value call may 2011

0

100

200

300

400

7,000

9,000

11,000

13,000

1Jun 31Aug 30Nov 1Mar 31May

TheMarket OneYearPerformanceVolume Index

IndexVolume(m)

-

20

40

60

80

100

120

140

11,30011,40011,50011,60011,70011,80011,90012,00012,10012,20012,300

2-May 5-May 10-May 13-May 18-May 23-May 26-May 31-May

TheMarket May2011Turnover Index

Index Volume(m)

STOCKMARKETDATA29Apr11 31May11 %Chg.

KSE100Index 12,057.54 12,123.15 0.5%KSE30Index 11,716.35 11,762.76 0.4%SharesTraded m 1,585.92 1,570.54 1.0%ValueTraded PKRm 65,065 51,571 20.7%

US$m 762.78 604.58 20.7%MarketCap. PKRb 3,207.79 3,217.53 0.3%

US$b 37.61 37.72 0.3%

PERFORMANCEFORTHEMONTHOFMAY2011Top5Gainers 31May11 %Chg. Chg.(PKR)AzgardNineLimited 6.50 27.7% 1.41PakistanTelephoneCables 3.18 27.2% 0.68PakistanReinsurance 16.96 23.3% 3.21JahangirSiddiqui&Co 7.31 23.3% 1.38E.F.U.GeneralInsurance 38.00 22.3% 6.94

Top5Losers 31May11 %Chg. Chg.(PKR)GharibwalCement 6.15 35.1% 3.33AgritechLimited 18.84 14.4% 3.16LottePakistanPTALtd. 14.92 7.6% 1.22NetsolTechnologiesLimited 21.23 7.1% 1.63IbrahimFibers 45.53 6.6% 3.20

VALUECALLMONTHLYREVIEWANDOUTLOOK

31May2011

TheMarket

Themarketwasrangeboundcoupledwiththinvolumesfor most of the month under review before activitypicked up over the final 10 days. The KSE100 Indexposted a minor gain of 65 points or 0.5% during May2011tocloseat12,123whiletheKSE30Indeximprovedbyonly46pointsor0.4% to11,762. TheaveragedailyturnoverduringMay2011was71.39msharescomparedto75.52m sharesduringApril2011. Thenet inflowofforeign funds according to NCCPL figures during themonthunderreviewwasUS$26.36mwhilethefiscalyeartodate net inflow was US$321.39m and the calendaryeartodatenetinflowwasUS$71.40m.

BankALHabibLtd.(BAHL)

We are initiating coverage on BAHL, the eight largestcommercial bank operating in Pakistan by asset size.Qualities distinguishing BAHL from other banks includevery low levelof loanbook infectionandhighoperatingefficiency.

ForFY11,weexpectthebanktopostaPATofPKR4,253million(EPS:PKR4.84)withagrowthof18.07%YoY.WealsoexpectittogiveacashdividendofPKR2.50.

Using the justifiedpricetobookapproach,wearevaluingBAHLatPKR32.41.AsofMay31,2011,theBank istrading at PKR 28.39,with an upside of 14.16% to ourtarget price; we, therefore, recommend an ACCUMULATEstanceonit.

TaurusSecuritiesLimitedValueCall:May2011

2

TableofContents

MarketOutlook3 CompanyReport:BankAlHabibLtd.(BAHL)@PKR28.397 RatingsGuide 17KSE100KeyIndicators 18KSE100Statistics 20EconomicIndicators 22


3

MarketOutlookMarketReviewMay2011Themarketwasrangeboundcoupledwiththinvolumesformostofthemonthunderreviewbeforeactivitypickedupoverthe final10days. TheKSE100 Indexpostedaminorgainof65pointsor0.5%duringMay2011tocloseat12,123whiletheKSE30Indeximprovedbyonly46pointsor0.4%to11,762.TheaveragedailyturnoverduringMay2011was71.39msharescomparedto75.52msharesduringApril2011.ThenetinflowofforeignfundsaccordingtoNCCPLfiguresduringthemonthunderreviewwasUS$26.36mwhilethefiscalyeartodatenetinflowwasUS$321.39mandthecalendaryeartodatenetinflowwasUS$71.40m.

Themarketwasmainlyaffectedby thepoliticaleventsduring the firstweekof themonth.TheKSE100Indexbegantheweekonabearishnoteshedding385pointsduringthefirstthreedaystocloseat11,672onMay4.ThecaptureandkillingofOsamaBinLadenduringaU.S.operationinAbbottabadintheweehoursofMondaymorningalongwiththetargetkillingofaprominentMQMleaderinKarachilaterthatsamedaycaused nervousness amongmost local and foreign investors leading to some panicselling.MostinvestorswereconcernedthatthecaptureofBinLadenonPakistanisoilwouldcausesomeblowbackbyotherextremistsgrouptoseekrevengeonthePakistanistateandmilitary. Inaddition,therewasfearthattheU.S.CongresswouldcutoffeconomicaidtothecountryassomemembersofCongresswerethreateningthisaction, as they felt that the Pakistani security establishment was playing a doublegamebyhidingBinLadenorgenerallyincompetent.ThereleaseoftheApril2011inflationdatashowedthatinflationwasslowlycreepingupagain.Fortunately,themarket reboundedonMay5on thebackofgoodnews thatMoodysmaintainedPakistanssovereigncreditratingandstatedthatPakistandidnotfacean immediateriskofawithdrawalofforeignaiddespiteaccusationsthat itshelteredBinLaden. Therewas renewedbuyingactivity inoilstockssuchasOGDC,PPLandPSOas therewerereports in themarket thatOGDCsproductionoverthenext23yearswillbehigher

Analyst:[email protected]

21.81%

20.28%

20.05%

17.32%

10.93%

3.85%

2.77%

2.62%

2.56%

1.92%

1.54%

1.15%

0.99%

0.52%

0.00%

0.04%

0.04%

0.23%

0.85%

1.18%

1.55%

2%

2.10%

2.14%

2.44%

2.63%

3.70%

4.37%

4.43%

6.06%12.67%

20% 15% 10% 5% 0% 5% 10% 15% 20% 25%

B.O.PunjabJSCLANLEFUGeneralInsAHLP.T.C.L.AOGDCP.S.O.ATRLPKGSBAFLUBLPOLFFBLKSE100KapcoAKBLPPLNBPHubcoMCBFFCAHCLEngroCorp.APLAICLLUCKDGKCHBLNMLNIBBank

ComparativePerformance (May2011)

Outperformers

Underperformers


4

thanoriginallyanticipatedandthatPSOreceivedPKR89.1bn fromHubcoandKapcoandthus,wasabletopayoffsomemoneyowedtorefineriesandtheFBRwhichledtotheunfreezingof itsbankaccounts. TheKSE100 Index shed177pointsduring theweektocloseat11,879onMay6.

Themarketwasmainlyupbeatbutdullintermsofturnoverduringthesecondweek.TheKSE100 Indexstarted theweekonabullishnoteas itgained156points in thefirst3 tradingdays to closeat12,036onMay11. Despite the continuing concernsovertheAbbottabadincident,themarketwaspositiveduetovariousnewsreportsontheweekendregardingrecommendedbudgetarymeasuressuchasalowercorporatetax rate for listed companiesand tonot introduce further taxmeasuresonexistingtaxpayers. Inaddition,theWorldBankdecidedtovisitPakistanneartheendoftheweek. Therewasrenewed investor interest inENGROas it isexpectedto launchanIPOforEngroFoods,whichrecentlyacquiredaHalalfoodcompanyintheUSA.Therewasaslightrebound in internationalcrudeoilpricesduringmidweekandnewsthatproductionfromMaramzaifieldwasabouttorestartsoon(approximately2,000bpdcrudeoiland40mmcfdgas) that led tobuying interest inoil stocks suchasOGDC,POL,PPLandPSO.FertilizerstockshadagoodweekbasedonnewsreportsthatureapricesmayhikebyanotherPKR105perbagasaresultofgovernment'sagreementtodivert40mmcfdgasfromIndependentPowerProducers(IPPs)tofertiliserplants.Inaddition,therewerepositivedevelopmentsonthemacroeconomicfrontwithremittances during 10mFY11 reaching US$ 9bn and the trade deficit during April 2011shrinkingby33%YoYtoUS$870m. TheKSE100 IndexdippedonMay12overconcernsregardingtheuncertaintyoftheoutcomeofthemeetingsduringtheweekwiththeIMFandsomeprofittakingactivityandwassubduedonMay13duetothebombblastinfrontofparamilitarytrainingcentreinCharsadda.TheKSE100postedamarginalgainof87pointsduringtheweektocloseat11,967onMay13.

