k 7 4 s 0 e pakistan weekly update...

AKD Research [email protected]

+92-21-111-253-111

Weekly Review

The benchmark index went downhill in four of the five trading sessions, resultantly closing

the week at 41,742pts, down 1.99%WoW. Fearing gas price hike and its spillover effects on

industries, investor sentiments had turned negative even before the ECC meeting. An incon-

clusive outcome with regards to fertilizer inventories, circular debt clearance and postpone-

ment of gas price hike led to further selling in the mainboard sectors, ramping the index

down for rest of the week. Volumes however improved 19.1%WoW during the outgoing

week to daily average of 177.48mn shares, where volume leaders included 1) EPCL

(53.97mn shares), 2) NRSL (51.23mn shares), 3) AGL (43.86mn shares), 4) STPL (42.38mn

shares) and 5) UNITY (42.23mn shares). Other news highlights for the week included: 1)

World Bank delegation emphasizing that Pakistan needs to focus on private sector policies

for a longer time horizon to encourage private investors, while committing an indicative

financing of US$11bn in CAS’ 2014-19, 2) Moody’s identifying Pakistan as a country most

vulnerable to US$ appreciation, 3) Pakistan’s budget deficit widening to PkR2.26trn or 6.6%

of GDP in FY18, 4) Federal Cabinet setting up six committees to introduce reforms in differ-

ent sectors and to carve out a new province from Punjab and 5) recent data from EAD show-

ing that Pakistan has received US$439mn loans from various international lenders in Jul’18.

Performance leaders from AKD universe during the week were: 1) HASCOL (+3.16%WoW),

2) FFBL (+2.88%WoW), 3) NBP (+2.29%WoW) and 4) BAFL (+1.82%WoW); while laggards

included: 1) MLCF (-9.14%WoW), 2) CHCC (-9.06%WoW), 3) PIOC (-8.14%WoW), 4) LUCK (-

6.43%WoW) and 5) FFC (-5.97%WoW). Foreigners continued to offload their stake in do-

mestic equities with net outflow of US$10.0mn in the outgoing week.

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©2018 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-108

Find AKD research on Bloomberg

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

Policy focus particularly macro-economic framework ushered by PTI led set-up is the most important determinant of the market direction, in our view. In this regard, we look forward to the next ECC meeting (scheduled in the mid of week) where pending decisions on key areas (i.e. gas pricing and circular debt) would impact market accordingly. Moreover, a visit from US delegation led by Secretary of the State Mike Pompeo is of key strategic im-portance, where positive developments could improve investors’ confidence.

31 August 2018

Outlook

Index & Volume Chart

Source: PSX & AKD Research

Universe Gainers & Losers

42,746

42,544

42,249

41,864

41,742

41,200

41,400

41,600

41,800

42,000

42,200

42,400

42,600

42,800

43,000

-

30,000

60,000

90,000

120,000

150,000

180,000

210,000

27-Aug 28-Aug 29-Aug 30-Aug 31-Aug

(Index)(Shrs'000)

Ready Volume (LHS) KSE100 Index (RHS)

Top- 5 Volume Le a de rs

Symbol Volume (mn)

EPCL : 53.97

NRSL : 51.23

AGL : 43.86

STPL : 42.38

UNITY : 42.23


Indices KSE-100 KSE-30

This w eek 41,742 20,491

Last w eek 42,588 21,012

Indices KMI-30 Allshare

This w eek 70,817 30,654

Last w eek 72,970 30,890

Mkt Cap. PkRbn US$bn

This w eek 8,678 69.85

Last w eek 8,753 70.45

Avg. Daily Turnover ('mn shares)

This w eek 177.48

Last w eek 149.02

Change 19.10%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

HA

SCO

L

FFB

L

NB

P

BA

FL

APL

FFC

LUC

K

PIO

C

CH

CC

MLC

F

37,000

39,000

41,000

43,000

45,000

47,000

0

55

110

165

220

275

330

385

440

495

Aug

-17

Oct

-17

Nov-1

7

Dec-1

7

Feb-1

8

Mar-

18

Apr-

18

May-

18

Jul-18

Aug

-18

(Index)(share mn)

Volume (LHS) KSE-100 Index

AKD Securities Limited

31 August 2018

StockSmart


This Week’s Daily Reports

2

Aug 30, 2018

Pakistan Economy: Aug'18 CPI preview losing steam, (AKD Daily, Aug 31, 2018)

