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AKD Research [email protected]

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Weekly Review

A volatile week for the market where the KSE-100 index touched a low/high of 37,101.3/38,564.4pts closing at 37,926pts driven by expectations surrounding monetary poli-

cy with further assistance gained from release of current account position. To recall, the coun-try posted US$99mn current account surplus in Oct’19 after a gap of more than four years (4MFY19: US$1.5bn vs. US$5.6bn in the corresponding period last year). Expectations of rate

cut died soon as the latest TBill auction witnessed a marginal uptick in yields (3M/12M: +30/46bps). Amongst other news flows, i) Former PM was allowed to travel abroad for treat-

ment, and ii) rebuttal by FBR chief on news flows suggesting IMF accepting Government de-mands of downward revision in revenue targets. Volumes remained healthy with ADT stand-

ing at 330.9mn vis-à-vis 311.2mn shares in the previous week with volume leaders being, i) BOP (103.65mn shares), ii) KEL (88.54mn shares), iii) PAEL (72.22mn shares), iv) TRG (64.90mn

shares), and v) FCCL (49.47mn shares). Amongst major sectors, a pullback was witnessed in Automobile (+3.1%WoW) and related sectors (+7.8%WoW), followed by Power (+3.1% on possible issuance of power sukuk for resolution of circular debt after getting approval for in-

crease in Government guarantee limit by the IMF) and Fertilizers (+1.7%WoW). Inflows from Foreigners (US$8.4mn) together with net buy of Individuals (US$11.9mn) absorbed selling by

Banks and Others (c. US$17.3mn) and Insurance (US$2.62mn). Top performers in AKD Uni-verse were, i) GWLC (+10.32%WoW), ii) EFERT (+9.34%WoW), iii) HUBC (+7.41%WoW), iv) FFC

(+6.31%WoW), and v) PSO (+4.87%WoW), while laggards were, i) CHCC (down 8.17%WoW), ii) FFBL (down 6.51%WoW), iii) FCEPL (down 5.58%WoW), iv) PSMC (down 4.85%WoW), and v)

MLCF (down 3.44%WoW).

StockSmart

AKD Equity Research / Pakistan

Pakistan Weekly Update

Important disclosures including investment banking relationships and analyst certification at end of this report. AKD Securities does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.

Important disclosures

Copyright©2019 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

In the recent monetary announcement, SBP decided to maintain ‘Status Quo’, keeping the policy rate at 13.25% foreseeing inflationary pressures in the short term in line with our expec-tation. Resultantly, investors’ focus could again shift on the banking sector stocks (down 0.5%WoW, impetus could be provided by higher Nov’19 inflation expectation) while a slight sell-off could be witnessed in leveraged plays. From a market perspective, volatility could be wit-nessed in the upcoming week given upbeat investor sentiment and general phenomena of a roll-over weak acting together. Hence, any weakness should be taken as an opportunity to build positions.

22 November 2019

Outlook

Index & Volume Chart

Source: PSX & AKD Research

Universe Gainers & Losers

38,412

38,564

38,038

37,101

37,926

36,000

36,500

37,000

37,500

38,000

38,500

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-

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18-Nov 19-Nov 20-Nov 21-Nov 22-Nov

(Index)(Shrs'000)

Ready Volume (LHS) KSE100 Index (RHS)

Top-5 Volume Leaders

Symbol Volume (mn)

BOP : 103.65

KEL : 88.54

PAEL : 72.22

TRG : 64.90

FCCL : 49.47


Indic e s KSE- 10 0 KSE- 3 0

This week 37,926 17,531

Last week 37,584 17,341

Change 0.91% 1.10%

Indic e s KMI- 3 0 Allsha re

This week 61,514 26,859

Last week 61,221 26,714

0.48% 0.54%

Mkt Ca p. PkRbn US$ bn

This week 7,248 46.67

Last week 7,215 46.43

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

This week 330.93

Last week 311.17

Change 6.4%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

GW

LC

EFER

T

HU

BC

FFC

PSO

MLC

F

PSM

C

FCEP

L

FFB

L

CH

CC

28,000

30,000

32,000

34,000

36,000

38,000

40,000

42,000

44,000

0

100

200

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400

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600

Nov

-18

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-18

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19

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-19

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-19

May

-19

Jun-

19

Jul-1

9

Aug

-19

Sep

-19

Oct

-19

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-19

(Index)(share mn)

Volume (LHS) KSE-100 Index

AKD Securities Limited

22 November 2019

StockSmart


This Week’s Daily Reports

2

Pakistan Economy: Tomato-flation kills early easing prospects!, (AKD Daily, Nov 22, 2019)

The Monetary Policy Committee of the SBP – scheduled to meet later today – is likely to keep policy rate on hold, considering weak FX buffers (import cover of mere 1.8months, estimated NIR: -US$13.2bn) and elevated inflation readings over the medium term (next 3M avg. CPI: 11.81%YoY).