Theactivitywasdullwiththinningvolumesduringthethirdweek,asactivitywasfocusedon lowertierstocks. TheKSE100 Indexdippedby65pointsonMonday,May16tocloseat11,902. Themainreasonforthedeclinewasthefearamong investorsregardingthesouringU.S.Pakistanrelationsandimpositionofnewtaxes.Therewerewarnings frommembers of theU.S. Congress to cutoff aid and restrict tradewithPakistanifterrorismandmilitancywerenotcurbed.Inaddition,itwasreportedovertheweekend that theFBRhasonlyaccepted less thanhalfof thebudgetproposalsforwardedbytheSECP.TheIndexstagedaslightrecoveryonTuesday,May17toendthedayat11,930onthebackofU.S.SenatorJohnKerrysstatementthattherewasno immediate threat to the aid to Pakistan. The KSE100 Index dipped again onWednesday,May18 to11,884becauseof realizationamong investors that thenextIMF tranche remaineduncertain. In addition, theMSCI review led to lowering theweightage of Pakistani stocks in theMSCI FrontierMarket Index. Despite positivenewsonthemacroeconomicfrontaboutthe10MFY11currentaccountsurplusofUS$748m, themarket sentiments remainedbearish. TheTbillauctionheldonMay18resulted inaslight increase incutoffyieldsacrossalltenorswhich ledtofurtherapprehensionthattherewasaslightpossibilitythattheSBPcouldraisethediscountratein theupcomingMonetaryPolicy StatementonMay21. Therewaspositivemovement inthesharepriceofBAFLonthebackofnewsthat itwasplanningtoopen20newbranchesbyAugust2011.OnThursday,May19,theKSE100Indexwaslacklusterasitshed5pointstocloseat11,878,asmostinvestorsdecidedtositonthesidelinesaheadof theMonetaryPolicyStatementscheduled forSaturday. ENGROwitnessedsellingpressureas itreportedthatSNGPcutthegassupplyto itsnewunit incontraventionof the SindhHighCourtdecision and thuswill take thematterback to thecourt.OMCstockssuchasPSOexperiencedariseinsharepriceduetonewsreports


5

that themarginson regulatedproductssuchasHSDandMotorSpiritmight rise. Thefallingcottonpriceshadanegative impactonthesharepriceofLOTPTA. TheKSE100endedtheweekonaslightpositivenoteduetospeculationregardingtheCapitalGainsTaxonshares intermsofeitherthecentralcollectionofCGTorpossibleremovalcoupledwithahike inCVT. TheKSE100 Indexgainedonly6points toend theweekat11,973onMay20.

ThefourthweekofMaysawthemarketbecomebullishwith improvement inturnoverfromthepreviousweekonthebackofnewsflowonthepossibilityofrelaxationinCGTandotherbudgetarymeasures. ItwasreportedthatthePakistanBusinessCouncilandprominentmembersoftheKSEmetwiththeFederalFinanceMinister in IslamabadonMay23and24todiscussbudgetproposalsanditwasalsoreportedthattheGoPwouldfurtherconsidertheseproposals.Inaddition,theSBPkeptthepolicyrateunchangedat14%forthenext2monthsonthebackofimprovedexternalaccountpositionandstablepricesandthevisitofUSSecretaryofStateHillaryClintontoIslamabadonMay27wasseenasapositivedevelopment,indicatingrestorationofsomenormalcytoPakUSrelations.Thelast2sessionsofthemonthsawslightprofittakingwithactivityconcentratedinlowertierstocks.TheKSE100Indexsurgedby149pointsoverthefinal7tradingdaystoendthemonthat12,123onMay31.

RegionalValuation

ThePakistanmarketPEat6.92xistradingata44.8%discounttotheregionalaverageof12.54x.Basedondividendyield,Pakistanisthemostattractiveat5.98%ascomparedtotheregionalaverageof2.49%,followedbyTaiwan(3.48%)andThailand(3.24%).

RegionalValuationComparison12mF 12mFPEx Div.Yield(%)

China 13.83 1.35

HongKong 12.03 2.64India 12.03 1.48

Indones ia 14.03 2.30

Malays ia 13.60 3.21

Pakistan 6.92 5.98

Phi l ippines 12.88 2.67

Singapore 12.36 3.15

SouthKorea 9.68 1.37Ta iwan 13.03 3.48

Thai land 11.96 3.24

Source:ThomsonOneAnalyticsDate:May19,2011

Country


6

Lookingahead

WeexpectthemarkettoreactimmediatelytothefederalbudgetforFY12expectedtobepresented intheNationalAssemblyonJune3. Anotherkeydriverthatwould influencethemarketdirectionduringthenext6weekswouldbethedecisionbytheIMFtocontinuetheSBAornot.

Given thesecuritysituation in thewakeof theAbbottabad incidentand theattackonPNSMehrannavalbaseinKarachiandtheirimplicationsonPakUSrelations,anymoresuch incidents couldhavenegative repercussionson thebourses if it leads to furtherdiplomaticisolationofPakistananddomesticunrest.

Domesticpoliticsmayplayagreater roleon thedirectionof thebourses in theaftermathofthebudget. IfthePMLN,PTIandotheroppositionpartiesplantoturnontheheatonthegovernmentandrallypublicsupport forearlyelections,thiscould leadtoinstability.

Werecommendinvestorstoholdontotheirpositions;anysharpspikewouldbeanopportunitytobookprofits.


7

BankALHabibLtd.(BAHL)DeepWithinitsShellWeareinitiatingcoverageofBankALHabibLtd(BAHL),withatargetpriceofPKR32.41for2011,derivedfromjustifiedpricetobook valuemethodology.AsofMay31,2011, theBank istradingatPKR28.39,withanupsideof14.16% toour targetprice.WehaveanACCUMULATEstanceonthestock.

WelikeBAHLbecauseofitsoperationalefficiency:itscapabilitytokeep itsadministrative costsunder controlwhilegoing forbranch network expansion at the same time. BAHL is in factbetterthanthetopfourprivatebanksinthisarea.

BankALHabibstandsoutfromtheotherbanksalsobecauseofits inordinate operational model of extra riskaversion. TheBankstactfulnessindolingoutloansandadvanceshasledittohave a remarkably low level of nonperforming loans (NPLs)compared to its gross advances. This conservatism is augmentedbyliberalprovisioningforthoseNPLs.

However,BAHLsprudencehascomeattheexpenseofhigherinterest income forgone. Since2009,BAHLhaskeptmore investments thanadvances, theonlybank inour coverageuniversetodoso.Thissituationbegstoaskthequestion:Whysoshy?

ACCUMULATE

Analyst:[email protected]

FairValue 32.4112monthTradingdataPrice ofMay31'11(PKR) 28.39High(PKR) 38.83Low(PKR) 27.03Avgdai lyvolume ('000) 273.88Avgva lue traded(PKRm) 7.94Shares outs tanding(m) 878.60Free float 86.9%MarketCapita l isation(PKRm) 24,943MarketCapita l isation(US$m) 29852weekgain 14.5%52weekgain(index) 30.4%Beta 1.22KATSCode BAHL

20

22

24

26

28

30

32

34

36

01Jun10 26Nov10 30May11

PKR

BAHL Rel.KSE100

PricePerformance (12months)

FinancialHighlights InPKRmunlessmentionedCY10A CY11E CY12F CY13F CY14F

NetInterestIncome 10,797 11,591 12,836 14,492 16,214Provisions Charge 946 1,126 1,164 1,124 1,161NonInterestIncome 2,130 2,808 3,131 3,467 3,828NonInterestExpense 6,324 6,731 7,283 7,839 8,398ProfitAfterTax 3,602 4,253 4,888 5,848 6,813Investments 137,168 157,340 176,394 195,970 215,567

Advances 125,773 136,149 152,322 172,221 192,832

Total Assets 301,552 338,630 378,560 425,264 472,334Deposits 249,774 280,964 314,989 353,099 391,940

Equity 14,706 17,527 20,249 23,931 28,139

Earnings PerShare(PKR) 4.10 4.84 5.56 6.66 7.75Dividends PerShare(PKR) 2.00 2.50 2.50 3.00 3.00BookValuePerShare(PKR) 16.74 19.95 23.05 27.24 32.03PricetoEarnings (x) 6.92 5.86 5.10 4.27 3.66DividendYield(%) 7.04% 8.81% 8.81% 10.57% 10.57%PricetoBookValue(x) 1.70 1.42 1.23 1.04 0.89NetInterestMargin(%) 4.46% 4.14% 4.11% 4.14% 4.15%ReturnonAssets (%) 1.31% 1.33% 1.36% 1.45% 1.52%ReturnonEquity(%) 26.69% 26.39% 25.88% 26.47% 26.17%Source:CompanyReports,TSLResearch


8

ValuationUsing a variation of the Gordon growth model, the justified pricetobook value approach,wehavecomeupwithavalueofPKR32.41/share forBAHL.The tablebelowshowshowwehavearrivedatour justifiedP/BVmultiple (of1.16x)andmultiplied itwiththeforecastedaveragebookvaluepershareforthenextfiveyearstoarriveatourtargetprice.

