 1.177 1.181 -0.005 -0.40% 4.94%

GBP/USD 1.311 1.307 0.004 0.34% -1.10%

AUD/USD 0.716 0.715 0.001 0.14% 1.97%

NZD/USD 0.652 0.655 -0.002 -0.38% -3.23%

CHF/USD 0.913 0.910 0.003 0.37% -5.53%

CAD/USD 1.323 1.322 0.000 0.02% 1.81%

USD/KRW 1,186 1,183 3.000 0.25% 2.60%

CNY/USD 6.924 6.945 -0.021 -0.30% -0.56%

Country Bloomberg Code 21-Aug-20 13-Aug-20 WoW CYTD

Pakistan KSE100 Index 39,622 40,291 -1.66% -2.7%

Srilanka CSEALL Index 5,382 5,236 2.80% -12.2%

Thailand SET Index 1,299 1,347 -3.52% -17.8%

Indonesia JCI Index 5,273 5,239 0.64% -16.3%

Malaysia FBMKLCI Index 1,577 1,576 0.04% -0.7%

Philippines PCOMP Index 6,005 6,098 -1.51% -23.2%

Vietnam VNINDEX Index 855 855 -0.03% -11.1%

Hong Kong HSI Index 25,114 25,231 -0.46% -10.9%

Singapore FSSTI Index 2,529 2,596 -2.60% -21.5%

Brazil IBX Index 42,984 42,585 0.94% -11.7%

India SENSEX Index 38,435 38,310 0.32% -6.8%

China SHCOMP Index 3,381 3,321 1.81% 10.8%

S&P SPX Index 3,386 3,373 0.36% 4.8%

DJIA INDU Index 27,740 27,897 -0.56% -2.8%

NASDAQ Composite CCMP Index 11,265 11,043 2.01% 25.5%

UK UKX Index 5,986 6,186 -3.23% -20.6%

Germany DAX Index 12,762 12,994 -1.79% -3.7%

Qatar DSM Index 9,767 9,602 1.72% -6.3%

Abu Dhabi ADSMI Index 4,543 4,387 3.56% -10.5%

Dubai DFMGI Index 2,236 2,155 3.72% -19.1%

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

Oman MSM30 Index 3,629 3,565 1.79% -8.8%

Saudi Arabia SASEIDX Index 7,843 7,704 1.80% -6.5%

MSCI EM MXEF Index 1,081 1,096 -1.43% -3.1%

MSCI FM MXFM Index 498 493 0.95% -15.1%

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21 August 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., 7.28

Co., 1.93

Bank/DFI, (8.81)

NBFC, 0.89

M.Funds, (2.42)

Ins , 7.94

Others , (0.56)

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KSE-All Share Index AKD Universe

6

AKD Securities Limited StockSmart


Market PER Chart 2021

21 August 2020

AKD Universe Valuations

Source: AKD Research

Market P/BVS Chart 2021


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21-Aug-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) 9.03 8.15 7.25 8.16 7.78

PER (Ex-Banks & E&Ps) (x) 9.15 8.38 9.26 9.95 7.48

Price to Book (x) 1.25 1.18 1.07 0.98 0.97

Price to CF (x) 12.26 9.24 12.63 9.86 6.34

Earnings Yield (%) 11.07 12.27 13.78 12.25 12.85

Dividend Yield (%) 6.80 6.30 6.37 6.31 7.95

EV / EBITDA (x) 6.37 6.32 5.49 4.64 4.72

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

21 August 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 1,280.22 1,375.00 Neutral 174.49 68.27 74.68 7.34 18.75 17.14 2.51 2.32 2.15 9.0 2.0 2.3

Pak Suzuki Motors PSMC 237.52 130.00 Sell (35.45) (38.81) 1.73 n.a n.a 137.18 0.75 0.86 0.85 - - 0.2

Cements

DG Khan Cement DGKC 106.55 117.01 Neutral 3.67 (4.98) 7.40 29.00 n.a 14.39 0.66 0.68 0.65 0.9 - 1.4

Lucky Cement LUCK 597.86 693.49 Buy 32.44 9.85 27.73 18.43 60.70 21.56 2.05 2.03 1.85 1.1 - 1.0

Maple Leaf Cement MLCF 34.18 41.90 Buy 1.33 (4.15) 2.68 25.62 n.a 12.74 1.23 1.14 1.02 0.8 - 1.6

Fauji Cement Company FCCL 19.99 19.38 Sell 2.05 0.16 1.45 9.77 125.74 13.83 1.32 1.31 1.28 7.5 - 5.8