Breaking its monthly upward momentum, headline inflation for Aug'18 is expected to hover at the same levels as of last month, likely to be recorded at 5.86%YoY (vs. 5.83%/3.42%YoY

in Jul'18/Aug'17). On MoM basis, CPI index is expected to rise 0.22% vs. 0.94%MoM in Jul'18. Key contributor is anticipated to be the decline in oil prices (in the previous month)

by way of reduced sales tax, likely to pull down transportation index down 0.3%MoM. Addi-tionally, uptick in perishable food prices should be countered by seasonal fall in chicken and

fruits prices to restrict food index, rising only 0.42%MoM (vs. 0.63%MoM in Jul'18). That

said, keeping in view higher international oil prices and FX swings, inflationary pressures are likely to persist, where we estimate CPI to average out to 6.8%YoY in FY19F. However sea-

sonal dip in perishable food prices in winters is likely to set tone for CPI readings in 2HFY19. While the stance of new setup with regards to its willingness to push monetary policy to

counter inflation remains uncertain, an upward interest rate profile seems incontrovertible. In this backdrop, another +175bps hike remains on the table in FY19 with TR/DR ending at

9.25%/9.75%.

Pakistan Economy: Fiscal tweaks pose challenges, (AKD Daily, Aug 30, 2018)

Amongst the key challenges facing the newly formed government is an escalating fiscal defi-cit (6.6% of GDP for FY18 vs. 5.8% in FY17 – marking the highest ever quantum PkR2.26trn).

Riding on the populist wave of an election year, spillovers in provincial deficits (PkR22.4bn

deficit vs. budgeted surplus of PkR274bn) along with slippages in non-tax revenue (down 21%YoY) paved the way for a massive breach of the GoP's revised target of 5.6% of GDP. For

the PTI's economic policy set-up, enacting fiscal consolidation measures with the priorities of enhancing the tax base (currently less than 1%), while enacting austerity measures, limit-

ing subsidies and reviving sick units serve as key tenets to cut back on expenditures. Even so, burdened by inevitable debt servicing (PkR1.7trn in FY19) as well as defense spending

(PkR1.1trn), we maintain our fiscal deficit outlook (estimated at 5.4% of GDP vs. GoP target

of 4.9%). We highlight possible constraints on development spending as a clear detriment to foreseeable growth prospects, posing headwinds (for construction and allied industries).

PAEL: Power division remains a pain in 1HCY18, (AKD Daily, Aug 29, 2018)

Management of PAEL conducted an analyst briefing going over 1HCY18 operational parame-ters, coupled with guidance on CY18 results and outlook for additional business lines. Key

highlights were: 1) the company has issued gross sales guidance aiming to reach topline of

PkR44.95bn (+6%YoY) where tepid growth results from both segments undergoing height-ened competition, 2) power division continuing to lag, expected to constitute 32% of Gross

sales for CY18 arising from a slowdown in power transformer/energy meter/switchgear business revenues to punch through 2/3/6%YoY growth, and 3) incremental CAPEX to initi-

ate additional business lines in the appliances business, where PEL intends on expanding its brand to the mid-tier LED and washing machine segments. We retain a BUY stance on the

stock where at present levels the stock trades at CY18/19F P/E of 5.9/4.9x.

Pakistan Fertilizers: Strong Jul'18 draws inventory to 7yr low, (AKD Daily, Aug 28, 2018)

Pakistan's fertilizer offtake remained promising in Jul'18, courtesy of early monsoon rains that came to the rescue spurring a delayed lift-off for Kharif season demand amid water

scarcity. According to the latest NFDC read, total fertilizer sales in Jul'18 stood at 980k tons

against 746k tons sold in Jul'17 (up 31%YoY/12%MoM). In tandem, Urea/DAP offtakes have increased by 46%/7%YoY to 497/302k tons during the month under review. Similarly, CAN/

NP sales have also jumped by 83%/16%YoY to 99/56k tons in Jul'18. On a cumulative basis, total fertilizer sales posted nominal growth of 4%YoY to 5.06mn tons during 7MCY18 where

urea offtake climbed 6%YoY to stand at 3.22mn tons. Backed by continuous improvements in industry dynamics, the fertilizer sector has gained 21%CYTD, outperforming the KSE-100

index by +13% during FY18. With this impressive run-up in the backdrop, we assert a Market

-weight stance on the sector, where EFERT (TP of PkR87.8/sh) remains our top pick on an appealing dividend yield of ~11%, followed by FATIMA (TP of PkR45.1/sh).