ThetargetpriceofPKR32.41givesthescripanupsideof14.16%fromitsMay31st2011closingpriceofPKR28.39.WethereforerecommendanACCUMULATEstanceonBAHL.

RiskstoourthesisPersistence of high inflation: Continuationofinflationarypressurebeyondourexpectationswillraiseoperatingexpenditure.Atthemoment,weareexpecting inflationtoremainaround15%forFY11andtoeasebeyondthat.

Change in monetary policy stance: Weareexpectingthepolicyratetobemaintainedforthisyear.IfSBPgoesforatightenedstancethenwecanexpectfurtherriseininterestincomeandviceversa.

Changesinregulations:Risksontheregulatoryfrontremaintoo.Low economic growth:Aslowerthanexpectedrecoveryintherealsectorwillculminateinabuildupofevenmorenonperformingloans.

ValuationRiskfreerate 14.00%MarketRiskPremium 6.00%Beta 1.22

CostofEquity 21.29%SustainableROE 24.13%Growth 3.00%

JustifiedP/B 1.16Avg.BVPS 28.06TargetPrice 32.41Source:TSLResearch

2.0% 2.5% 3.0% 3.5% 4.0%

19.29% 35.91 36.15 36.39 36.66 36.9420.29% 33.95 34.11 34.29 34.47 34.6721.29% 32.19 32.30 32.41 32.54 32.6722.29% 30.60 30.67 30.73 30.80 30.8823.29% 29.16 29.19 29.22 29.25 29.28

Source:TSLResearch

Cost

ofEqu

ity

GrowthTargetPriceSensitivityAnalysis


9

01020304050607080

02Ja

n06

07Apr

06

07Ju

l06

04Oct

06

12Ja

n07

16Apr

07

12Ju

l07

09Oct

07

16Ja

n08

16Apr

08

14Ju

l08

15Oct

08

20Ja

n09

22Apr

09

20Ju

l09

20Oct

09

22Ja

n10

22Apr

10

16Ju

l10

11Oct

10

20x

17x

14x

11x

8x

5.0x

Price

BAHL's PricetoEarningsBand

Source:Company Reports,TSLResearch

0102030405060708090

02Jan

06

28Apr

06

15Aug

06

07Dec

06

02Apr

07

17Jul

07

06Nov

07

28Feb

08

16Jun

08

06Oct

08

28Jan

09

20M

ay09

03Sep

09

29Dec

09

16Apr

10

29Jul

10

11Nov

10

5.0x

4.0x

3x

2x

1x

Price

BAHL's PricetoBookValueBand

Source:Company Reports,TSLResearch


10

Earningsoutlook WeareprojectingBAHLsearnings togrowbya4yearCAGRof17.3%; fromPKR

3.6bn(EPS:PKR4.10)in2010toPKR6.8bn(EPS:PKR7.75)in2014. Interest incomehasgrownsubstantially inpreviousyears,withthegrowth in2010

reaching24.2%.Wedonot,however,expectBAHLstoplinetodepictsimilarrobustgrowthinCY11andCY12,aswearenotexpectinganyfurthermonetarypolicyratehikesthisyear.

Similarly,interestexpensewilllikelydiscontinuerisingatthehighrateseeninpreviousyears.Apartfromahigherbasetakingeffect,thisslowdownwillalsobeattributabletoabuildupofcheapcurrentandsavingsaccount(CASA)deposits.

Inanattempt todecrease the costof funds,BAHLwillmost likely continue to increase itsbranchnetwork.Weexpect thenetwork toexpandata4yearCAGRof7.3%,from303in2010to385officesin2014.

Weexpectprovisionstoriseslightly (ata4yearCAGRof5.3%, fromPKR946m in2010toPKR1,161min2014)duetoincreaseinadvancesandminorriseininfectionratio.

Noninterestincomewill,accordingtoourforecast,riseata4yearCAGRof15.8%,fromPKR2,130min2010toPKR3,828min2014.

Weareexpectingnoninterestexpensetoriseata4yearCAGRof7.4% fromPKR6,324min2010toPKR8,398min2014.ThisrateislowkeepinginmindthatweexpectBAHLtoundergosubstantialbranchnetworkexpansion.

1.0%1.1%1.2%1.3%1.4%1.5%1.6%1.7%1.8%

24.0%

26.0%

28.0%

30.0%

32.0%

CY07A CY08A CY09A CY10A CY11E CY12F CY13F CY14F CY15F

ReturnonEquity(LHS) ReturnonAssets(RHS)

BAHL's Returns

Source:CompanyReports,TSLResearch


11

KeyInvestmentConsiderationsProvisioning:PartlyanillusionofextraprudenceBankAlHabib allocates generalprovision (forNPLs)over and above the SBP requirementseveryyear.Whilethisgivesanimpressionofconservatismandprudence,itmustbeborne inmind thatBAHLhasnot reversedanyof these charges since2007,whichshowsthattheywereneededandnotinexcess.BAHLhas,however,reversedsubstantialamountsofspecificprovisionsovertheyears,muchmorethantheothertopprivatebanks,asshownbelow.

*CalculatedastotalreversalsduringtheyeardividedbytheopeningbalanceforNPLprovisionsWehavevaluedBAHLwiththeassumptionthat itwillcontinuetoputasidePKR450m(inpracticesinceCY09)everyyearingeneralprovisionsoverandabovetheSBPrequirement. There is,however,aslightchancethatthiswillnotbethecase.Thetablebelowgives theearningsexpectations ifBAHLunexpectedlydiscontinues this prudentprac

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

CY07A CY08A CY09A CY10A CY11E CY12F CY13F CY14F

YieldonEarningAssets CostofFunds NetInterestMargin

BAHL's InterestBasedEarnings


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

BAHL HBL UBL MCB ABL BAFL FABL

CY07 CY08 CY09 CY10

Portion ofProvisionsforNPLsReversedDuringtheYear*



12

tice.

Assetscompositiontostay

Inlinewithexpectedindustrytrend,BAHLsdecliningadvancestodepositratiowillmostprobablystabilizeinthecomingyears,andgraduallyreverseitsinclination.ForCY11,weexpectadvances to rise less thanproportionally todepositsas thereare stillno signsthat theoveralleconomic conditionwill improve sufficiently forbanks tobe less riskaversethantheyareatpresent.

Banksassetliabilitycompositionstrategiesrelyheavilyupontheirownsize,assmallerbanksfindithardertogetintolongtermriskyloanswhentheirdepositbaseisrelativelyunstable.However,comparedtoitspeerbanks(thoseranked610byassetsize)BAHLismuchmoreinclinedtowardsinvestmentsingovernmentsecurities.

T.PriceCY11E CY12E CY13E CY14E

BaseCase* 4.84 5.56 6.66 7.75 32.41DiscontinuationinCY11** 5.06 5.90 6.99 8.09 34.11DiscontinuationinCY12 4.84 5.90 6.99 8.09 33.82DiscontinuationinCY13 4.84 5.56 6.99 8.09 33.40DiscontinuationinCY14 4.84 5.56 6.66 8.09 33.03Source:TSLResearch

*AllotmentofPKR450mneveryyear

EPS

**AllotmentofPKR150mnin2011(whichhasalreadyhappenedin1Q)anddisconitnuationinsubsequentyears

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

CY06A CY07A CY08A CY09A CY10A CY11E CY12F CY13F CY14F CY15F

AdvancestoDeposits InvestmentstoDeposits

ADRandIDRTrends OvertheYears



13

*BOPsfiguresareasofEnd2010,duetounavailabilityofdata.OthersfiguresareasofEndMarch2011.