For Nov’19, we expect the National CPI inflation to jump to 12.34%YoY vs. 11.04%YoY in Oct’19 and 5.70% in Nov’18. This is primarily driven by food inflation (18.5%YoY) and reversal of high base effect, where the former rises following an exorbitant increase in tomato and flour prices due to supply shock (cumulatively contributing 61% in sequential increase).

While the latest trends indicate a reversal in tomato and flour prices following the authorities’ intervention, near term inflation outlook depends on how quickly the impact of supply shock fades away. We project headline inflation to remain elevated over the medium term (next 3M avg. CPI: 11.81%) aided both by soft base and monthly utility price adjustments.

Pakistan Cement: FO generation is back in the game, (AKD Daliy, Nov 21,2019)

Domestic FO prices are falling in-line with global trends as IMO2020 imparts its magic, capping the allowed limit of sulfur in shipping fuels to 0.5% against previous limit of 3.5%, resulting in expected decline in global demand to 1.55mnbpd against 2.86mnbpd in CY19.

This decline is causing a shift in power generation preferences where FO based power genera-tion now stands cheaper than the grid while closely competing with natural gas. We opine, a continued decline in FO prices can allow power generation on FO to be cheaper than natural gas.

For cement manufacturers, Punjab-based players can turn out to be significant beneficiaries in the current scenario, where increasing RLNG prices forced them to prefer the grid. We esti-mate DGKC to save PkR8/bag on production at Kalar Kahar while MLCF and FCCL are expected to save PkR3/bag.

Among other potential beneficiaries, we highlight LUCK’s Pezu’s plant and DGKC’s South palnt with the former expected to face gas shortages in winter while for latter, decreasing FO prices can result in FO based power generation being cheaper than KE tariff.

In this backdrop, we believe players like LUCK, MLCF and DGKC will continue to enjoy an ad-vantage over others after already selling well above their capacity based shares in 1QFY20, capitalizing on low cost of production in an environment of price competition where decline in FO prices can provide further impetus to these players.

Pakistan Energy: HSFO cracks tank HSD MS make a comeback, (AKD Daily, Nov 20, 2019)

Oct’19 rounds out the culmination of a watershed mark for international refining margins, with MS/HSD/HSFO crack to Arab Light for the month averaging US$+3.90/+11.39/-18.82/bbl below vs. 1QFY20 averages +3.2/+11.5/-6.5/bbl where HSFO shows a clear break downward as IMO 2020 rules and slowing demand from marine bunkering worsen cracks

FY20TD average cracks of light distillates HSD/MS averaging at US$+11.5/+3.5/bbl firming their spreads (vs. 4QFY19 average of +8.9/+1.7/bbl) and HSFO cracks worsening to average -9.56/bbl (vs. 4QFY20 average of -9.4/bbl) tanking to US$-18.8/bbl below Arab Light crude during Oct’19, contrasting the significant divergence between light vs. heavy distillate prices

Crude prices have remained tethered to a narrow threshold of US$55-65/bbl while recovering sharply from any supply shocks as excess capacity in OPEC markets, heightened trade tensions and soft demand from emerging markets keep oil markets slightly over supplied

Monitoring the impact of IMO 2020 through HSFO 180 CST commodity futures contracts we highlight the significant downtrend indicated by lower HSFO futures prices for delivery con-tracts during 1QFY20 (lower by US$101.3/mt on average) extending to CY20, indicating a peri-od of extended decline in soon to be phased out, high Sulphur variant of FO still used for pow-er generation domestically (see: IMO-2020 can be a 'lucky break' for FO IPPs, Mar 28, 2019)

While refiners remain on the firing block (downtrend in GRMs for FO), based on its slow and steady operational performance (holding on to market share), we believe APL can capitalize on a possible revival in private sector (captive power) and IPP bulk sales.

Nov 22, 2019

Nov 21, 2019

Nov 20, 2019

Nov 19, 2019

Nov 18,2019

36,800

37,000

37,200

37,400

37,600

37,800

38,000

38,200

9:3

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15:2

4

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37,800

37,890

37,980

38,070

38,160

38,250

38,340

38,430

38,520

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0

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36,800

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0

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15:0

7

15:3

1

15:5

4

16:1

8


22 November 2019

StockSmart


This Week’s Daily Reports

3

Pak Economy: Current Account gives a green light to Macro Consolidation, (AKD Daily, Nov 19, 2019)

Latest SBP data on external account show marked improvement in the current account bal-ance, with the country running a current account surplus of US$99mn in Oct’19 after 49months compared to CAD of US$284mn in the preceding month and US$1,280mn in Oc-t’18.

Encouragingly, unlike the past few months where YoY deficit reduction was primarily import led, the Oct’19 improvement in current account balance was driven both by i) export growth (+10%YoY) and ii) import contraction (-21%YoY).

While the current account balance improved sequentially (CA surplus of US$99mn in Oct’19 vs. CA deficit of US$284mn in Sep’19), the underlying trends (goods/services imports: up 9%/34%MoM) seem to suggest the course correction has reached its bottom, thus sustaina-bility of current trend is highly dependent on exports and remittances.

