AKD Research research@akdsecurities.net

+92-21-111-253-111

Weekly Review

Bulls continue to dominate the market with the market breaking 40K barrier (after a gap of

6M), daily volume reaching ~4Y high to 950.7mn shares and traded value reaching 38M high of

PkR34.5bn in the outgoing week. KSE-100 closed at 40,030pts, +1.96%WoW and marking the

7th continuous week of positive close. Avg. volumes stood at 638.2mn shares vs. 389.8mn

shares in the previous week led by, i) WTL (410mn shares), ii) POWER (181mn shares), iii) TRG

(177mn shares), iv) MLCF (156mn shares), and v) PAEL (140mn sharea). Major news flows were,

i) Cement dispatches recording a jump of 38%YoY to 4.3mn tonnes in Jul’20, ii) Exports re-

bounding after 4Ms of decline, growing by 5.8%YoY to ~US$2.0bn whereas imports continue to

decline (down 4.2%YoY to US$3.5bn), iii) CPI for Jul’20 standing at 9.26%YoY as economic activi-

ty gradually resumed with the easing of coronavirus lockdowns, driving food and fuel prices

higher, iv) FBR collection for Jul’20 recorded at PkR300bn – exceeding target by 23.4% and was

up 15%YoY, and v) Govt. further easing restrictions from coming week. Sector wise, major sec-

tors were led by Engineering (+13.5%WoW on optimism surrounding construction activities),

Cements (+6.3%WoW), and Autos (+5.0%WoW) while Refinery sector (+12.2%WoW on draft

policy favoring midstream and downstream oil) was the leader in side boards. Flow wise, for-

eigners turned buyers (net buy: US$3.7mn) whereas within locals, Individuals with a net buy of

US$41.1mn absorbed profit-taking by Insurance (Net sell: US$29.4mn) and Mutual Funds (Net

sell: US$11.9mn). Top performers during the week were, i) JLICL (+36.0%WoW), ii) PSX (23.1%

WoW), iii) HCAR (22.2%WoW), iv) PIOC (20.9%WoW), and v) PSMC (20.7%WoW) while laggards

were, i) BNWM (-5.5%WoW), ii) SYS (-5.2%WoW), iii) SHFA (-4.7%WoW), iv) IDYM (-4.2%WoW),

and v) FATIMA (-4.1%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©2020 AKD Securities Limited. All rights reserved. The information provided on this document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject AKD Securities or its affiliates to any registration requirement within such jurisdiction or country. Neither the information, nor any opinion contained in this document constitutes a solicitation or offer by AKD Securities or its affiliates to buy or sell any securities or provide any investment advice or service. AKD Securities does not warrant the accuracy of the information provided herein.

www.akdsecurities.net

AKD Securities

TREC Holder & Registered Broker

Pakistan Stock Exchange

REP-019

Find AKD research on Bloomberg

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

Market should sustain its momentum in the coming weeks amidst lack of triggers and negatives in result season being largely priced-in. Cement/Steel should continue being the driving force in the backdrop of improved outlook for construction activity while techs could keep investors

sentiments upbeat. We also like banks (on cheap valuations), consumers (Govt. opening econo-my further should stimulate consumer demand) and OMCs (being an indirect beneficiary of

increased economic activity).

7 August 2020

Outlook

Top-5 Volume Leaders

Symbol Volume (mn)

WTL : 409.76

POWER : 181.44

TRG : 176.77

MLCF : 156.00

PAEL : 140.39

Source: PSX & AKD Research

Indic e s KSE- 10 0 KSE- 3 0

This week 40,030 17,297

Last week 39,258 17,070

Change 1.96% 1.33%

Indic e s KMI- 3 0 Allsha re

This week 64,060 28,043

Last week 63,108 27,559

1.51% 1.75%

Mkt Ca p. PkRbn US$ bn

This week 7,424 44.16

Last week 7,294 43.68

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

This week 638.16

Last week 389.84

Change 63.7%

Source: PSX & AKD Research

Index & Volume Chart KSE100 Gainers & Losers

39,872 39,578 39,883

40,166 40,030

39,200

39,300

39,400

39,500

39,600

39,700

39,800

39,900

40,000

40,100

40,200

40,300

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

3-Aug 4-Aug 5-Aug 6-Aug 7-Aug

(Index)(Shrs'000)