BAHLsriskaversioncomesatacostofhigherreturns forgoneas it istheonlybank inouruniversetoownmoreinvestmentsthanadvances.EvenitsadvancesearnaloweryieldthanitsyieldonAFSsecuritiesduetothehighcreditworthinessofborrowersthoseadvancesaremadeto. It isof interesttonoteherethatBAHLdoesnotclassifyanyof its investmentsasheldfortrading.ThismeansthatitsearningsdonotcompriseofanyvolatileunrealizedgainsorlossesrelatedtoHFTsecurities.

Weexpecttheassetqualitytoworsenslightly forBAHL,butas itsNPLstoGrossLoansarealreadytoolowcomparedtootherbanks,thisishardlyacauseforconcern.TheinfectionofBAHLsloanbookwilllikelyreach2.8%byCY14from2.28%inCY10.ThemainreasonforthisexpectedincreaseisthatwebelieveBAHLspresentlevelofNPLsisalreadyverylowandalsobecausewehaveanadverseoutlookonthemacroeconomicfront.

*averageforlocalprivatebanks

190210230250270290310330350

120 140 160 180 200

Dep

osits(in

PKR

bn)

Advances(inPKRbn)

AKBL

SCBPL

BOP*

BAFL

BAHL's HigherDepositsandLowerAdvancesComparedtoPeerBanks


BAHL

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

CY06A CY07A CY08A CY09A CY10A CY11E CY12F CY13F CY14F CY15F

BAHL Avg.* HBL UBL MCB ABL

BAHL's LowInfectionofLoanPortfolioComparedtoOtherBanks

Source:CompanyReports,SBP,TSLResearch


14

Continuousimprovementinoperatingefficiency

BAHLhasrecentlyimproveditsoperatingefficiencyandhasmanagedtoreigninitsadministrative expenses despite high inflation rate and branch network expansion. By2010,BAHLhadthe lowestadministrativeexpensesasapercentofdepositscomparedtosixofthetoplocalprivatebanks.

BAHLhasbeenaggressivelyexpanding itsbranchnetwork. In2010alone, itadded22branchesand25subbranches,tobringup itsnetworkto303from255 in2009(2008:225,2007:175,1QCY11:314offices).Subbranchesarebranchesthatprovidebasicfacilitiesbutdonothandlemore sophisticatedoperations like givingout advances andhandlingforeignexchangetrade.Thismodel(ofamixofbranchesandsubbranches)isexpectedtoincreaseBAHLsaccesstocheapdeposits.We,however,donotexpectittoincuranylessadministrativeexpensesthanapurebranchesmodelwouldhave.

ImpressiveperformancesofarthisyearBAHLpostedaprofitaftertaxofPKR1,034.8m(EPS:PKR1.18)inthe1QCY11,comparedtoPKR880.6m(EPS:PKR1.00)inthecorrespondingperiodlastyear.Aswithmostotherbanksintheindustry,thisgrowthwaslargelydrivenbyincreaseinnetinterestincome.

Astheaverage6monthKIBOR in1QCY11was140bpsabovethat inthecorrespondingperiod inCY10, interest incomegrewby30.7%.Buildup incheapdeposits(CASAasat30Mar,2011:61.0%;31Dec,2010:59.27%),meanwhile,ensuredthatinterestexpensesdidntrisebyasmuchas interest income,resulting ina40.9%surge innet interest income.

Provisionsincreasedsubstantially(by297%)asaresultofbothriseininfectionratioandageing of loan portfolio. Though the infection ratio has risen by the end of 1QCY11(2.21%)comparedtothatof1QCY10 (1.93%); ithasactuallydeclined fromthatbytheendof2010(2.28%).

Noninterestbased incomeandexpenseshave increasedby23.5%YoYand27.9%YoY,respectively,inlinewiththetrend.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

CY07 CY08 CY09 CY10

BAHL HBL UBL MCB ABL BAFL FABL

BAHL'sAdministrative ExpensestoDeposits ComparedwithOtherBanks



15

BriefcompanyoverviewBankALHabib, theeighth largestcommercialbank inPakistanbyassetsize,hasbeenoperatingasapublicly listedbanksince1992(incorporated inOctober1991).Itsmajorsponsor is theDawoodHabibGroup, the same group that initially establishedHabibBankLimited.Currently ithasonlyonesubsidiary,ALHabibCapitalMarkets(Pvt.)Limited,as itsothersubsidiary,ALHabibFinancialServicesLimited,waswoundup inDecember2010.

Outlook:ApleasantrideaheadGoingforward,weexpectthebottomlinetogrowonthebackofhealthyriseintopline,whichinturnwillbedrivenbylowercostoffundsandincreaseininterestearningassets(both investments and advances). Provisionswill continue to remain subdued due toBAHLsconservativepolicies;thoughweexpecttoseeaslightrise in infectionoftheirloanbookasanaturalconsequenceofthepresentandforeseeneconomicscenario.Rise in noninterest based income and constrained growth in operating expenses(despitenetworkexpansion)duetomanagementefficiencywillfurthersupportearningsinthefuture.

BankALHabibLimited InPKRmnUnconsolidated 1QCY11 1QCY10 %ChgMarkupIncome 8,251 6,315 30.7%MarkupExpense 4,939 3,964 24.6%NetMarkupIncome 3,312 2,351 40.9%Provisions Expense 484 122 297.1%NIIafterProvisions 2,828 2,229 26.9%NonMarkupIncome 618 500 23.5%OtherExpenses 1,795 1,403 27.9%Profitbeforetax 1,651 1,326 24.5%Taxation 616 445 38.5%

Profitaftertax 1,035 881 17.5%EPS 1.18 1.00 17.5%

Source:CompanyReports


16

FinancialHighlights

BankALHabibLtdBalanceSheetHighlights InPKRmn

CY10A CY11E CY12F CY13F CY14FCashandBalances withBanks 21,133 25,130 27,123 31,374 35,040Investments 137,168 157,340 176,394 195,970 215,567

Advances 125,773 136,149 152,322 172,221 192,832

TotalAssets 301,552 338,630 378,560 425,264 472,334Borrowings 22,579 24,724 27,942 31,900 35,660

Deposits 249,774 280,964 314,989 353,099 391,940

Equity 14,706 17,527 20,249 23,931 28,139

TotalLiabilitiesandEquity 301,552 338,630 378,560 425,264 472,334

ProfitandLossHighlights InPKRmnCY10A CY11E CY12F CY13F CY14F

InterestIncome 27,475 30,109 33,195 37,234 41,550InterestExpense 16,679 18,518 20,359 22,741 25,336NetInterestIncome 10,797 11,591 12,836 14,492 16,214ProvisionsCharge 946 1,126 1,164 1,124 1,161NonInterestIncome 2,130 2,808 3,131 3,467 3,828NonInterestExpense 6,324 6,731 7,283 7,839 8,398ProfitBeforeTax 5,656 6,543 7,520 8,996 10,482ProfitAfterTax 3,602 4,253 4,888 5,848 6,813

KeyPerformanceIndicatorsCY10A CY11E CY12F CY13F CY14F

Earnings PerShare(PKR) 4.10 4.84 5.56 6.66 7.75Dividends PerShare(PKR) 2.00 2.50 2.50 3.00 3.00BookValuePerShare(PKR) 16.74 19.95 23.05 27.24 32.03PricetoEarnings (x) 6.92 5.86 5.10 4.27 3.66DividendYield(%) 7.04% 8.81% 8.81% 10.57% 10.57%PricetoBookValue(x) 1.70 1.42 1.23 1.04 0.89Advances toDeposits (%) 50.35% 48.46% 48.36% 48.77% 49.20%NPLs toGross Loans (%) 2.28% 2.30% 2.55% 2.70% 2.80%CASAtoTotal Deposits (%) 59.27% 59.90% 60.60% 60.90% 61.10%YieldonAvgEarningAssets (%) 11.36% 10.76% 10.63% 10.64% 10.63%CostofFunds (%) 6.42% 6.14% 6.04% 6.03% 6.03%NetInterestMargin(%) 4.46% 4.14% 4.11% 4.14% 4.15%Spreads (%) 4.94% 4.62% 4.59% 4.61% 4.60%ReturnonAssets (%) 1.31% 1.33% 1.36% 1.45% 1.52%ReturnonEquity(%) 26.69% 26.39% 25.88% 26.47% 26.17%Source:CompanyReports,TSLResearch