The actual monthly CAD run rate of US$368mn in 4MFY20 remains significantly below our earlier expectations of US$616 per month. At this rate, full-year CAD would be around US$4.42bn (1.7% of GDP) well below the GoP’s target of 3% of GDP and the IMF’s projection of 2.6% of GDP. We look forward to detailed trade data to revise our full CAD estimate of US$7.39bn (2.9% of GDP).

Pakistan Banks: BOP - Clear road to narrowing discount!, (AKD Daily, Nov 18, 2019) - Coverage Initiation

We initiate coverage on Bank of Punjab (BoP) with a ‘Buy’ stance and a TP of PkR14.0/sh, implying an upside of 34.8% from last close. Capital reinforcements (Tier-I/II Cap raised in CY17/18: PkR6.1/4.3bn) of yesteryears coupled with higher interest rate driven earnings growth (CY20-22F CAGR: 15.7%) is likely to keep dividends healthy (CY20F dividend yield: 12.0% vs. 7.7% of our universe) at least in the medium run. Earnings growth is expected to be driven by, i) Gross NIMs swelling to ~4.4% over the medium term vs. 3.9% in 9MCY19, benefitting from structural alignment to interest rates and change in investment mix to longer tenor instruments, magnifying impact of branch expansion (158 branch added in the past 3y) and ii) one of the lowest administrative expenses/branch of PkR23.2mn across our banking universe despite being Government owned, which not only minimizes drain on core income (PBT/NII net of provisioning at 57.0% in 9MCY19) but also compensates for the high-er cost of deposits (9MCY19 CoD: 7.0% vs. 6.0% of peers). Even after providing for cost of provisioning at 1.0%, BOP offers CY20-22F ROE of 20.1%. The stock is currently trading at a CY20F P/B of 0.52x, whereas taking peers’ valuation multiples in to consideration the stock should trade at a P/B of 0.8x based on ROE per unit of PB. Awaiting details regarding modali-ties of Treasury Single Account (TSA), we have incorporated 10% pa. withdrawal from CY23 onwards (Without TSA: TP PkR17.5/sh ceteris paribus).


22 November 2019

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 (2019)