Pioneer Cement Limited PIOC 87.47 64.18 Sell 3.48 (5.09) 1.85 25.14 n.a 47.30 1.49 1.63 1.58 - - 0.4

Cherat Cement Co CHCC 132.24 76.02 Sell 9.98 (9.20) 3.75 13.25 n.a 35.30 1.99 2.34 2.18 0.8 - 0.6

Engineering

*Amreli Steels Ltd. ASTL 47.05 56.00 Buy 0.11 (3.45) 1.57 425.74 n.a 29.97 1.14 1.25 1.21 - - -

Fertilizers

*Engro Corporation ENGRO 292.57 331.10 Buy 28.69 47.72 52.27 10.20 6.13 5.60 0.86 0.75 0.65 8.2 9.0 9.0

Engro Fertilizers Limited EFERT 61.77 55.51 Sell 12.63 8.75 8.31 4.89 7.06 7.43 1.91 1.86 1.85 21.0 13.0 13.0

Fauji Fert. Bin Qasim FFBL 18.34 30.0 Buy (6.34) 0.14 1.55 n.a n.a 11.83 2.51 2.46 2.04 - - -

Fauji Fertilizer Company FFC 109.30 127.00 Buy 13.45 15.17 16.07 8.13 7.20 6.80 3.91 3.51 3.11 9.9 11.0 11.0

Fatima Fertilizer FATIMA 26.25 34.43 Buy 7.54 5.98 4.67 3.48 4.39 5.62 0.75 0.68 0.63 7.6 9.0 7.0

Oil & Gas

Oil & Gas Development OGDC 114.92 172.20 Buy 27.53 24.90 20.72 4.18 4.62 5.55 0.66 0.59 0.54 9.6 7.2 5.9

Pak Oilfields POL 421.86 379.00 Sell 59.44 55.58 44.63 7.10 7.59 9.45 1.77 1.57 1.43 11.9 9.5 8.3

Pakistan Petroleum PPL 100.26 143.40 Buy 27.18 18.92 17.05 3.69 5.30 5.88 0.75 0.69 0.63 2.0 - 4.0

Hascol Petroleum HASCOL 15.52 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Attock Petroleum APL 340.17 400.35 Buy 39.79 16.37 29.73 8.55 20.78 11.44 1.79 1.82 1.63 5.9 2.4 5.2

Pakistan State Oil PSO 186.52 214.62 Buy 22.55 8.24 20.20 8.27 22.65 9.23 0.73 0.74 0.69 5.4 1.1 4.6

Power

Hub Power Co. HUBC 80.59 159.96 Buy 9.37 18.09 20.26 8.60 4.46 3.98 2.65 1.93 1.61 - - 8.7

K-Electric Co. KEL 3.71 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Kot Addu Power KAPCO 27.66 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Cable & Electrical Goods

Pak Elektron Ltd PAEL 33.23 24.40 Sell 1.68 0.21 2.15 19.78 158.24 15.46 0.67 0.66 0.64 - - 3.0

Personal Goods

Nishat Mills NML 102.94 132.00 Buy 16.66 8.78 11.00 6.18 11.72 9.36 0.54 0.53 0.51 3.9 2.2 3.2

*Nishat Chunian Ltd. NCL 40.71 60.53 Buy 13.19 5.87 7.08 3.09 6.94 5.75 0.64 0.61 0.56 9.8 5.5 6.8

Banks

Allied Bank Limited ABL 87.61 88.90 Neutral 12.65 13.41 10.29 6.93 6.53 8.51 0.86 0.82 0.82 9.1 10.3 10.3

Bank Al Habib BAHL 65.52 65.00 Sell 10.07 8.18 8.41 6.51 8.01 7.79 1.18 1.05 0.96 5.3 6.1 6.1

Bank AlFalah BAFL 36.95 38.00 Neutral 7.34 6.78 5.61 5.03 5.45 6.59 0.74 0.63 0.60 10.8 8.1 8.1

Habib Bank Limited HBL 124.27 141.63 Buy 10.45 19.66 20.62 11.89 6.32 6.03 0.81 0.69 0.65 4.0 4.8 5.6

Habib Metropolitn Bank HMB 34.88 45.70 Buy 6.34 6.63 6.46 5.50 5.26 5.40 0.76 0.66 0.60 7.2 7.2 7.2

MCB Bank Limited MCB 169.60 211.00 BUY 20.14 18.57 17.29 8.42 9.13 9.81 1.17 1.11 1.03 10.0 10.0 10.0