Ready Volume (LHS) KSE100 Index (RHS)

25,000

28,000

31,000

34,000

37,000

40,000

43,000

46,000

0

100

200

300

400

500

600

700

800

900

1,000

Aug-1

9

Sep-1

9

Nov-

19

Jan

-20

Mar-

20

Apr-

20

Jun

-20

Aug-2

0

(Index)(share mn)

Volume in million (LHS) KSE-100 Index

-8.0%

-3.0%

2.0%

7.0%

12.0%

17.0%

22.0%

27.0%

JLIC

L

PS

X

HC

AR

PIO

C

PS

MC

FA

TIM

A

IDY

M

SH

FA

SY

S

BN

WM

AKD Securities Limited

7 August 2020

StockSmart

Pakistan Weekly Update

This Week’s Daily Reports

2

Pakistan Power: Cracks lose steam as recovery stammers, (AKD Daily, Aug 07, 2020)

POL product cracks paired back some gains during July’20, with underlying crude benchmarks higher (July’20 Arab Light average at US$43.5/bbl up 24%MoM) indicative of global economic reopening post COVID-19, taking monthly HSD/MS crack to Arab Light to average US$+4.3/-0.8/bbl, near 4QFY20 averages (US$5.6/-0.9/bbl) but below CY20TD averages (US$+6.4/+0.1/bbl).

HSFO cracks crashed 3.1xMoM to US$-8.2/bbl (vs. 4QFY20/CY20TD avg of US$-2.9/-9.1/bbl), where bunker fuel demand destruction post IMO-2020 implementation, spike in crude prices and sour crude supply disruptions have kept cracks volatile.

Indications of systemic slowdown in global oil production (particularly US shale production) and OPEC+ plans to start loosening cuts (9.7mn bpd May’20 cut to be rolled back to 7.7mn from Aug’20) in the backdrop of COVID-19 driven economic externalities (rising unemploy-ment, trade protectionism) are expected to have a jarring impact on crude prices.

Contrasting power generation costs on FO with RLNG we find the relative stability in domestic HSFO as opposed to the drastic fall in RLNG prices raising the cost divergence between the two to PkR5.0/KwH (June’20 cost of gen on FO/RLNG at PkR13.6/8.5/KwH) approaching levels last seen in Sept’19 and propagating the demise of FO in the domestic power mix.

Pakistan Cements: Upbeat demand ratchets up earnings outlook, (AKD Daily, Aug 06, 2020)

We raise our cement universe estimates by 11.9/9.4% for FY21/22 where progress on material-ization of various infrastructure/housing projects have increased our optimism on local cement demand accompanied by relatively resilient offtake; we now expect local cement demand to grow at 11% for FY21 against 6% previously.

AKD Cement universe has returned 100.7% since 25th Mar’20 (when KSE-100 made its 1yr low of 27,228pts) against 47.4% of KSE-100 as a plethora of factors contributed to the cause includ-ing implementation of construction package incentives, Naya Pakistan Housing scheme and

initiation of Dam construction.

Despite significant outperformance, we still maintain LUCK as our preferred play amongst con-glomerates and MLCF from pure-play cements, with both companies trading at a discount to EV/EBITDA of their respective groups, indicating further room for upside

Contrary to recent market rumors regarding ongoing case against Competition Commission of Pakistan (CCP), our correspondence suggests there isn’t an exact timeframe for announcement of decision and local players have an option of going to the tribunal or appeal in case of an unfavorable decision.