Source: AKD Research & Bloomberg

129.0

134.0

139.0

144.0

149.0

154.0

159.0

164.0

169.0

Nov-18

Dec-18

Feb-19

Mar-

19

Apr-1

9

Jun-19

Jul-19

Aug-19

Sep-19

Nov-19

SPOT Units 22-Nov-19 15-Nov-19 WoW CYTD

TRJ-CRB Points 180.6326 181.001 -0.20% 6.38%

Nymex (WTI) US$/bbl. 58.26 57.72 0.94% 28.30%

ICE Brent US$/bbl. 63.27 63.93 -1.03% 19.00%

N. Gas Henry Hub US$/Mmbtu 2.53 2.7 -6.30% -20.63%

Cotton USd/Pound 73.4 74.9 -2.00% -9.16%

Gold US$/Tr.Oz 1470.06 1468.3 0.12% 14.63%

Sliver US$/Tr.Oz 17.1496 16.9645 1.09% 10.68%

Copper US$/MT 5809.75 5825.5 -0.27% -2.34%

Platinum US$/Oz 906.22 890.8 1.73% 13.90%

Coal US$/MT 76.25 71.75 6.27% -20.86%

SPOT 22-Nov-19 15-Nov-19 Chg +/- WoW CYTD

Dollar Index 98.022 97.999 0.023 0.02% 1.92%

USD/PkR 155.282 155.375 -0.093 -0.06% 11.82%

USD/JPY 108.570 108.800 -0.230 -0.21% -1.02%

EUR/USD 1.106 1.105 0.001 0.09% -3.54%

GBP/USD 1.286 1.290 -0.004 -0.29% 0.82%

AUD/USD 0.679 0.682 -0.002 -0.35% -3.63%

NZD/USD 0.642 0.640 0.001 0.20% -4.49%

CHF/USD 0.994 0.990 0.004 0.40% 1.21%

CAD/USD 1.327 1.322 0.004 0.33% -2.71%

USD/KRW 1,179 1,167 12.200 1.05% #N/A

CNY/USD 7.037 7.008 0.029 0.41% 2.31%

Country Bloomberg Code 22-Nov-19 15-Nov-19 WoW CYTD

Pakistan KSE100 Index 37,926 37,584 0.91% 2.3%

Srilanka CSEALL Index 6,119 6,023 1.60% 1.1%

Thailand SET Index 1,598 1,602 -0.28% 2.2%

Indonesia JCI Index 6,100 6,128 -0.46% -1.5%

Malaysia FBMKLCI Index 1,597 1,595 0.13% -5.5%

Philippines PCOMP Index 7,825 7,933 -1.37% 4.8%

Vietnam VNINDEX Index 978 1,010 -3.19% 9.6%

Hong Kong HSI Index 26,595 26,327 1.02% 2.9%

Singapore FSSTI Index 3,226 3,239 -0.41% 5.1%

Brazil IBX Index 44,974 44,658 0.71% 23.2%

India SENSEX Index 40,359 40,357 0.01% 11.9%

S&P SPX Index 3,104 3,120 -0.54% 23.8%

DJIA INDU Index 27,766 28,005 -0.85% 19.0%

UK UKX Index 7,337 7,303 0.46% 9.0%

Germany DAX Index 13,174 13,242 -0.51% 24.8%

Qatar DSM Index 10,267 10,363 -0.93% -0.3%

Abu Dhabi ADSMI Index 5,042 5,138 -1.87% 2.6%

Dubai DFMGI Index 2,684 2,701 -0.64% 6.1%

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

Oman MSM30 Index 4,083 4,084 -0.03% -5.6%

Saudi Arabia SASEIDX Index 8,063 7,924 1.75% 3.0%

MSCI EM MXEF Index 1,045 1,049 -0.40% 8.2%

MSCI FM MXFM Index 561 559 0.33% 8.8%

EPS Growth PE(x)

Pakistan 18.39% 6.79

Indonesia 11.55% 15.34

Malaysia 12.81% 14.15

Philippines 6.34% 15.72

Vitenam 10.27% 15.29

India 23.63% 17.93

China 10.19% 10.41

% ROE Divd Yld

Pakistan 16.1% 9.31

Indonesia 13.91 2.38

Malaysia 8.98 3.67

Philippines 11.46 1.75

Vitenam 16.99 1.99

India 14.43 1.66

China 11.70 2.88

165

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171

174

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Jan-1

9

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Apr-

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May-

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Jun-1

9

Jul-19

Aug-1

9

Sep-1

9

Oct-19

5


22 November 2019

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

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Nov

-18

Dec

-18

Jan-1

9

Mar-

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Apr-1

9

May

-19

Jun-1

9

Jul-19

Aug

-19

Sep

-19

Oct-

19

Nov

-19

KSE100

MSCI EM

MSCI FM

4,248 3,962

3,276

1,813

(4,840)

(6,000)

(5,000)

(4,000)

(3,000)

(2,000)

(1,000)

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1,000

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5,000

18-Nov-19 19-Nov-19 20-Nov-19 21-Nov-19 22-Nov-19

(US$'000)

120.00

130.00

140.00

150.00

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170.00

180.00

No

v-18

Dec

-18

Jan-

19

Mar

-19

Ap

r-19

May

-19

Jun

-19

Jul-

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Au

g-19

Sep

-19

Oct

-19

No

v-19

(%)

Ind., 11.90

Co., 1.98

Bank/DFI, (15.15)

NBFC, (1.49)

M.Funds, (0.12)

Ins, (2.62)

Others, (2.29)

Prop. Trading , (0.67)

(20.00)

(15.00)

(10.00)

(5.00)

-

5.00

10.00

15.00

0.60

0.90

1.20

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2.40

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8

Dec-1

8

Feb

-19

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Jun-1

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Jul-1

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Sep-1

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Nov-1

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-34%

-29%

-24%

-19%

-14%

-9%

-4%

1%

6%

No

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De

c-1

8

Jan

-19

Feb

-19

Mar

-19

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r-1

9

May

-19

Jun

-19

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-19

Oct

-19

No

v-1

9

KSE-Al l Sh are Index AKD Universe

6

AKD Securities Limited StockSmart


Market PER Chart 2020

22 November 2019

AKD Universe Valuations

Source: AKD Research

Market P/BVS Chart 2020

Source: AKD Research

Jul-0

7

Jun-

08

May

-09

May

-10

Ap

r-1

1

Ap

r-1

2

Mar

-13

Feb

-14

Feb

-15

Jan

-16

Dec

-16

Dec

-17

No

v-1

8

No

v-1

9

11.0

8.5

6.0

3.5

(x)

Jul-0

7

Jun-

08

May

-09

May

-10

Ap

r-1

1

Ap

r-1

2

Mar

-13

Feb

-14

Feb

-15

Jan

-16

Dec

-16

Dec

-17

No

v-1

8

No

v-1

9

2.5

2.0

1.5

1.0

(x)