Meezan Bank Limited MEBL 85.95 100.00 Buy 12.12 11.92 10.09 7.09 7.21 8.52 1.76 1.59 1.49 5.8 7.0 7.0

National Bank of NBP 35.14 45.60 Buy 7.79 7.96 6.81 4.51 4.41 5.16 0.31 0.29 0.27 - - -

United Bank Limited UBL 118.60 160.00 Buy 15.60 15.58 15.70 7.60 7.61 7.56 0.76 0.72 0.68 10.1 10.1 11.0

The Bank Of Punjab BOP 10.05 13.90 Buy 3.12 2.60 1.88 3.22 3.87 5.34 0.56 0.52 0.50 7.5 10.0 10.0

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

DGKC, LICK & MLCF - Unconsolidated

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

8


21 August 2020

StockSmart


AKD Universe Coverage Cluster’s Performance


Stocks Symbol Price 1 Year 1 Year

21-Aug-20 1M 3M 6M 12M CYTD High Low

KSE-100 Index 39,621.59 5.1 17.1 -1.6 27.9 -2.7 43,218.7 27,228.8

Automobile and Parts

Indus Motors INDU 1,280.22 -1.6 30.5 26.5 22.0 10.2 1429.98 700.38

Pak Suzuki Motors PSMC 237.52 18.3 39.8 9.0 43.0 3.0 290.93 124.21

Cements

DG Khan Cement DGKC 106.55 4.0 27.8 55.5 119.6 43.5 111.93 44.29

Lucky Cement LUCK 597.86 11.8 30.8 22.0 73.1 39.6 616.65 310.30

Maple Leaf Cement MLCF 34.18 7.0 31.4 44.4 85.2 47.7 36.12 13.79

Fauji Cement Company FCCL 19.99 -3.7 14.8 30.4 43.7 28.5 21.68 11.68

Pioneer Cement Limited PIOC 87.47 22.1 45.7 211.3 370.5 186.9 92.75 18.54

Cherat Cement Limited CHCC 132.24 21.8 55.3 142.9 406.1 149.3 139.62 26.56

Engineering

Amrel i Steel Ltd ASTL 47.05 10.4 35.6 40.4 174.0 30.3 50.73 16.92

Fertilizers

Engro Ferti l i zers Ltd. EFERT 61.77 -3.9 -0.6 -5.7 -4.5 -15.9 78.57 50.72

Engro Chemica l ENGRO 292.57 -5.9 -2.1 -10.1 18.7 -15.3 366.00 237.65

Fatima Ferti l i zer FATIMA 26.25 -9.5 -2.8 4.5 0.5 -1.3 29.23 20.82

Fauji Fert. Bin Qas im Ltd. FFBL 18.34 0.4 7.9 0.6 20.9 -6.0 24.54 11.79

Fauji Ferti l i zer Company FFC 109.30 -1.6 0.5 2.1 19.9 7.7 114.54 82.71

Cable & Electrical Goods

Pak Elektron Limited PAEL 33.23 10.1 46.7 35.0 115.1 22.8 35.35 14.44

Oil & Gas

Oi l & Gas Development OGDC 114.92 -0.8 1.8 -12.5 -0.9 -19.3 154.21 75.01

Pak Oi l fields POL 421.86 7.6 30.6 4.7 14.0 -5.6 473.43 241.11

Pakis tan Petroleum Ltd. PPL 100.26 -0.3 6.7 -21.9 -14.0 -26.9 151.82 69.13

Pakis tan State Oi l PSO 186.52 6.6 15.7 2.5 37.7 -2.7 216.54 113.98

Attock Petroleum Ltd. APL 340.17 6.1 25.2 -2.6 35.0 -8.0 394.43 211.87

Hascol Petroleum HASCOL 15.52 13.0 7.2 -30.7 -63.8 -42.3 52.08 10.65

Power

Hub Power Co. HUBC 80.59 -1.3 3.9 -18.0 22.8 -13.7 103.21 57.40

K-Electric Limited KEL 3.71 16.3 19.7 -8.8 18.2 -15.1 4.77 2.65

Kot Addu Power Company KAPCO 27.66 15.5 20.6 3.3 -7.6 -12.3 35.46 15.00

Personal Goods

Nisaht (Chunian) Ltd. NCL 40.71 13.1 32.2 -4.3 32.9 -4.5 47.63 23.78

Nishat Mi l l s NML 102.94 14.8 45.7 -2.1 48.0 -3.0 117.81 54.07

Banks

Al l ied Bank Limited ABL 87.61 14.4 21.5 -5.8 1.4 -8.4 104.71 66.82

Bank AlHabib Limited BAHL 65.52 18.9 20.0 -17.8 -7.1 -14.0 82.00 50.98

Bank AlFa lah BAFL 36.95 1.1 25.8 -24.3 -7.3 -19.1 52.99 28.79

Habib Bank Limited HBL 124.27 12.8 27.4 -25.3 6.2 -21.1 171.24 94.78

Bank of Punjab BOP 10.05 10.4 13.8 -23.0 20.9 -11.3 14.13 7.01

Habib Metropol i tan Bank HMB 34.88 14.7 22.4 -12.2 8.6 -4.0 42.00 27.30

MCB Bank Limited MCB 169.60 2.5 13.2 -18.1 -1.2 -17.2 224.53 132.89