Aug 29, 2018

Aug 31, 2018

Aug 27, 2018

Aug 28, 2018

41,550

41,600

41,650

41,700

41,750

41,800

41,850

41,900

41,950

42,000

42,050

9:1

5

9:3

8

10:0

2

10:2

5

10:4

9

11:1

2

11:3

6

11:5

9

12:2

3

12:4

6

13:0

9

13:3

3

13:5

6

14:2

0

14:4

3

15:0

6

15:3

0

15:5

4

16:1

7

41,600

41,700

41,800

41,900

42,000

42,100

42,200

42,300

9:3

0

9:5

3

10:1

7

10:4

0

11:0

4

11:2

7

11:5

1

12:1

4

12:3

8

13:0

1

13:2

5

13:4

8

14:1

2

14:3

5

14:5

9

15:2

2

42,100

42,159

42,218

42,277

42,336

42,395

42,454

42,513

42,572

42,631

9:3

0

9:5

3

10:1

7

10:4

0

11:0

3

11:2

7

11:5

0

12:1

4

12:3

7

13:0

1

13:2

4

13:4

8

14:1

1

14:3

5

14:5

8

15:2

2

42,500

42,550

42,600

42,650

42,700

42,750

42,800

42,850

9:3

0

9:5

5

10:2

0

10:4

5

11:0

9

11:3

4

11:5

9

12:2

4

12:4

8

13:1

3

13:3

7

14:0

2

14:2

7

14:5

1

15:1

6

42,590

42,630

42,670

42,710

42,750

42,790

42,830

42,870

42,910

9:3

0

9:5

5

10:2

0

10:4

4

11:0

9

11:3

4

11:5

8

12:2

3

12:4

8

13:1

3

13:3

7

14:0

2

14:2

7

14:5

1

15:1

6


31 August 2018

StockSmart


This Week’s Daily Reports

3

Pakistan Textiles: Sector update Jul'18, (AKD Daily, Aug 27, 2018)

Latest PBS data shows that country's export sector is facing headwinds from seasonal slow-down and softening commodity prices in international markets, with Jul'18 exports resting

at US$1.646bn (marginally up by 1.2%YoY). Amongst the major categories, food exports

were up 6.1%YoY to US$266mn (declining 16.3%MoM), while textile exports went down both on sequential and year-on-year basis, with group exports clocking in at US$1,002mn

(down 16.1%MoM/0.5%YoY). In the Textile group, double digit sequential decline in both value (16.0%MoM) and low value added (16.4%MoM) exports was primarily attributable to

softening final product prices and seasonal slowdown. On a cumulative basis, 7MCY18 tex-tile exports moved 8.1%YoY higher at US$7.90bn (vs. US$7.31bn in 7MCY17), while value

added exports inched up by 7.8%YoY to US$5.76bn. Low value added exports, which re-

mained largely sanguine in the 2HCY17, strongly recovered in 1HCY18 reaching US$2.13bn (up 9.7%YoY) in 7MCY18. Moving forward, we expect textile sector to benefit from flexible

exchange rate regime and continued gov't support in the form of export incentives. Howev-er, key structural challenges in the form of slow materialization of export package and ongo-

ing trade spat between global economic powers pose downside risk to export outlook.


31 August 2018

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

Regional Valuations (2018)