17

RATINGSGUIDEMay31,2011

FY10A FY11F FY12F FY10A FY11F FY12F FY10A FY11F FY12FAlliedBank 65.0 62.0 Hold 9.6 11.6 12.3 3.6 4.0 4.0 41.8 49.4 56.7 5.4 6% 1.3 1.1 860 DecBankAlHabib 32.4 28.4 Accumulate 4.1 4.8 5.6 2.0 2.5 2.5 18.3 22.1 25.2 5.9 9% 1.3 1.2 879 DecFaysal Bank 9.9 9.9 Hold 1.6 1.3 2.2 NIL 1.0 1.0 22.5 24.7 26.4 7.9 10% 0.4 1.2 733 DecBankAlfalah 11.6 10.3 Accumulate 0.7 1.6 2.0 NIL 1.0 1.0 16.5 17.4 18.3 6.4 10% 0.6 1.3 1,349 DecHabibBank 113.5 117.3 Reduce 14.2 18.1 20.3 6.5 7.0 7.0 81.2 93.9 107.8 6.5 6% 1.2 1.1 1,102 DecMCBBank 200.9 208.0 Reduce 20.2 23.0 26.2 10.5 11.5 12.0 94.7 100.0 114.8 9.0 6% 2.1 1.2 836 DecUnitedBank 64.1 64.8 Reduce 9.1 10.4 11.9 5.0 5.0 6.0 55.9 61.7 70.1 6.2 8% 1.1 1.2 1,224 DecAttockCement 74.2 54.9 Buy 11.7 6.3 8.5 5.0 3.0 4.0 62.3 65.7 70.2 8.7 5% 0.8 0.9 87 JunCheratCement 8.5 10.1 Sell (0.1) 0.5 1.0 NIL NIL NIL 23.5 23.5 26.6 20.9 NIL 0.4 0.9 96 JunD.G.KhanCement 26.0 23.1 Accumulate 0.6 1.2 1.6 NIL NIL 1.0 72.6 77.1 84.4 20.1 NIL 0.3 1.4 365 JunFauji Cement 10.5 4.8 StrongBuy 0.2 0.5 0.4 NIL NIL NIL 7.2 10.7 11.1 9.7 NIL 0.4 1.5 1,331 JunLafargePakistanCem 1.9 3.0 Sell 0.7 (0.3) NIL NIL NIL 6.7 8.3 6.8 N/A NIL 0.4 1.1 1,313 DecLuckyCement 80.6 71.1 Accumulate 9.7 11.0 12.7 4.0 3.0 4.0 77.6 85.6 94.3 6.4 4% 0.8 1.3 323 JunM.LeafCement 2.1 2.3 Reduce (4.9) (7.0) (5.6) NIL NIL NIL 9.8 9.8 9.7 N/A NIL 0.2 1.6 526 JunMillatTractors Ltd 581.9 540.0 Hold 62.4 71.2 79.1 52.0 60.0 60.0 114.5 173.4 218.3 7.6 12% 3.2 1.0 37 JunPakSuzuki 66.4 65.6 Hold 3.1 4.7 7.5 0.5 1.0 1.0 176.2 177.3 184.8 14.0 2% 0.4 0.9 82 DecHubPower 46.2 37.6 Buy 4.8 5.5 6.9 5.0 5.0 6.5 25.8 26.2 27.1 6.9 13% 1.4 0.9 1,157 JunKAPCO 48.5 43.5 Accumulate 5.8 8.6 8.7 5.0 8.0 8.5 25.6 70.5 57.4 5.0 18% 0.6 0.7 880 JunAttockPetroleum 408.4 378.1 Hold 52.0 58.2 62.4 25.0 35.0 40.0 133.6 106.1 137.8 6.5 9% 3.6 1.0 69 JunP.S.O 342.0 283.6 Buy 52.8 57.7 67.2 8.0 10.0 15.0 171.0 265.0 317.4 4.9 4% 1.1 1.1 172 JunOil &GasDev. 107.7 150.5 Sell 13.8 14.4 15.0 5.5 5.0 5.0 36.6 45.8 55.8 10.5 3% 3.3 1.1 4,301 JunPakistanOilfields 302.9 333.4 Reduce 31.4 45.6 45.6 25.5 32.0 32.0 123.1 136.7 150.3 7.3 10% 2.4 1.2 237 JunPakistanPetroleum 228.1 213.1 Hold 19.5 30.2 31.5 7.5 12.0 13.0 66.9 87.6 106.1 7.1 6% 2.4 1.0 1,195 JunIndusMotors 235.0 221.5 Hold 43.8 42.5 47.8 15.0 13.0 14.0 160.1 213.7 244.3 5.2 6% 1.0 1.1 79 JunP.I.C.T. 88.3 85.0 Hold 8.3 8.8 10.1 4.0 4.0 5.0 34.1 34.4 40.1 9.7 5% 2.5 0.8 109 JunP.T.C.L. 21.7 17.6 Buy 2.3 2.1 2.5 1.8 2.0 2.0 21.2 21.7 22.3 8.4 11% 0.8 1.1 5,100 JunFauji Fert.Bin 38.2 42.8 Sell 7.0 6.7 6.3 6.6 6.2 13.8 13.1 13.6 6.0 6.4 14% 3.1 1.0 934 DecFauji Ferti lizer 129.2 139.8 Reduce 13.0 14.7 15.1 10.4 13.2 13.6 18.2 16.9 23.7 9.5 9% 8.3 0.8 848 DecICIPakistan 176.4 157.0 Accumulate 17.5 20.5 17.8 17.5 17.5 10.0 97.1 111.4 131.2 7.6 11% 1.4 1.0 139 DecEngroPolymer 12.5 11.6 Hold (1.2) 2.0 2.2 NIL 0.3 14.1 10.4 12.6 0.8 5.7 2% 0.9 1.1 663 Dec

FairValue*

Closingpriceasat310511

Rating P/BVx BetaStockShares

OutstandingYearend

P/ExDiv

Yld(%)

EPS DPS BVPS


18

KSE100KEYINDICATORSSector Company Mkt.Cap Equity Sh.O/S PAT EPS P/E Price Weightage

(mln) (mln) (mln) (mln) (Rs) (x) 31May (%)

Oi l AndGas AttockPetroleumLtd 26,132 9,236.6 69.1 3,594.3 52.0 7.3 378.07 7.94 0.91%AttockRefinery 11,178 12,196.9 85.3 126.4 1.5 88.4 131.05 0.00 0.39%Mari Gas CompanyLimited 8,017 9,190.8 73.5 1,186.0 16.1 6.8 109.07 2.84 0.28%National Refinery 29,171 19,638.0 80.0 3,284.8 41.1 8.9 364.79 5.48 1.02%OGDC 647,247 157,392.5 4,300.9 59,177.1 13.8 10.9 150.49 3.65 22.53%Pakis tanOil fields 78,874 29,124.7 236.5 7,437.0 31.4 10.6 333.44 7.65 2.75%Pakis tanPetroleumLtd 254,638 79,906.2 1,195.0 23,320.5 19.5 10.9 213.09 4.22 8.86%Pakis tanRefinery 2,988 2,348.8 35.0 (2,974.5) (85.0) N.M 85.38 0.00 0.10%Pakis tanState Oi l 48,638 29,336.1 171.5 9,049.6 52.8 5.4 283.57 2.82 1.69%BycoPetroleum 3,631 (8,068.9) 392.1 (1,616.4) (4.1) N.M 9.26 0.00 0.13%

Sec.P/E:10.29 Shel l Pakis tan 15,411 7,900.0 68.5 1,615.6 23.6 9.5 225.02 5.33 0.54%Chemica ls ClariantPakistan 5,534 2,658.4 34.1 762.7 22.4 7.3 162.19 8.32 0.19%

DawoodHercules 7,620 22,671.8 120.3 3,248.0 27.0 2.3 63.33 7.90 0.27%EngroCorporation 76,415 30,599.0 393.3 6,441.0 16.4 11.9 194.30 3.09 2.66%EngroPolymer&Chemica ls Ltd 7,683 6,906.3 663.5 (813.8) (1.2) N.M 11.58 0.00 0.27%Fauji Ferti l i serBinQas im 40,008 12,210.0 934.1 6,514.4 7.0 6.1 42.83 15.29 1.39%Ari fHabibCorporation 8,528 16,135.3 375.0 (2,768.9) (7.4) N.M 22.74 0.00 0.30%Fauji Ferti l i zer 118,539 15,447.5 848.2 11,028.8 13.0 10.7 139.76 9.30 4.13%