22-Nov-19 2016 2017 2018F 2019F 2020F

EPS (PkR) 7.19 6.22 6.72 7.78 9.23

EPS chg (%) 2.39 (13.55) 8.09 15.81 18.53

EPS chg (%) ex-E&P 17.90 (22.96) 2.27 6.35 25.94

Book Value per Share (PkR) 41.15 43.99 46.58 50.90 55.81

Payout (%) 50.96 55.63 50.48 46.83 49.41

Valuations

Price to Earnings (x) 6.74 8.76 8.24 7.45 6.79

PER (Ex-Banks & E&Ps) (x) 5.51 8.07 7.41 7.96 7.21

Price to Book (x) 1.30 1.22 1.16 1.07 0.97

Price to CF (x) 9.80 11.15 9.13 11.31 5.90

Earnings Yield (%) 14.85 11.42 12.13 13.43 14.73

Dividend Yield (%) 7.62 6.96 6.36 6.75 8.23

EV / EBITDA (x) 6.16 6.38 6.37 5.50 4.76

Profitability

Return on Equity (%) 17.48 14.14 14.43 15.29 16.53

Return on Assets (%) 3.18 2.36 2.41 2.66 2.80

Chg in Sales (%) (14.92) 16.29 18.23 17.01 15.17

Gross Margin (%) 34.39 35.77 34.52 33.94 32.81

Operating Margin (%) 22.38 24.45 23.89 23.76 23.10

Net Margin (%) 15.56 11.57 10.57 10.47 10.77

7



AKD Universe Active Coverage Cluster’s Valuations

22 November 2019

Source: AKD Research UR Under Review

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

(PkR) (PkR) 18 19F 20F 18 19F 20F 18 19F 20F 18 19F 20F

Automobile and Parts

Indus Motors INDU 1,216.92 1,452.06 Buy 200.66 174.49 180.17 6.06 6.97 6.75 2.60 2.34 2.10 11.50 9.45 9.92

Pak Suzuki Motors PSMC 187.09 275.08 Buy 15.77 4.33 21.14 11.86 43.24 8.85 0.53 0.53 0.50 - 0.53 2.67

Cements

DG Khan Cement DGKC 70.46 53.20 Sell 20.17 6.86 (0.06) 3.49 10.27 n.a 0.40 0.39 0.40 6.03 0.14 0.00

Lucky Cement LUCK 399.87 516.54 Buy 37.72 32.44 24.75 10.60 12.33 16.16 1.50 1.37 1.29 3.25 1.63 1.38

Maple Leaf Cement Factory MLCF 19.34 22.90 Buy 6.12 4.14 (0.25) 3.16 4.67 n.a 0.38 0.36 0.37 12.93 2.59 0.00

Fauji Cement Company Ltd. FCCL 15.88 15.09 Sell 2.49 2.05 0.99 6.39 7.76 16.11 1.07 1.05 1.04 11.35 9.45 4.58

Pioneer Cement Limited PIOC 31.69 17.30 Sell 7.24 4.46 7.82 4.38 7.10 4.05 0.53 0.51 0.46 12.84 - 4.94

Cherat Cement Co Limited CHCC 47.86 23.60 Sell 12.07 9.98 (3.61) 3.96 4.80 n.a 0.76 0.70 0.76 10.45 2.09 -

Gharibwal Cement Ltd GWLC 12.83 25.00 Buy 3.77 2.70 3.69 3.40 4.76 3.48 0.41 0.41 0.39 11.69 3.90 17.54

Engineering

Amreli Steels Ltd. ASTL 38.93 41.00 Sell 5.34 0.11 5.00 7.29 352.27 7.78 0.90 0.94 0.94 5.65 - -

Fertilizers

Engro Corporation ENGRO 331.56 321.56 Sell 24.28 39.68 51.30 13.66 8.36 6.46 1.04 0.93 0.80 0.58 8.50 8.50

Engro Fertilizers Limited EFERT 70.49 68.56 Sell 13.04 9.25 10.41 5.41 7.62 6.77 2.07 2.11 2.09 15.61 14.19 14.19

Fauji Fert. Bin Qasim Ltd. FFBL 19.54 31.34 Buy 1.54 (1.63) 1.24 12.71 n.a 15.76 1.31 1.47 1.43 5.12 - 4.09

Fauji Fertilizer Company FFC 101.80 116.45 Buy 11.35 13.87 15.22 8.97 7.34 6.69 3.88 3.50 3.15 8.69 10.81 11.79

Fatima Fertilizer FATIMA 26.99 36.68 Buy 6.24 8.88 7.29 4.32 3.04 3.70 0.91 0.75 0.66 6.48 8.89 9.82

Food Producers

Engro Foods Limited EFOODS 68.50 80.87 Neutral 0.08 1.22 1.37 823.29 56.00 50.14 2.68 2.52 2.41 - - -

Oil & Gas

Oil & Gas Development Co. OGDC 133.66 215.00 Buy 18.31 27.53 29.71 7.30 4.86 4.50 1.04 0.92 0.84 7.48 8.23 8.98

Pak Oilfields POL 409.68 450.00 Sell 40.10 59.44 67.43 10.22 6.89 6.08 3.55 3.25 2.88 8.64 12.20 13.18

Pakistan Petroleum PPL 123.02 208.00 Buy 23.17 23.10 21.72 5.31 5.32 5.66 1.16 1.05 0.96 3.89 1.63 10.28

Hascol Petroleum HASCOL 22.51 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Attock Petroleum APL 345.16 479.57 Buy 56.83 39.79 55.97 6.07 8.67 6.17 1.87 1.75 1.62 11.59 8.11 11.41