Source: AKD Research & Bloomberg

103.0

106.0

109.0

112.0

115.0

118.0

121.0

124.0

127.0

130.0

Aug-1

7

Sep-1

7

Oct-17

Nov-

17

Dec-

17

Jan-1

8

Feb

-18

Mar-

18

May-

18

Jun-1

8

Jul-18

Aug-1

8

SPOT Units 31-Aug-18 24-Aug-18 WoW CYTD

TRJ-CRB Points 192.8049 192.0795 0.38% -0.55%

Nymex (WTI) US$/bbl. 69.77 68.72 1.53% 15.48%

ICE Brent US$/bbl. 77.09 75.01 2.77% 15.37%

N. Gas Henry Hub US$/Mmbtu 2.95 2.99 -1.34% -16.66%

Cotton USd/Pound 92.65 91.4 1.37% 3.40%

Gold US$/Tr.Oz 1203.79 1205.9 -0.17% -7.62%

Sliver US$/Tr.Oz 14.6012 14.815 -1.44% -13.81%

Copper US$/MT 6062.5 6091.5 -0.48% -15.88%

Platinum US$/Oz 795.68 791.5 0.53% -14.49%

Coal US$/MT 99.6 99.45 0.15% 4.62%

SPOT 31-Aug-18 24-Aug-18 Chg +/- WoW CYTD

Dollar Index 94.783 95.146 -0.363 -0.38% 2.89%

USD/PkR 124.249 124.225 0.024 0.02% 12.49%

USD/JPY 110.860 111.240 -0.380 -0.34% -1.62%

EUR/USD 1.165 1.162 0.003 0.25% -2.95%

GBP/USD 1.298 1.285 0.014 1.05% -3.94%

AUD/USD 0.723 0.733 -0.010 -1.41% -7.47%

NZD/USD 0.663 0.667 -0.004 -0.54% -6.54%

CHF/USD 0.968 0.984 -0.015 -1.57% -0.64%

CAD/USD 1.300 1.303 -0.002 -0.17% 3.44%

USD/KRW 1,113 1,119 -6.100 -0.55% 3.95%

CNY/USD 6.838 6.811 0.027 0.40% 5.08%

Country Bloomberg Code 31-Aug-18 24-Aug-18 WoW CYTD

Pakistan KSE100 Index 41,721 42,588 -2.04% 3.1%

Srilanka CSEALL Index 6,080 6,053 0.46% -4.5%

Thailand SET Index 1,722 1,704 1.04% -1.8%

Indonesia JCI Index 6,018 5,969 0.83% -5.3%

Malaysia FBMKLCI Index 1,820 1,809 0.61% 1.3%

Philippines PCOMP Index 7,856 7,766 1.15% -8.2%

Vietnam VNINDEX Index 990 987 0.25% 0.5%

Hong Kong HSI Index 27,889 27,672 0.78% -6.8%

Singapore FSSTI Index 3,213 3,213 0.01% -5.6%

Brazil IBX Index 31,465 31,382 0.26% -0.5%

Russia RTSSTD Index 15,533 15,169 2.40% 13.6%

India SENSEX Index 38,645 38,252 1.03% 13.5%

S&P SPX Index 2,901 2,875 0.92% 8.5%

DJIA INDU Index 25,987 25,790 0.76% 5.1%

UK UKX Index 7,485 7,577 -1.23% -2.6%

Germany DAX Index 12,395 12,395 0.00% -4.0%

Qatar DSM Index 9,886 9,448 4.64% 16.0%

Abu Dhabi ADSMI Index 4,987 4,885 2.09% 13.4%

Dubai DFMGI Index 2,840 2,816 0.87% -15.7%

Kuwait KWSEIDX Index 6,633 6,633 0.00% 3.5%

Oman MSM30 Index 4,419 4,390 0.66% -12.4%

Saudi Arabia SASEIDX Index 7,948 7,867 1.03% 9.9%

MSCI EM MXEF Index 1,058 1,050 0.73% -8.7%

MSCI FM MXFM Index 536 551 -2.80% -15.9%

EPS Growth PE(x)

Pakistan 20.38% 7.14

Indonesia 10.12% 14.49

Malaysia 12.95% 13.79

Philippines 7.90% 16.36

Vitenam 13.10% 16.11

India 19.95% 17.21

China 13.53% 9.60

% ROE Divd Yld

Pakistan 16.0% 6.87

Indonesia 15.24 2.51

Malaysia 10.45 3.28

Philippines 11.69 1.76

Vitenam 19.27 1.59

India 15.26 1.60

China 12.38 3.22

175

178

181

184

187

190

193

196

199

202

205

208

Aug-1

7

Oct-17

Nov-

17

Dec-

17

Jan-1

8

Feb

-18

Mar-

18

Apr-

18

May-

18

Jun-1

8

Jul-18

Aug-1

8

5


31 August 2018

StockSmart


Chart Bank

FIPI Flows for the week

Advance to Decline Ratio

AKD Universe vs. KSE-100 Index

LIPI Flows for the week

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

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

-15%

-10%

-5%

0%

5%

10%

15%

20%

Au

g-1

7

Oct

-17

No

v-1

7

De

c-1

7

Jan

-18

Fe

b-1

8

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

KSE100 MSCI EM

MSCI FM

(666)

(1,868)

(3,804)

(3,032)

(631)

(4,000)

(3,500)

(3,000)

(2,500)

(2,000)

(1,500)

(1,000)

(500)

-

27-Aug-18 28-Aug-18 29-Aug-18 30-Aug-18 31-Aug-18

(US$'000)

-1.70

-1.30

-0.90

-0.50

-0.10

0.30

0.70

1.10

Au

g-17

Sep

-17

Oct

-17

No

v-17

Dec

-17

Jan-

18

Feb

-18

Mar

-18

Mar

-18

Ap

r-18

May

-18

Jun

-18

Jul-

18

Au

g-18

(%)

Ind., 0.76

Co., 0.96

Bank/DFI, 0.06

NBFC, (1.00)

M.Funds, (0.12)

Ins, 8.38

Others, 1.43

Prop. Trading , (0.48) (2.00)