Sec.P/E:8.37 ICI Pakis tan 21,785 15,455.4 138.8 2,428.8 17.5 9.0 156.95 11.15 0.76%Agri techLimited 7,393 10,799.5 392.4 885.7 2.3 8.3 18.84 0.00 0.26%Lotte PakistanPTALtd. 22,592 9,688.4 1,514.2 4,527.8 3.0 5.0 14.92 3.35 0.79%

ForestryAndPaper Fatima Ferti lzerCompany 25,800 24,258.8 2,000.0 (163.6) (0.1) N.M 12.90 0.00 0.90%Industria l Metals AndMining Securi tyPapers 1,716 3,110.7 41.2 348.1 8.5 4.9 41.70 11.99 0.06%ConstructionAndMateria l s Internationa l Industries 6,237 4,690.5 119.9 1,026.3 8.6 6.1 52.02 7.69 0.22%

AttockCement 4,753 5,395.4 86.6 1,003.6 11.6 4.7 54.89 9.11 0.17%BestwayCement 4,274 7,006.1 325.7 (1,209.4) (3.7) N.M 13.12 0.00 0.15%D.G.KhanCement 10,121 26,519.2 438.1 233.0 0.5 43.4 23.10 0.00 0.35%JavedanCement 3,567 12,435.8 58.1 (128.9) (2.2) N.M 61.37 0.00 0.12%Lafarge PakistanCement 3,938 8,815.4 1,312.6 (948.5) (0.7) N.M 3.00 0.00 0.14%

Sec.P/E:8.66 LuckyCement 22,985 25,095.9 323.4 3,137.5 9.7 7.3 71.08 5.63 0.80%Gharibwal Cement 2,462 4,000.4 400.3 (1,027.5) (2.6) N.M 6.15 0.00 0.09%

General Industries Ghani Glass 6,028 4,143.6 106.7 947.2 8.9 6.4 56.50 4.42 0.21%Packages Limited 9,510 26,929.9 84.4 (332.4) (3.9) N.M 112.71 2.88 0.33%Siemens Engineering 8,191 7,168.4 8.2 999.5 121.2 8.2 993.19 9.06 0.29%

Sec.P/E:5.25 Thal Limited 3,161 5,664.0 30.7 1,366.3 44.5 2.3 103.00 3.88 0.11%Electronics AndElectrica l Equipments Pakis tanCables Limited 1,396 1,399.7 28.5 45.5 1.6 30.7 49.04 3.06 0.05%Industria l Engineering Al Ghazi Tractors 9,962 6,362.7 42.9 1,908.9 44.5 5.2 232.01 8.62 0.35%Sec.P/E:7.09 Mil la tTractors 19,767 4,192.4 36.6 2,284.5 62.4 8.7 540.00 12.04 0.69%Industria l Transportation P.I .C.T 9,275 3,718.0 109.2 907.8 8.3 10.2 84.97 4.71 0.32%Sec.P/E:8.03 P.N.S.C. 3,735 7,133.5 132.1 711.5 5.4 5.2 28.28 5.30 0.13%SupportServices TRGPakis tanLimited 1,091 1,015.7 385.4 (1,616.8) (4.2) N.M 2.83 0.00 0.04%Automobi le AndParts Atlas Honda 9,259 3,891.8 62.6 712.5 11.4 13.0 148.02 1.69 0.32%

Indus Motors 17,411 12,587.6 78.6 3,443.4 43.8 5.1 221.51 6.77 0.61%Sec.P/E:7.34 PakSuzuki Motors 5,399 14,497.9 82.3 211.1 2.6 25.6 65.60 0.76 0.19%Beverages Muree BreweryCoLtd 1,869 3,785.5 17.3 315.3 18.2 5.9 107.92 4.63 0.07%FoodProducers Nestle Pakis tan 153,727 5,581.9 45.3 4,112.8 90.7 37.4 3389.81 2.21 5.35%

RafhanMaize 24,625 4,953.9 9.2 1,837.9 199.0 13.4 2666.08 4.31 0.86%Uni leverPakis tanLtd. 65,757 3,560.3 13.3 3,273.2 246.2 20.1 4946.40 4.97 2.29%

Sec.P/E:26.16 Uni leverFoods Ltd 8,621 404.4 6.2 437.5 71.0 19.7 1400.00 5.07 0.30%HouseholdGoods PakElectronLimited 941 6,795.7 121.9 260.5 2.1 3.6 7.72 0.00 0.03%Leisure Goods Grays ofCambridge Pak 345 201.2 7.3 (18.3) (2.5) N.M 46.94 5.33 0.01%Personal Goods AzgardNine Limited 2,921 18,469.7 449.3 60.5 0.1 48.3 6.50 0.00 0.10%

Bata Pakis tanLtd. 3,826 1,960.7 7.6 585.5 77.4 6.5 506.13 5.53 0.13%

Div.Yield(%)


19

Sector Company Mkt.Cap Equity Sh.O/S PAT EPS P/E Price Weightage (mln) (mln) (mln) (mln) (Rs) (x) 31May (%)Colgate Palmol ive 22,430 3577.1 31.6 1151.6 36.5 19.5 710 1.90 0.78%IbrahimFibers 14,137 15238.1 310.5 3360.1 10.8 4.2 45.53 4.39 0.49%Indus Dyeing&Mfg.Company 5,734 4310.4 18.1 1858.5 102.8 3.1 317.27 0.00 0.20%

Sec.P/E:7.04 NishatMil l s 20,917 31376.3 351.6 2915.5 8.3 7.2 59.49 7.56 0.73%Tobacco Phi l l ipMorri s 15,099 6819.9 61.6 958.4 15.6 15.8 245.19 1.02 0.53%Sec.P/E:21.85 Pakis tanTobaccoCompany 26,060 3602.1 255.5 925.1 3.6 28.2 102 3.28 0.91%HealthCare EquipmentAndServices Shi fa International Hospita l s 1,619 1585.7 50.5 189.0 3.7 8.6 32.05 7.80 0.06%Pharma AndBioTech AbbotLaboratories 9,058 3912.5 97.9 1176.9 12.0 7.7 92.52 5.40 0.32%Sec.P/E:10.55 GlaxoSmithKl ine PakLtd. 14,515 10799.8 196.4 1057.4 5.4 13.7 73.9 5.41 0.51%Travel AndLeisure DreamworldLtd 18,400 347.1 32.0 1.9 0.1 9668.9 575 0.00 0.64%

P.I.A.C.(A) 5,841 56416.9 2327.3 20785.1 8.9 N.M 2.51 0.00 0.20%Sec.P/E:53.59 PakServices 4,635 22792.0 32.5 427.9 13.2 10.8 142.5 0.00 0.16%FixedLine Telecommunication PTCL 89,607 99389.6 5100.0 9151.2 1.8 9.8 17.57 9.96 3.12%Electrici ty HubPowerCompany 43,544 29881.3 1157.2 5556.1 4.8 7.8 37.63 13.29 1.52%

K.E.S.C. 18,182 31300.9 7451.6 14641.2 2.0 N.M 2.44 0.00 0.63%KohinoorEnergy 2,966 7051.7 169.5 687.3 4.1 4.3 17.5 14.29 0.10%

Sec.P/E:7.49 KotAdduPowerCo.Ltd 38,326 22494.7 880.3 5089.1 5.8 7.5 43.54 11.48 1.33%Gas WaterAndMultiuti l i ties Sui NorthernGas Ltd 10,521 18702.1 549.1 2554.6 4.7 4.1 19.16 10.44 0.37%Sec.P/E:4.17 Sui SouthernGas 18,482 14072.3 839.0 4399.1 5.2 4.2 22.03 6.81 0.64%Banks Al l iedBankLimited 53,339 35974.9 860.3 8225.3 9.6 6.5 62 6.45 1.86%