Pakistan State Oil PSO 183.11 195.80 Neutral 32.93 22.55 24.37 5.56 8.12 7.51 0.65 0.60 0.57 6.83 5.46 4.10

Power

Hub Power Co. HUBC 88.82 139.96 Buy 9.56 9.37 15.99 9.29 9.48 5.56 3.62 2.63 2.19 7.43 - 2.25

K-Electric Co. KEL 4.10 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Kot Addu Power Company KAPCO 34.88 41.93 Buy 12.06 10.90 10.52 2.89 3.20 3.31 0.87 0.84 0.82 26.23 12.90 27.24

Cable & Electrical Goods

Pak Elektron Ltd PAEL 23.49 18.30 Sell 2.76 (1.16) 0.58 8.52 n.a 28.55 0.39 0.39 0.39 - 2.32 4.64

Personal Goods

Nishat Mills NML 101.71 158.00 Buy 11.65 16.66 14.92 8.73 6.11 6.82 0.47 0.45 0.44 4.67 3.93 5.90

Nishat Chunian Ltd. NCL 37.67 55.00 Buy 9.84 9.30 7.11 3.83 4.05 5.30 0.66 0.60 0.57 10.62 10.62 7.96

Banks

Allied Bank Limited ABL 90.25 118.50 Buy 11.08 15.45 20.55 8.15 5.84 4.39 0.93 0.86 0.79 8.86 9.42 12.53

Bank Al Habib BAHL 73.91 97.64 Buy 7.61 9.53 11.94 9.72 7.76 6.19 1.64 1.45 1.22 3.38 5.41 7.44

Bank AlFalah BAFL 44.34 51.30 Buy 5.99 7.69 9.07 7.40 5.77 4.89 1.02 0.90 0.79 5.63 6.77 6.77

Habib Bank Limited HBL 137.90 140.47 Sell 8.22 11.06 23.22 16.78 12.47 5.94 1.02 0.93 0.83 3.08 3.63 5.08

Habib Metropolitn Bank HMB 33.75 43.81 Buy 5.88 6.92 8.34 5.74 4.88 4.05 0.87 0.79 0.67 5.93 7.17 8.65

MCB Bank Limited MCB 191.38 224.73 Buy 18.02 20.37 26.35 10.62 9.39 7.26 1.49 1.41 1.30 8.36 8.36 9.41

Meezan Bank Limited MEBL 83.28 115.80 Buy 6.96 9.66 12.08 11.96 8.62 6.89 2.52 2.13 1.79 3.82 4.15 6.23

National Bank of Pakistan NBP 40.24 66.51 Buy 9.42 7.14 12.27 4.27 5.63 3.28 0.45 0.46 0.43 - 17.40 19.88

United Bank Ltd UBL 150.10 154.60 Neutral 12.29 21.52 31.28 12.21 6.97 4.80 1.04 0.94 0.80 7.33 7.33 7.99

The Bank Of Punjab BOP 11.13 14.00 Buy 2.91 3.15 3.97 3.82 3.53 2.80 0.77 0.61 0.52 7.23 9.63 12.04

8


22 November 2019

StockSmart


AKD Universe Coverage Cluster’s Performance


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

2 2 - Nov- 19 1M 3 M 6 M 12 M CYTD High Low

KSE- 10 0 Inde x 3 7 ,9 2 5 .7 9 14 .2 2 1.0 9 .5 - 7 .2 2 .3 4 1,6 6 0 .8 2 8 ,7 6 4 .6