Meezan Bank Limited MEBL 85.95 14.9 44.6 -13.3 12.4 -9.6 106.21 55.66

National Bank of NBP 35.14 16.9 31.1 -18.3 16.5 -18.8 46.30 25.53

United Bank Ltd UBL 118.60 8.1 19.6 -31.9 -6.7 -27.9 181.96 89.44

Absolute Performance (%)

9


21 August 2020

StockSmart


Economic Snapshot

Source: SBP, PBS & AKD Research

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

Monetary Rates

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

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

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

PIB10Y % 13.67 13.29 12.18 11.3 11.35 11.09 11.04 11.18 10.16 8.47 8.25 8.61 8.83

KIBOR6M % 13.3 13.82 13.65 13.08 13.48 13.5 11.23 13.23 12.34 12.08 7.75 7.58 6.54

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

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

Inflation

National CPI Inflation % 8.4 10.5 11.4 11.0 12.7 12.6 14.6 12.0 10.2 8.5 8.2 8.6 9.3

Core inflation (Urban) % 8.2 8.5 8.4 7.7 7.5 7.5 7.9 8.0 7.4 7.7 7.3 7.6 7.8

Core inflation (Rural) % 7.8 8.8 8.8 8.6 8.4 8.1 9 9.4 9.4 9.8 9.7 10.0 11.5

Food inflation Urban) % 7.9 11.9 15.0 13.7 16.6 16.7 19.5 15.2 13.0 10.4 10.6 12.9 15.1

Food inflation (Rural) % 9.3 12.6 15.0 14.6 19.3 19.7 23.8 19.7 15.5 12.9 13.7 15.2 17.8

External Indicators

Export (PBS) US$(mn) 1,894 1,859 1,769 2,024 2,011 1,993 1,970 2,140 1,814 957 1,396 1,599 2,000

Import (PBS) US$(mn) 4019 3658 3,785 4,074 3,940 4,037 4,037 4,185 3,316 3,088 2,863 3,719 3,640

Trade Deficit (PBS) US$(mn) (2,125) (1,799) (2,016) (2,050) (1,929) (2,044) (2,067) (2,045) (1,502) (2,131) (1,467) (2,120) (1,640)

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

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

Trade Deficit (SBP) (1,954) (1,629) (1,438) (1,443) (1,571) (1,683) (1,860) (1,570) (1,501) (1,733) (1,541) (1,981) n.a

Home Remittances US$(mn) 2,039 1,691 1,748 2,001 1,820 2,097 1,907 1,825 1,894 1,790 1,873 2,466 2,768

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

Banking Sector

Deposits PkR(bn) 13,747 13,977 14,026 13,912 14,312 14,632 14,673 14,815 15,126 14,476 15,481 16,229 16,122

Advances PkR(bn) 7,991 7,994 7,975 8,019 8,095 8,158 8,164 8,212 8,259 8,217 8,357 8,202 8,120

Investments PkR(bn) 8,731 8,019 9,269 7,918 7,886 8,801 8,366 8,725 9,297 9,794 10,382 10,681 10,809

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

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

Spread rate % 6.51 6.52 6.79 6.83 6.01 6.08 6.40 6.23 6.10 5.09 6.46 6.55 n.a

Public Finance

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

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

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

Currency

Fx Reserves US$(mn) 15,144 15,644 15,228 15,424 16,003 17,930 18,645 18,881 17,098 18,755 16,943 17,971 19,563

USD PkR-Interbank PkR/USD 159.19 158.24 156.33 156.04 155.40 155.01 154.74 154.34 159.02 164.43 160.58 165.53 166.87

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

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21 August 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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