Askari BankLimited 8,406 16004.0 707.0 943.2 1.3 8.9 11.89 0.00 0.29%BankAl Habib 24,943 16066.1 878.6 3602.2 4.1 6.9 28.39 7.04 0.87%BankAl Fa lah 13,896 22305.5 1349.2 968.5 0.7 14.3 10.3 0.00 0.48%BankOfPunjab 3,242 3743.1 528.8 10059.5 19.0 N.M 6.13 0.00 0.11%Faysa l Bank 7,254 16517.8 732.7 1190.3 1.6 6.1 9.9 0.00 0.25%HabibBank 129,295 89524.7 1102.1 15613.1 14.2 8.3 117.32 5.54 4.50%HabibMetropol i tanBank 18,630 20308.1 1047.8 2818.0 2.7 6.6 17.78 0.00 0.65%MCBBankLtd. 173,912 79204.2 836.2 16873.2 20.2 10.3 207.97 5.53 6.05%MeezanBank 14,221 11080.0 803.0 1649.6 2.1 8.6 17.71 0.00 0.50%National Bank 88,716 128495.8 1681.8 17563.2 10.4 5.1 52.75 14.22 3.09%NIBBank 7,036 13662.8 4043.7 10112.1 2.5 N.M 1.74 0.00 0.24%Soneri Bank 3,861 8917.7 602.3 125.4 0.2 30.8 6.41 0.00 0.13%StandardCharteredBank 32,715 51073.1 3871.6 3605.6 0.9 9.1 8.45 7.10 1.14%

Sec.P/E:7.69 UnitedBankLimited 79,376 68415.1 1224.2 11159.9 9.1 7.1 64.84 7.71 2.76%NonLi fe Insurance Adamjee Insurance 8,355 11035.0 123.7 2434.5 4.2 16.1 67.54 3.70 0.29%

EastWestInsurance Co.Ltd. 7,441 338.2 25.1 8.4 0.3 881.3 296 0.00 0.26%E.F.U.General Insurance 4,750 10464.5 125.0 732.3 5.9 6.5 38 0.00 0.17%IGI Insurance 5,173 11575.9 71.8 836.6 11.6 6.2 72 4.17 0.18%NewJubi lee Insurance 4,570 2873.4 79.1 450.2 5.7 10.2 57.78 3.46 0.16%

Sec.P/E:7.48 Pakis tanReinsurance 5,088 6785.7 300.0 269.9 0.9 18.9 16.96 17.69 0.18%Li fe Insurance E.F.U.Li fe Assurance 5,557 1579.3 85.0 363.2 4.3 15.3 65.38 7.65 0.19%Real Estate InvestmentAndServices Pace Pakis tanLimited 772 5194.4 278.9 436.8 1.6 1.8 2.77 0.00 0.03%

Jahangi rSiddiqui &Co 5,580 10127.7 763.3 8983.8 11.8 N.M 7.31 13.68 0.19%Equi tyInvestmentIns truments PICICGrowthFund 3,677 6937.2 283.5 551.7 1.9 6.7 12.97 15.42 0.13%Software AndComputerServices Netsol Technologies Limited 1,654 3337.2 77.9 951.9 12.2 1.7 21.23 5.89 0.06%TechnologyHardware AndEquipment Pakis tanTelephone Cables 67 155.6 21.0 107.4 5.1 N.M 3.18 0.00 0.00%Media Media Times Ltd. 2,232 1365.1 134.1 73.6 0.5 N.M 16.64 0.00 0.08%

N.A=NotAvai lable,N.M=NotMeaningful KSE100INDEX 12,123.15(**)Companies have equity,dividendyieldandPATof2009 MarketCap.(Rs m)

P/E(x) 9.34DividendYield(%) 5.24ROE(%) 19.54

2,872,523

Div.Yield(%)


20

KSE100STATISTICS

May31,2011

20LowestP/ExStocksNetsolTechnologies Limited 1.74PacePakistanLimited 1.77ThalLimited 2.31DawoodHercules 2.35IndusDyeing&Mfg.Company 3.09PakElectronLimited 3.61SuiNorthernGasLtd 4.12SuiSouthernGas 4.20IbrahimFibers 4.21KohinoorEnergy 4.31AttockCement 4.74SecurityPapers 4.93LottePakistanPTALtd. 4.99NationalBank 5.05IndusMotors 5.06AlGhaziTractors 5.22P.N.S.C. 5.25PakistanStateOil 5.37MureeBreweryCoLtd 5.93InternationalIndustries 6.08

20LowestP/BVxStocksPakElectronLimited 0.14PacePakistanLimited 0.15AzgardNineLimited 0.16PakServices 0.20JavedanCement 0.29DawoodHercules 0.34PackagesLimited 0.35PakSuzukiMotors 0.37D.G.KhanCement 0.38KohinoorEnergy 0.42PakistanTelephoneCables 0.43SoneriBank 0.43FaysalBank 0.44LafargePakistanCement 0.45IGIInsurance 0.45E.F.U.GeneralInsurance 0.45MureeBreweryCoLtd 0.49NetsolTechnologiesLimited 0.50NIBBank 0.51P.N.S.C. 0.52

Top20EPSStocks (Rs )UnileverPakistanLtd. 246.2RafhanMaize 199.0SiemensEngineering 121.2IndusDyeing&Mfg.Company 102.8NestlePakistan 90.7Bata PakistanLtd. 77.4UnileverFoodsLtd 71.0MillatTractors 62.4PakistanStateOil 52.8AttockPetroleumLtd 52.0ThalLimited 44.5AlGhaziTractors 44.5IndusMotors 43.8NationalRefinery 41.1ColgatePalmolive 36.5PakistanOilfields 31.4DawoodHercules 27.0ShellPakistan 23.6ClariantPakistan 22.4MCBBankLtd. 20.2

Top20ROEStocks (%)UnileverFoodsLtd 108.18UnileverPakistanLtd. 91.94NestlePakistan 73.68FaujiFertilizer 71.40MillatTractors 54.49FaujiFertiliserBinQasim 53.35LottePakistanPTALtd. 46.73IndusDyeing&Mfg.Company 43.12AttockPetroleumLtd 38.91OGDC 37.60RafhanMaize 37.10ColgatePalmolive 32.19SuiSouthernGas 31.26PakistanStateOil 30.85AbbotLaboratories 30.08AlGhaziTractors 30.00BataPakistanLtd. 29.86PakistanPetroleumLtd 29.18ClariantPakistan 28.69NetsolTechnologies Limited 28.52

OGDC 647,247PakistanPetroleumLtd 254,638MCBBankLtd. 173,912NestlePakistan 153,727HabibBank 129,295FaujiFertilizer 118,539PTCL 89,607NationalBank 88,716UnitedBankLimited 79,376PakistanOilfields 78,874EngroCorporation 76,415UnileverPakistanLtd. 65,757AlliedBankLimited 53,339PakistanStateOil 48,638HubPowerCompany 43,544FaujiFertiliserBinQasim 40,008KotAdduPowerCo.Ltd 38,326StandardCharteredBank 32,715NationalRefinery 29,171AttockPetroleumLtd 26,132

Top20MarketCapStocks(Rsm) Top20Div.YldStocks (%)PakistanReinsurance 17.69PICICGrowthFund 15.42FaujiFertiliserBinQasim 15.29KohinoorEnergy 14.29NationalBank 14.22JahangirSiddiqui&Co 13.68HubPowerCompany 13.29MillatTractors 12.04SecurityPapers 11.99KotAdduPowerCo.Ltd 11.48ICIPakistan 11.15SuiNorthernGasLtd 10.44PTCL 9.96

FaujiFertilizer 9.30AttockCement 9.11SiemensEngineering 9.06AlGhaziTractors 8.62ClariantPakistan 8.32AttockPetroleumLtd 7.94DawoodHercules 7.90


21

KSE100SectorStatisticsP/Ex ROE(%) P/Ex ROE(%)

OilAndGas 10.29 30.54 Tobacco 21.85 18.07Chemicals 8.37 21.48 HealthCareEquipmentAndServices 8.57 11.92ForestryAndPaper 4.34 11.19 PharmaAndBioTech 10.55 15.19IndustrialMetalsAndMining 6.08 21.88 Media n.m. 0.00ConstructionAndMaterials 8.66 4.90 TravelAndLeisure 53.59 1.86GeneralIndustries 5.25 7.55 FixedLineTelecommunication 9.79 9.21ElectronicsAndElectricalEquipments 30.67 3.25 Electricity 7.49 12.49IndustrialEngineering 7.09 39.73 GasWaterAndMultiutilities 4.17 21.22IndustrialTransportation 8.03 14.92 Banks 7.69 14.51SupportServices n.m. 0.00 NonLifeInsurance 7.48 10.99AutomobileAndParts 7.34 14.10 LifeInsurance 15.30 23.00Beverages 5.93 8.33 RealEstateInvestmentAndServices 1.77 8.41FoodProducers 26.16 66.63 FinancialServices n.m. 0.00HouseholdGoods 3.61 3.83 EquityInvestmentInstruments 6.66 7.95LeisureGoods n.m. 0.00 SoftwareAndComputerServices 1.74 28.52PersonalGoods 7.04 13.25 TechnologyHardwareAndEquipment n.m. 0.00