Automobile a nd Pa rts

Indus Motors INDU 1,216.92 30.9 14.6 2.8 - 11.4 - 0.2 1390.50 924.49

Pak Suzuki Motors PSMC 187.09 25.7 5.9 - 24.2 - 23.6 7.4 340.41 148.79

Ce me nts

DG Khan Cement DGKC 70.46 34.3 29.7 21.0 - 30.3 - 12.1 110.84 42.31

Lucky Cement LUCK 399.87 14.4 8.8 6.8 - 21.4 - 8.0 532.44 338.70

Maple Leaf Cement Factory MLCF 19.34 24.0 - 3.2 - 9.6 - 61.1 - 52.4 52.94 13.79

Fauji Cement Company Ltd. FCCL 15.88 11.0 3.1 - 3.6 - 35.8 - 24.1 25.77 12.48

Pioneer Cement Limited PIOC 31.69 46.9 47.1 44.6 - 41.1 - 24.4 54.64 17.37

Cherat Cement Limited CHCC 47.86 55.1 66.8 41.8 - 46.4 - 31.3 91.22 24.78

Gharibwal Cement Limited GWLC 12.83 42.6 29.5 15.6 - 31.7 - 18.8 19.16 8.19

Engine e ring

Amreli Steel Ltd ASTL 38.93 50.8 100.3 56.0 - 39.7 - 18.7 65.30 15.83

Fe rtilize rs

Engro Fertilizers Ltd. EFERT 70.49 - 1.1 6.3 4.8 30.8 2.1 78.36 61.99

Engro Chemical ENGRO 331.56 16.8 25.8 22.9 - 0.4 13.9 339.80 234.78

Fatima Fertilizer FATIMA 26.99 5.8 5.4 0.8 - 20.8 - 26.0 36.55 24.26

Fauji Fert. Bin Qasim Ltd. FFBL 19.54 20.8 18.9 0.5 - 51.9 - 47.6 43.57 14.39

Fauji Fertilizer Company FFC 101.80 5.7 12.9 14.2 2.8 9.6 109.12 84.88

Food Produc e rs

Engro Foods Limited EFOODS 68.50 30.9 41.2 45.4 - 17.3 - 14.1 92.45 43.98

Ca ble & Ele c tric a l Goods

Pak Elektron Limited PAEL 23.49 34.0 36.7 6.2 - 28.6 - 5.7 33.31 14.32

Oil & Ga s

Oil & Gas Development Co. OGDC 133.66 8.1 9.3 - 6.6 - 8.3 4.4 154.19 104.56

Pak Oilfields POL 409.68 11.2 6.4 - 7.2 - 16.7 - 3.6 523.35 352.30

Pakistan Petroleum Ltd. PPL 123.02 12.0 2.9 - 25.6 - 26.2 - 17.8 193.79 103.40

Pakistan State Oil PSO 183.11 36.2 29.8 5.2 - 34.1 - 18.8 281.26 124.54

Attock Petroleum Ltd. APL 345.16 18.2 27.9 25.5 - 30.7 - 20.0 510.27 240.05

Hascol Petroleum HASCOL 22.51 - 25.1 - 48.3 - 68.3 - 89.5 - 84.8 221.87 20.31

Powe r

Hub Power Co. HUBC 88.82 22.1 30.0 13.2 - 6.7 3.5 95.65 62.50

K- Electric Limited KEL 4.10 10.2 15.2 - 6.4 - 27.7 - 31.0 6.68 3.04

Kot Addu Power Company KAPCO 34.88 15.5 16.9 - 6.3 - 33.8 - 29.6 53.33 27.73

Pe rsona l Goods

Nisaht (Chunian) Ltd. NCL 37.67 1.0 21.3 - 6.3 - 38.3 - 22.5 62.97 25.51

Nishat Mills NML 101.71 22.4 33.1 - 8.6 - 31.5 - 19.6 152.03 66.55

Ba nks

Allied Bank Limited ABL 90.25 3.7 5.2 - 15.9 - 12.5 - 16.0 112.81 82.64

Bank AlHabib Limited BAHL 73.91 8.5 5.3 - 5.4 0.4 7.4 87.06 64.00

Bank AlFalah BAFL 44.34 5.1 8.2 - 1.8 - 10.9 9.2 51.00 36.50

Habib Bank Limited HBL 137.90 8.6 16.8 11.4 1.1 14.5 151.43 106.17

Habib Metropolitan Bank HMB 33.75 6.8 1.8 - 12.3 - 21.0 - 26.3 46.00 28.95

MCB Bank Limited MCB 191.38 15.4 11.2 11.4 - 2.8 - 1.1 212.51 154.04

Meezan Bank Limited MEBL 83.28 6.7 7.1 - 3.0 - 11.4 - 9.9 103.59 69.20

National Bank of Pakistan NBP 40.24 23.9 25.2 2.8 - 18.3 - 4.3 50.16 28.58

United Bank Ltd UBL 150.10 8.0 13.8 1.5 9.3 22.4 158.82 121.11

Absolute Pe rforma nc e (%)

9


22 November 2019

StockSmart


Economic Snapshot

Source: SBP, PBS & AKD Research

End Month Data Units Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19

Monetary Rates

T-Bills - 3M % 7.73 7.73 8.73 8.73 10.19 10.29 10.45 10.45 10.84 11.54 12.39 12.93 13.43

T-Bills - 6M % 7.84 7.84 8.84 8.84 10.28 10.44 10.6 10.6 11 11.68 12.46 12.98 13.48

T-Bills - 12M % 8.05 8.05 9.05 9.05 10.42 10.68 10.78 10.78 11.1 11.81 12.6 13.1 13.6

PIB 10Y % 9.93 10.02 11.53 12.16 12.89 13.18 13.35 13.35 13.06 13.5 13.68 13.67 13.29

KIBOR 6M % 7.79 8.17 9.43 9.62 10.66 10.76 10.85 10.9 10.99 11.92 12.86 13.3 13.82

Discount rate % 8.00 9.0 9.0 10.5 10.5 10.75 10.75 11.25 11.25 12.75 13.75 13.75 13.75