(TP: PkR693.5/sh, 15.6% upside) and MLCF (TP: PkR41.9/sh, 19.6% upside) as our top picks, we maintain a favorable outlook on the sector on the back of encouraging demand numberRe-iterating LUCK s which opens up room for local players to increase prices in the medium term.

Pakistan OMCs: Volumes go back to the normal, (AKD Daily, Aug 05, 2020)

FY21 started on a good note for local OMCs with sales for Jul’20 increasing by 8/3% YoY/MoM with MS sales standing at 718k tons (up 14%YoY) while HSD/FO volumes moved by +24/-19% on YoY basis.

Overall, performance for 7MCY20 remained disappointing with volumes declining by 13%YoY where FO took the lead with a decline of 47%YoY while demand for MS/HSD remained tepid as well, decreasing by 3/4%YoY.

Market shares remain in flux with PSO/APL/HASCOL/SHEL accounting for market shares of 48/10/5/8% during Jul'20 where a comparison with Jul'19 reveals decreasing/increasing share of PSO/HASCOL by 1ppt each while market shares of APL/SHEL remained flat during Jul’20.

We rate APL (TP: PkR400.2/sh, 15.5% upside) as our preferred play from the sector with high refinery upliftment guarding the company against fluctuating oil prices while PSO’s (TP: PkR214.6/sh, 19.0% upside) worsening balance sheet puts the company in an unfavorable position, barring aggressive policy response.

Aug 07, 2020

Aug 06, 2020

Aug 03, 2020

Aug 04, 2020

39,900

39,970

40,040

40,110

40,180

40,250

40,320

40,390

40,460

9:3

0

9:5

4

10:1

7

10:4

1

11:0

5

11:2

8

11:5

2

12:1

6

12:3

9

13:0

3

13:2

7

13:5

0

14:1

4

14:3

8

15:0

2

15:2

5

39,400

39,530

39,660

39,790

39,920

40,050

40,180

40,310

40,440

9:3

0

9:5

5

10:2

0

10:4

5

11:1

0

11:3

5

11:5

9

12:2

4

12:4

9

13:1

4

13:3

9

14:0

4

14:2

9

14:5

3

15:1

8

39,300

39,390

39,480

39,570

39,660

39,750

39,840

39,930

40,020

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

9

13:1

4

13:3

9

14:0

3

14:2

8

14:5

3

15:1

8

Source: PSX & AKD Research

39,900

39,990

40,080

40,170

40,260

40,350

40,440

40,530

9:3

0

9:5

3

10:1

7

10:4

1

11:0

4

11:2

8

11:5

2

12:1

5

12:3

9

13:0

2

13:2

6

13:4

9

14:1

3

14:3

6

15:0

0

15:2

4

15:4

7

16:1

1

Aug 05, 2020

39,350

39,440

39,530

39,620

39,710

39,800

39,890

39,980

9:3

0

9:5

3

10:1

7

10:4

1

11:0

4

11:2

8

11:5

2

12:1

5

12:3

9

13:0

3

13:2

6

13:5

0

14:1

3

14:3

7

15:0

1

15:2

5

AKD Securities Limited

7 August 2020

StockSmart

Pakistan Weekly Update

This Week’s Daily Reports

3

Pak Economy: Inflation surprise means nothing for monetary policy, (AKD Daily, Aug 04, 2020)

Well above consensus estimate, headline inflation for Jul’20 came in at 9.30%YoY vs. 8.59%YoY in the last month and 8.40%YoY in Jul’19. The surprise came on account of higher than expected price hikes in perishables (i.e. vegetable prices) and housing rent.

On a MoM basis, inflation jumped 2.50%MoM (vs. 0.82%MoM in Jun’20 and 1.89%MoM in Jul’19) - a record high monthly rate since the rollout of new inflation methodology. The key drivers were food inflation (3.86%MoM) on the sudden spike in certain perishables, transport (9.6%MoM) following reversal of Gov’t administered POL product prices, and

quarterly housing rent adjustment.