-

2.00

4.00

6.00

8.00

10.00

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

Aug-1

7

Sep-1

7

Oct

-17

Oct

-17

Nov-1

7

Dec-1

7

Dec-1

7

Jan-1

8

Jan-1

8

Feb

-18

Ma

r-1

8

Ma

r-1

8

Apr-

18

Ma

y-18

Ma

y-18

Jun-1

8

Jun-1

8

Jul-1

8

Aug-1

8

Aug-1

8

-32%

-27%

-22%

-17%

-12%

-7%

-2%

3%

Au

g-1

7

Sep

-17

Oct

-17

De

c-1

7

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

KSE-All Share Index AKD Universe

6

AKD Securities Limited StockSmart


Market PER Chart 2018

Source: AKD Research

Market P/BVS Chart 2018


31 August 2018

Jul-

07

Ma

r-08

De

c-08

Sep

-09

Jun

-10

Ma

r-11

De

c-11

Sep

-12

Ma

y-1

3

Feb

-14

No

v-1

4

Au

g-1

5

Ma

y-1

6

Feb

-17

No

v-1

7

Au

g-1

8

14.0

10.5

7.0

3.5

(x)

Jul-

07

Ma

r-08

De

c-08

Sep

-09

Jun

-10

Ma

r-11

De

c-11

Sep

-12

Ma

y-1

3

Feb

-14

No

v-1

4

Au

g-1

5

Ma

y-1

6

Feb

-17

No

v-1

7

Au

g-1

8

2.5

2.0

1.5

1.0

(x)

31-Aug-18 2016 2017 2018F 2019F 2020F

EPS (PkR) 7.59 7.21 8.11 9.39 11.52

EPS chg (%) (0.50) (4.91) 12.38 15.77 22.72

EPS chg (%) ex-E&P 19.21 (15.73) 8.76 8.97 36.45

Book Value per Share (PkR) 43.02 46.52 51.43 56.37 62.79

Payout (%) 49.14 47.88 51.06 51.95 44.80

Valuations

Price to Earnings (x) 8.83 9.28 8.26 7.14 5.81

PER (ex-E&P) (x) 7.25 8.61 7.91 7.26 5.32

Price to Book (x) 1.56 1.44 1.30 1.19 1.07

Price to CF (x) 10.82 12.57 8.67 8.58 7.03

Earnings Yield (%) 11.33 10.77 12.11 14.02 17.20

Dividend Yield (%) 5.57 5.16 6.18 7.28 7.70

EV / EBITDA (x) 5.77 5.91 5.56 4.91 4.39

Profitability

Return on Equity (%) 17.64 15.51 15.76 16.65 18.34

Return on Assets (%) 3.58 2.96 3.22 3.43 3.86

Chg in Sales (%) (14.06) 18.71 11.99 12.01 8.74

Gross Margin (%) 32.87 35.23 35.47 35.79 35.70

Operating Margin (%) 22.03 25.40 26.02 26.61 26.51

Net Margin (%) 15.65 12.53 12.58 13.00 14.67

AKD Universe Valuations


7



AKD Universe Active Coverage Cluster’s Valuations

31 August 2018

Source: AKD Research UR Under Review

Stock Symbol Price TP Stance EPS(PkR) PE(x) PB(x) DY(%)

(PkR) (PkR) 17 18F 19F 17 18F 19F 17 18F 19F 17 18F 19F

Automobile and Parts

Indus Motors INDU 1,513.21 2,191.48 Buy 165.41 188.74 199.71 9.15 8.02 7.58 3.81 3.24 2.79 7.60 7.80 8.26

Pak Suzuki Motors PSMC 283.25 610.01 Buy 46.49 44.38 59.03 6.09 6.38 4.80 0.79 0.74 0.67 6.57 6.35 8.47

Cements

DG Khan Cement DGKC 112.76 118.00 Neutral 18.20 18.52 15.10 6.19 6.09 7.47 0.66 0.61 0.59 6.65 6.65 5.32

Lucky Cement LUCK 540.78 666.00 Buy 42.34 39.21 32.51 12.77 13.79 16.63 2.19 2.10 1.95 2.22 2.22 1.85

Maple Leaf Cement Factory MLCF 52.29 65.00 Buy 8.05 6.39 5.10 6.50 8.18 10.25 1.31 0.96 0.82 6.37 10.84 5.74

Fauji Cement Company Ltd. FCCL 24.62 26.00 Accumulate 1.89 2.03 1.95 13.00 12.11 12.62 1.73 1.60 1.60 3.66 7.11 7.11

Pioneer Cement Limited PIOC 46.02 70.00 Buy 12.84 6.96 6.39 3.58 6.61 7.20 0.85 0.80 0.76 11.95 8.15 7.61

Cherat Cement Co Limited CHCC 85.07 88.00 Neutral 11.08 12.58 7.27 7.68 6.76 11.71 1.44 1.28 1.21 3.15 3.53 3.53

Gharibwal Cement Ltd GWLC 20.64 36.00 Buy 5.71 3.32 2.25 3.62 6.22 9.19 0.73 0.68 0.69 14.53 15.75 6.06