Policy rate % 7.50 8.5 8.5 10 10 10.25 10.25 10.75 10.75 12.25 13.25 13.25 13.25

Inflation

Headline inflation % 5.8 5.1 6.8 6.5 6.2 7.2 8.2 9.4 8.8 9.1 8.9 10.3 11.6

Core inflation % 7.7 8.00 8.20 8.3 8.4 8.7 8.8 8.5 7.0 7.2 7.2 7.8 8.2

Food inflation % 3.3 1.4 2.7 1.8 0.9 2.4 5.0 8.4 8.6 8.7 8.2 9.2 11.9

External Indicators

Export (PBS) US$ (mn) 2,017 1,728 1,903 1,843 2,080 2,043 1,889 1,979 2,094 2,102 1,717

1,894

1,859

Import (PBS) US$ (mn) 4,992 4,430 4,841 4,626 4,444 4,504 4,180 4,155 4,753 5,042 4364 4019 3658

Trade Deficit (PBS) US$ (mn) (2,975) (2,702) (2,938) (2,783) (2,364) (2,461) (2,291) (2,176) (2,659) (2,940) (2,647)

(2,125)

(1,799)

Export (SBP) 2087 1801 2063 1893 2,004 2,272 1,862 2,026 2,079 2,318 1800 2228 1914

Import (SBP) 4,460 3,792 4,717 4,184 4,578 4,403 3,440 4,121 4,182 4,381 3997 4182 3522

Trade Deficit (SBP) (2,373) (1,991) (2,654) (2,291) (2,574) (2,131) (1,578) (2,095) (2,103) (2,063) (2,197)

(1,954)

(1,608)

Home Remittances US$ (mn) 2,089 1,486 2,060 1,664 1,749 1,743 1,577 1,746 1,779 2,316 1,646 2,039 1,691

Current Account US$ (mn) (600) (909) (1,218) (1,209) (1,660) -873 -356 (822) (1,244) (1,089) (995)

(678)

(614)

Banking Sector

Deposits PkR (bn) 12,692 13,032 12,666 13,079 13,354 13,058 12,805 13,456 13,149 13,460 14,458 13,747 n.a

Advances PkR (bn) 7,426 7,492 7,534 7,750 7,888 7,841 7,884 7,889 7,860 8,022 8,097 7,991 n.a

Investments PkR (bn) 6,893 6,677 5,525 5,459 7,583 5,223 7,498 5,751 6,230 7,300 7,624 n.a n.a

W. A. lending rate % 8.27 8.33 8.87 9.07 9.66 10.20 10.46 10.99 11.19 11.39 11.87 n.a n.a

W. A. deposit rate % 3.44 3.51 3.84 3.92 4.46 4.78 4.96 5.00 5.81 5.34 5.71 n.a n.a

Spread rate % 4.83 4.82 5.02 5.14 5.20 5.42 5.50 5.99 5.38 6.05 6.16 n.a n.a

Public Finance

Tax collection PkR (bn) 247.40 333.82 268.90 281.80 411.90 273.10 265.00 371.60 277.60 309.40 537.90 - -

Direct taxes PkR (bn) 71.50 133.02 79.40 98.90 191.60 92.10 81.20 155.70 78.50 92.90 276.80 n.a n.a

Indirect Taxes PkR (bn) 175.90 200.80 189.50 182.90 220.30 181.00 183.80 215.90 199.10 216.50 261.10 n.a n.a

Currency

Fx Reserves US$ (mn) 16,370 14,921 14,016 14,011 13,753 14,920 14,951 17,417 15,723 14,882 14,477 15,144 15,644

USDPkR - Interbank PkR/USD 124.08 124.29 130.72 134.03 138.74 138.83 138.62 139.76 141.33 146.17 156.41

159.19

158.24

10



DISCLOSURES & DISCLAIMERS

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

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

Subject to any applicable laws and regulations, AKD Securities Limited, its affiliates or group companies or individuals connected with AKD Securities Limited may have used the information contained herein before publication and may have positions in, may from time to time pur-chase or sell or have a material interest in any of the securities mentioned or related securities or may currently or in future have or have had a relationship with, or may provide or have provided investment banking, capital markets and/or other services to, the entities referred to herein, their advisors and/or any other connected parties.

AKD Securities Limited (the company) or persons connected with it may from time to time have an investment banking or other relationship, including but not limited to, the participation or investment in commercial banking transaction (including loans) with some or all of the issuers mentioned therein, either for their own account or the account of their customers. Persons connected with the company may provide corporate finance and other services to the issuer of the securities mentioned herein, including the issuance of options on securities mentioned herein or any related investment and may make a purchase and/or sale of the securities or any related investment from time to time in the open market or otherwise, in each case either as principal or agent.

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Any recipient, other than a U.S. recipient that wishes further information should contact the company.

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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

Hamza Kamal +92 111 253 111 (634) [email protected] Banking

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

Umer Farooq +92 111 253 111 (602) [email protected] Textiles & Steel

Shahrukh Saleem +92 111 253 111 (685) [email protected] Cement Sector

AIlia Naeem +92 111 253 111 (603) [email protected] Fertilizer & Energy

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

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

Faisal Tufail +92 111 253 111 (647) [email protected] Research Production

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

22 November 2019

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