Food inflation spiked 17.79%YoY (vs. 14.56%YoY in the last month and 8.19%YoY in Jul’19) on the back of a steep increase in tomato, other fresh vegetables, and wheat prices ahead of Eid-ul-Azha. Another major contributor to the increase in headline inflation was a reversal in POL product prices (revised upward in the range of 26-34%), the impact of which was somewhat offset by a decline in transport fares.

The recent surge in inflation albeit partly due to a transitory increase in perishables further

affirms our view that the easing cycle has ended. We do not expect any immediate policy

reaction to this from the SBP and continue to believe that it would remain on a ‘long pause’

until a deterioration in external account merits any action.

Pakistan Strategy: No Bears in sight (AKD Daily, Aug 03, 2020)

Solidifying investor sentiment, driven in part by tamed COVID-19 testing outcomes (10 day avg. % of positive cases at ~4.8%, R-effective ~0.5) and a slew of policy actions geared to driving demand (financing incentives, down & mid-stream energy reforms, construction incentive) raised the KSE-100 index by ~14.1%MoM (-3.6%CYTD, +22.9%YoY).

Market liquidity shot through the roof, with KSE-100/All average traded volumes up 117.7/93.2%MoM (KSE-All avg vol. trouncing ~300mn level from Nov-Dec’19, approaching Jan-Feb’17 levels) with mainboard scrips prominent (KSE 100 share of traded volumes at 65.9% vs. 69.7% for 7MCY20 avg.), pushing value traded 111%MoM to US$87.1mn, levels not seen since April’18.

Domestic flows completely decoupled from foreign flows, where selling persisted (July’20 FPI recording net sell of US$68.9mn, taking CYTD outflows to US$361.8mn), matched by net buyers Insurance (US$33.8mn), Companies (US$19.8mn) and Individuals (US$17.2mn).

Previously sluggish sectors rallied during the month where expectations of swift consumer durable demand recovery and GoP reforms led Autos/Refinery/Engineering sectors higher by 33.5/32.6/31.5% MoM.

Based on medium term expectations of earnings recovery, bulls are likely to continue domi-nating the market in the short run with sharp decline in COVID-19 cases providing confi-dence on sustainability of economic recovery. However, medium to long run trend is and the conditions associated with it (tariff hikes, measures for meeting redependent upon de-velopments around COVID-19 and restart of the IMF program venue target etc.)