Cable & Electrical Goods

Pak Elektron Ltd PAEL 33.99 51.70 Buy 6.65 6.08 7.57 5.11 5.59 4.49 0.63 0.59 0.54 7.94 7.06 8.83

Engineering

Amreli Steels Ltd. ASTL 77.46 117.00 Buy 3.62 4.82 11.17 21.42 16.07 6.93 2.06 1.82 1.50 2.58 2.58 6.45

Fertilizers

Engro Corporation ENGRO 328.96 348.84 Accumulate 20.47 21.56 27.91 16.07 15.26 11.79 2.08 2.05 1.97 6.38 6.08 6.69

Engro Fertilizers Limited EFERT 78.94 87.75 Accumulate 8.35 9.40 10.25 9.45 8.40 7.70 2.48 2.41 2.34 10.77 10.72 11.69

Fauji Fert. Bin Qasim Ltd. FFBL 41.47 48.10 Accumulate 2.03 2.60 2.79 20.39 15.94 14.86 2.88 2.67 2.48 2.05 5.02 5.38

Fauji Fertilizer Company FFC 97.49 104.57 Accumulate 8.42 8.75 10.22 11.58 11.14 9.54 4.23 3.76 3.58 7.18 8.04 9.13

Fatima Fertilizer FATIMA 33.71 45.11 Buy 5.06 5.44 6.00 6.66 6.20 5.62 1.30 1.20 1.11 - 11.29 12.46

Food Producers

Engro Foods Limited EFOODS 88.96 84.20 Reduce 0.75 1.19 1.22 118.91 74.50 72.73 3.69 3.49 3.27 - - -

Oil & Gas

Oil & Gas Development Co. OGDC 152.46 217.00 Buy 14.83 18.53 23.68 10.28 8.23 6.44 1.28 1.16 1.04 3.94 4.26 5.41

Pak Oilfields POL 643.26 676.29 Accumulate 40.46 47.83 73.47 15.90 13.45 8.76 4.83 4.65 4.00 6.22 6.53 9.72

Pakistan Petroleum PPL 208.30 276.00 Buy 18.10 21.62 29.45 11.51 9.64 7.07 1.90 1.71 1.51 4.32 5.04 6.48

Hascol Petroleum HASCOL 302.39 317.69 Accumulate 13.61 17.46 22.39 22.22 17.32 13.51 5.92 5.11 4.42 2.89 3.72 5.21

Attock Petroleum APL 619.92 724.84 Accumulate 63.89 73.88 80.18 9.70 8.39 7.73 3.16 3.02 2.88 6.86 10.49 11.29

Pakistan State Oil PSO 343.58 399.08 Accumulate 55.90 53.54 58.22 6.15 6.42 5.90 1.09 1.01 0.93 6.06 7.86 8.73

Power

Hub Power Co. HUBC 96.39 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

K-Electric Co. KEL 5.42 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Kot Addu Power Company KAPCO 56.73 64.38 Accumulate 10.73 11.09 10.79 5.29 5.12 5.26 1.54 1.47 1.42 15.95 16.75 16.31

Personal Goods

Nishat Mills NML 135.45 169.10 Buy 12.12 15.48 18.09 11.17 8.75 7.49 0.54 0.52 0.49 3.69 5.17 6.09

Nishat Chunian Ltd. NCL 50.66 57.15 Accumulate 6.75 5.48 7.60 7.51 9.25 6.67 1.01 0.96 0.87 5.43 4.44 5.92

Banks

Allied Bank Limited ABL 105.05 100.69 Neutral 11.29 12.77 14.93 9.31 8.22 7.04 1.13 1.07 1.00 6.66 7.62 8.57

Bank AlFalah BAFL 57.08 55.16 Neutral 5.30 6.39 6.84 10.78 8.93 8.34 1.38 1.26 1.12 2.63 2.63 2.63

Habib Bank Limited HBL 151.03 237.30 Buy 5.54 19.74 23.41 27.25 7.65 6.45 1.17 1.06 0.95 5.30 4.63 9.27

MCB Bank Limited MCB 201.23 253.88 Buy 18.53 18.82 23.30 10.86 10.69 8.64 1.52 1.44 1.38 7.95 7.95 8.45

National Bank of Pakistan NBP 52.34 71.15 Buy 10.97 9.86 10.61 4.77 5.31 4.93 0.62 0.50 0.47 - 10.51 16.24

United Bank Ltd UBL 158.03 253.30 Buy 21.39 16.58 23.62 7.39 9.53 6.69 1.11 1.07 1.02 8.23 8.86 8.86