KSE100Index 9.34 19.54

Top20LiquidShares (m)LottePakistanPTALtd. 6.24JahangirSiddiqui&Co 5.60AzgardNineLimited 4.67BankAlFalah 2.35NIBBank 2.25BankOfPunjab 2.24D.G.KhanCement 1.78FaujiFertiliserBinQasim 1.61NationalBank 1.52ArifHabibCorporation 1.50NishatMills 1.46FaujiFertilizer 1.31PakistanReinsurance 1.23BycoPetroleum 1.16OGDC 1.14EngroCorporation 1.04PTCL 0.91PakistanOilfields 0.88HubPowerCompany 0.85TRGPakistanLimited 0.77

DreamworldLtd 0.04SecurityPapers 0.05HabibMetropolitanBank 0.08P.I.C.T 0.08

UnileverFoodsLtd 0.10ShifaInternationalHospitals 0.10RafhanMaize 0.10AttockPetroleumLtd 0.11EngroCorporation 0.12PakistanCables Limited 0.12ICIPakistan 0.13NetsolTechnologiesLimited 0.14PakistanTobaccoCompany 0.14AlliedBankLimited 0.16MariGasCompanyLimited 0.20ShellPakistan 0.20IGIInsurance 0.21AskariBankLimited 0.21FaujiFertiliserBinQasim 0.22IbrahimFibers 0.23

*growthtakenoverlast5years

20LowestPEGStocks*AzgardNineLimited 27.7%PakistanTelephoneCables 27.2%PakistanReinsurance 23.3%JahangirSiddiqui&Co 23.3%E.F.U.GeneralInsurance 22.3%P.I.C.T 21.2%

E.F.U.LifeAssurance 21.0%BankOfPunjab 20.9%GraysofCambridgePak 18.2%TRGPakistanLimited 10.5%GharibwalCement 35.1%AgritechLimited 14.4%LottePakistanPTALtd. 7.6%NetsolTechnologiesLimited 7.1%IbrahimFibers 6.6%SiemensEngineering 6.3%BestwayCement 6.2%PakSuzukiMotors 5.6%PacePakistanLimited 4.8%PakServices 4.8%

*Rel.PerfomancetakenoverMoM

10Highest/LowestRel .Perf.*


22

ECONOMICINDICATORS

FY04 FY05 FY06 FY07 FY08 FY09 FY10A/PNominal GDP(Rs bil l ions) 5533 6548 7195 8235 9922 12082 13844Real GDPGrowth(%) 6.4 8.4 5.8 6.8 3.7 1.2 4.1LargeScaleManufacturingGrowth(%) 18.2 15.4 8.3 8.7 4.0 (8.2) 4.4AgricultureGrowth(%) 2.2 7.5 6.3 4.1 1.0 4.0 2.0MajorCrops:Wheat(mtons) 19.5 21.6 21.6 23.3 21.0 24.0 23.9Cotton(mbales) 10.0 14.3 14.3 12.9 11.7 11.8 12.9Sugarcane(mtons) 53.4 47.2 47.2 54.7 63.9 50.0 49.4Rice(mtons) 4.8 5.0 5.0 5.4 5.6 7.0 6.9Services SectorGrowth(%) 6.0 7.9 6.5 7.0 6.0 1.6 4.6

Exports (US$millions) 12313 14391 16451 16976 19052 17688 19346Growth(%) 10.3 16.9 14.3 3.2 12.2 (7.2) 9.4Imports (US$mill ions) 15592 20598 28581 30540 39966 34822 34710Growth(%) 27.6 32.1 38.8 6.9 30.9 (12.9) (0.3)TradeBalance(US$mill ions) (3279) (6207) (12130) (13564) (20914) (17134) (15364)CurrentAccountBalance(US$mill ions) 280 (1070) (4990) (6878) (13874) (9261) (3495)

SBPForeignExchangeReserves (US$millions) 10326 9578 10836 14333 8745 9527 13112ExchangeRate(Rs perUS$) 57.6 59.4 59.9 60.6 62.5 78.5 83.8%change (1.6) 3.1 0.8 1.3 3.2 25.5 6.8

Total External Liabil ities (US$bill ions) 35.3 35.8 36.4 39.5 44.9 51.1 54.5DomesticDebt(Rs bil l ions) 1979 2129 2337 2610 3275 3861 4653ofwhich:Permanent(Rs bill ions) 537 501 500 553 608 678 794Floating(Rs bill ions) 543 778 941 1108 1637 1904 2399Unfunded(Rs bil l ions) 899 850 882 940 1020 1271 1456

TaxRevenue(Rs bil l ions) 510 590 704 840 1010 1252 1483BudgetaryExpenditures (Rs bil l ions) 899 1001 1196 1365 1921 2101 2577BudgetaryDeficit(%ofGDP) 2.3 3.3 4.3 4.4 7.6 5.3 6.3

BorrowingforBudgetarySupport(Rs bil l ions) 63.7 60.2 70.9 102.0 519.9 305.6 304.6CreditExpansion(%) 23.7 22.2 16.1 14.2 29.3 15.4 12.7M2Growth(%) 19.6 19.1 15.1 19.3 15.4 9.6 12.5

ConsumerPriceIndex(FY91=100) 4.6 9.3 7.9 7.8 12.0 20.8 11.7SensitivePriceIndex(FY91=100) 6.0 11.1 7.8 9.4 14.2 22.7 13.2Source:SBPAnnualReports

CORPORATEOFFICESuite#604,6thFloor,ProgressivePlaza,BeaumontRoad,Karachi,Pakistan.UAN:(021)111828787Fax:(92)02135686279

SyedZainHussain ChiefExecutiveOfficer [email protected] ChiefFinancialOfficer&CompanySecretary Ext:217 [email protected]

CORPORATESALESMuhammadAs i f Res identVice Pres ident(GroupChief) 35682690 as i fjan@taurus .com.pkM.AftabAlam SeniorManager 35212946 aftab.a lam@taurus .com.pkM.IrfanSurya SeniorManager 35673390 mirfan@taurus .com.pkFerozAhmed SeniorManager 35662817 feroz@taurus .com.pkTauseefLadak SeniorManager 35662731 tauseefladak@taurus .com.pkMuhammadUsmanAnsari SeniorManager 35215952 usman.ansari@taurus .com.pkKhurramRasheed Manager 35681420 khurram@taurus .com.pkSyedQulbeAbbas Manager 35684228 qulb.abbas@taurus .com.pkFahedFaza l Manager 35651128 fahed@taurus .com.pk

RESEARCH

SalmanRasheed HeadofResearch&InvestmentAdvisory Ext:202 sa lman@taurus .com.pkSaadNajafAl i Sayed SeniorEquityAnalyst Ext:203 saad@taurus .com.pkMohammadAl i Ghanghro EquityAnalyst Ext:202 m.al i@taurus .com.pkNabi l Saleh EquityAnalyst Ext:202 nabi l@taurus .com.pkShumai la Badar EquityAnalyst Ext:203 shumai la .badar@taurus .com.pk

PESHAWARBRANCH StateLifeBuilding,2ndFloor,24TheMall,PeshawarCantt.UAN(091)111828787Fax:(091)270063Abdul Bas it Res identRepresentative bas i t@taurus .com.pkM.Adeel EquitySales Officer adeelahmed@taurus .com.pkSai ful lah EquitySales Officer safiul lah@taurus .com.pk

HYDERABADBRANCH MezzanineFloor,GulCentre,FatimaJinnahRoad,CanttHyderabad.Ph:(022)92011979,Fax:(022)2786691SarfrazM.Akhund Res identRepresentative [email protected] EquitySales Officer info@taurus .com.pkAneel Shaikh EquitySales Officer ani l@taurus .com.pk

URL:http://www.taurus.com.pkEmail:[email protected]

AnalystCertificationWe,Salman RasheedandShumaila Badar, theauthorsof this report,herebycertify thatallof theviews expressedinthisresearchreportaccuratelyreflectourpersonalviewsaboutanyandallofthesubjectissuer(s)orsecurities.Wealsocertifythatnopartofourcompensationwas,is,orwillbedirectlyorindirectlyrelatedtothespecificrecommendation(s)orview(s)inthisreport.

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