8


31 August 2018

StockSmart


AKD Universe Coverage Cluster’s Performance


Stoc ks Symbol Pric e 1 Ye a r 1 Ye a r

3 1- Aug- 18 1M 3 M 6 M 12 M CYTD High Low

KSE- 10 0 Inde x 4 1,7 4 2 .2 4 - 2 .3 - 2 .6 - 3 .5 1.3 3 .1 4 6 ,6 3 7 .6 3 7 ,9 19 .4

Automobile a nd Pa rts

Indus Motors INDU 1513.21 9.4 - 4.2 - 12.0 - 13.3 - 9.9 1941.95 1251.61

Pak Suzuki Motors PSMC 283.25 - 17.7 - 38.4 - 40.4 - 36.9 - 43.1 566.60 282.79

Ce me nts

DG Khan Cement DGKC 112.76 - 2.0 - 10.8 - 21.5 - 27.5 - 15.7 171.58 91.54

Lucky Cement LUCK 540.78 - 1.9 - 1.0 - 10.0 - 9.4 4.5 723.19 445.80

Maple Leaf Cement Factory MLCF 52.29 - 3.4 - 18.8 - 22.5 - 43.2 - 23.6 95.58 39.90

Fauji Cement Company Ltd. FCCL 24.62 1.6 - 2.0 - 1.4 - 28.2 - 1.6 35.21 19.24

Pioneer Cement Limited PIOC 46.02 - 9.6 - 10.7 - 29.5 - 53.8 - 27.1 99.54 39.59

Cherat Cement Limited CHCC 85.07 - 8.3 - 24.8 - 32.6 - 39.7 - 23.3 141.15 80.79

Gharibwal Cement Limited GWLC 20.64 - 8.1 - 5.8 - 19.7 - 43.5 - 14.4 37.75 18.38

Engine e ring

Amreli Steel Ltd ASTL 75.02 - 4.4 - 7.4 - 18.6 - 21.7 - 19.0 106.06 54.40

Fe rtilize rs

Dawood Hercules DAWH 113.04 - 3.1 - 6.6 - 6.6 - 5.0 1.0 137.58 99.49

Engro Fertilizers Ltd. EFERT 78.94 - 0.2 6.2 14.1 46.5 16.6 82.36 54.91

Engro Chemical ENGRO 328.96 - 2.7 6.8 9.4 16.0 19.7 350.22 253.43

Fatima Fertilizer FATIMA 33.71 - 3.7 18.4 8.7 17.9 9.2 35.90 26.83

Fauji Fert. Bin Qasim Ltd. FFBL 41.47 4.9 5.1 14.1 23.7 16.7 44.81 32.30

Fauji Fertilizer Company FFC 97.49 - 2.1 - 0.8 9.9 37.6 23.2 103.68 70.86

Food Produc e rs

Engro Foods Limited EFOODS 88.96 - 2.6 - 7.5 1.4 3.3 10.8 105.73 70.19

Ca ble & Ele c tric a l Goods

Pak Elektron Limited PAEL 33.99 - 11.3 - 11.7 - 30.4 - 53.7 - 28.4 77.97 31.82

Oil & Ga s

Oil & Gas Development Co. OGDC 152.46 0.8 - 6.1 - 6.6 8.1 - 6.3 177.31 141.10

Pak Oilfields POL 643.26 - 2.9 - 5.2 3.0 33.9 8.2 707.34 462.18

Pakistan Petroleum Ltd. PPL 208.30 - 2.5 - 2.8 2.2 26.1 1.2 222.96 165.15

Pakistan State Oil PSO 343.58 5.4 7.5 15.4 - 18.2 17.2 459.31 265.17

Attock Petroleum Ltd. APL 619.92 11.7 3.4 9.8 - 2.4 18.5 644.75 490.02

Hascol Petroleum HASCOL 302.39 - 1.7 - 1.5 11.5 - 4.6 22.4 322.42 211.63

Powe r

Hub Power Co. HUBC 92.38 - 3.7 - 6.5 - 5.8 - 18.3 1.5 117.46 87.19

K- Electric Limited KEL 5.31 - 1.3 - 10.6 - 14.5 - 12.7 - 15.8 7.11 5.14

Kot Addu Power Company KAPCO 56.73 0.4 - 3.1 - 5.1 - 22.1 5.3 77.44 49.39

Pe rsona l Goods

Nisaht (Chunian) Ltd. NCL 50.66 - 0.9 0.2 2.2 - 3.0 10.7 62.35 43.70

Nishat Mills NML 135.45 - 1.9 - 6.5 - 15.1 - 5.2 - 9.4 171.56 126.05

Ba nks

Allied Bank Limited ABL 105.05 - 1.3 8.2 14.2 20.9 23.6 109.95 76.72

Bank AlFalah BAFL 57.08 0.4 8.3 20.6 42.1 34.3 58.94 38.15

Habib Bank Limited HBL 151.03 - 15.0 - 11.8 - 27.5 - 15.0 - 9.6 218.99 151.03

MCB Bank Limited MCB 201.23 - 2.9 - 1.4 - 7.9 4.0 - 5.2 236.56 189.90

National Bank of Pakistan NBP 52.34 4.2 5.7 11.8 - 5.7 7.8 60.14 43.01

United Bank Ltd UBL 158.03 - 9.9 - 6.6 - 16.2 - 15.1 - 15.9 215.16 152.57

Absolute Pe rforma nc e (%)

9


31 August 2018

StockSmart


Economic Snapshot

Source: SBP, PBS & AKD Research

End Month Data Units Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18

Monetary Rates

T-Bills - 3M % 5.99 5.99 5.99 6.21 6.26 6.26 6.24 6.26 6.76

T-Bills - 6M % 6.01 6.01 6.01 n.a n.a n.a 6.35 6.35 6.85

T-Bills - 12M % 5.91 5.91 5.92 n.a n.a n.a n.a n.a n.a

PIB 10Y % n.a n.a n.a n.a n.a n.a n.a n.a n.a

KIBOR 6M % 6.17 6.18 6.21 6.23 6.44 6.51 6.25 6.34 6.73

Discount rate % 6.25 6.25 6.25 6.5 6.5 6.5 6.5 6.5 6.5

Policy rate % 5.75 5.75 5.75 6.0 6.0 6.25 6.00 6.00 6.00

Inflation

Headline inflation % 3.8 4.0 4.6 4.4 3.8 3.2 3.7 4.2 5.2

Core inflation % 5.3 5.5 5.5 5.2 5.2 5.8 7.0 7.0 7.1

Food inflation % 2.2 2.4 3.8 3.7 2.2 0.1 (0.20) 1.0 3.0

External Indicators

Export (PBS) US$ (mn) 1,888 1,974 1,977 1,971 1,902 2,231 2,133 2,144 n.a

Import (PBS) US$ (mn) 4,929 4,898 4,910 5,607 4,797 5,280 5,066 5,814 n.a

Trade Deficit (PBS) US$ (mn) (3,041) (2,924) (2,933) (3,636) -2,895 -3,049 1947 1934 n.a

Export (SBP) 2,380 2,546 2,464 2,111 2,059 2,305 2,246 2,266 n.a

Import (SBP) 5,258 5,346 5,140 4874 4,334 4,943 4,949 5,149 n.a

Trade Deficit (SBP) (2,878) (2,800) (2,676) (2,763) (2,275) (2,638) (2,703) (2,883) n.a

Home Remittances US$ (mn) 1,654 1,577 1,724 1,639 1,672 n.a 1,651 1,771 n.a

Current Account US$ (mn) (1,315) (1,441) (1,256) -1,617 -1,241 1,160 1947 1934 n.a

Banking Sector

Deposits PkR (bn) 11,777 11,969 12,362 12,002 11,933 12,571 12,277 12,258 13,063

Advances PkR (bn) 6,151 6,280 6,530 6,556 6,629 6,812 6,839 7,046 7,362

Investments PkR (bn) 8,342 8,475 8,542 7,637 8,127 6,853 7,784 6,733 8,179

W. A. lending rate % 7.82 7.81 7.74 7.72 7.99 7.60 7.75 7.74 n.a

W. A. deposit rate % 2.91 2.91 2.89 2.89 2.92 2.95 2.91 2.92 n.a

Spread rate % 4.90 4.90 4.85 4.83 5.07 4.65 4.84 4.83 n.a

Public Finance

Tax collection PkR (mn) 541,120 547,902 841,472 546,994 527,652 720,486 n.a n.a n.a

Direct taxes PkR (mn) 270,560 273,951 420,736 273,497 263,826 360,243 n.a n.a n.a

Indirect Taxes PkR (mn) 270,560 273,951 420,736 273,497 263,826 360,243 n.a n.a n.a

Currency

Fx Reserves US$ (mn) 19,584 18,774 20,154 18,957 18,317 17,796 17,540 15,977 16,386

USDPkR - Interbank PkR/USD 105.41 105.44 109.13 110.53 110.55 111.73 115.60 115.61 119.57

10



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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 personal 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

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

Haris Imtiaz +92 111 253 111 (639) [email protected] Economy

Ali Asghar Poonawala +92 111 253 111 (646) [email protected] OMCs & Automobiles

Waqas Imdad Ali +92 111 253 111 (634) [email protected] Cements & Fertilizer

M.Daniyal Kanani +92 111 253 111 (602) [email protected] Oil & Gas & Power

Umer Farooq +92 111 253 111 (637) [email protected] Textiles & Steel

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

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

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

31 August 2018

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