AKD Securities Limited

7 August 2020

StockSmart

Pakistan Weekly Update

4

Commodities

International Major Currencies

Source: Bloomberg

Source: Bloomberg

Major World Indices’ Performance

Source: Bloomberg

TRJ-CRB Index

Source: Bloomberg

PkR/US$ Trend

Source: Bloomberg

SPOT Units 7-Aug-20 30-Jul-20 WoW CYTD

TRJ-CRB Points 148.0817 142.7755 3.72% -20.29%

Nymex (WTI) US$/bbl. 41.37 39.92 3.63% -32.25%

ICE Brent US$/bbl. 43.72 42.64 2.53% -34.18%

N. Gas Henry Hub US$/Mmbtu 2.17 1.797 20.76% 3.83%

Cotton USd/Pound 70.85 67.05 5.67% -9.57%

Gold US$/Tr.Oz 2053.06 1956.64 4.93% 35.31%

Sliver US$/Tr.Oz 28.0723 23.4975 19.47% 57.25%

Copper US$/MT 6479.75 6441.75 0.59% 5.38%

Platinum US$/Oz 970.08 908 6.84% 0.36%

Coal US$/MT 54.4 53.7 1.30% -31.74%

SPOT 7-Aug-20 30-Jul-20 Chg +/- WoW CYTD

Dollar Index 93.199 93.021 0.178 0.19% -3.31%

USD/PkR 167.879 166.425 1.454 0.87% 8.38%

USD/JPY 105.720 104.730 0.990 0.95% -2.66%

EUR/USD 1.181 1.185 -0.004 -0.30% 5.33%

GBP/USD 1.307 1.310 -0.002 -0.18% -1.39%

AUD/USD 0.720 0.720 0.001 0.10% 2.58%

NZD/USD 0.664 0.670 -0.006 -0.84% -1.44%

CHF/USD 0.915 0.909 0.006 0.63% -5.38%

CAD/USD 1.335 1.342 -0.008 -0.57% 2.74%

USD/KRW 1,185 1,194 -9.650 -0.81% 2.46%

CNY/USD 6.959 7.009 -0.050 -0.71% -0.06%

Country Bloomberg Code 7-Aug-20 30-Jul-20 WoW CYTD

Pakistan KSE100 Index 40,030 39,258 1.96% -1.7%

Srilanka CSEALL Index 5,176 5,088 1.74% -15.5%

Thailand SET Index 1,324 1,316 0.66% -16.2%

Indonesia JCI Index 5,144 5,150 -0.11% -18.3%

Malaysia FBMKLCI Index 1,578 1,604 -1.60% -0.7%

Philippines PCOMP Index 5,846 5,928 -1.39% -25.2%

Vietnam VNINDEX Index 841 801 5.03% -12.4%

Hong Kong HSI Index 24,532 24,711 -0.72% -13.0%

Singapore FSSTI Index 2,546 2,530 0.62% -21.0%

Brazil IBX Index 44,113 44,425 -0.70% -9.4%

India SENSEX Index 38,041 37,736 0.81% -7.8%

China SHCOMP Index 3,354 3,287 2.04% 10.0%

S&P SPX Index 3,349 3,246 3.17% 3.7%

DJIA INDU Index 27,387 26,314 4.08% -4.0%

NASDAQ Composite CCMP Index 11,108 10,588 4.91% 23.8%

UK UKX Index 6,022 5,990 0.54% -20.2%

Germany DAX Index 12,601 12,380 1.79% -4.9%

Qatar DSM Index 9,412 9,368 0.47% -9.7%

Abu Dhabi ADSMI Index 4,360 4,305 1.27% -14.1%

Dubai DFMGI Index 2,108 2,051 2.77% -23.8%

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

Oman MSM30 Index 3,568 3,568 0.00% -10.4%

Saudi Arabia SASEIDX Index 7,500 7,459 0.55% -10.6%

MSCI EM MXEF Index 1,107 1,082 2.27% -0.7%

MSCI FM MXFM Index 483 474 1.81% -17.6%

100

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9

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149.0

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9

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20

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-20

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5

AKD Securities Limited

7 August 2020

StockSmart

Pakistan Weekly Update

Chart Bank

FIPI Flows for the week

Advance to Decline Ratio

AKD Universe vs. KSE-100 Index

LIPI Flows for the week

Average PIB and E/Y differential

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

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Au

g-1

9

Oc

t-1

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De

c-1

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r-20

Ma

y-2

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Au

g-2

0

KSE100

MSCI EM

MSCI FM

939

1,995

621

1,180

(1,009)

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000

2,500

3-Aug-20 4-Aug-20 5-Aug-20 6-Aug-20 7-Aug-20

(US$'000)

Ind., 41.12

Co., 0.40

Bank/DFI, (0.44)

NBFC, 0.75

M.Funds, (11.90)

Ins , (29.36)

Others , (3.03)

Prop. Trading , (1.25)

(40.00)

(30.00)

(20.00)

(10.00)

-

10.00

20.00

30.00

40.00

50.00

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

17.0%

19.0%

21.0%

23.0%

25.0%

Aug

-19

Oct-

19

Dec-1

9

Fe

b-2

0

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20

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0

Aug

-20

Earning Yield PIB Yield

0.60

0.90

1.20

1.50

1.80

2.10

2.40

Aug

-19

Sep

-19

Oct-

19

Nov-1

9

Dec-1

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Fe

b-2

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Ma

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-20

-30%

-20%

-10%

0%

10%

20%

30%

Aug

-19

Sep-

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-19

Nov

-19

Dec

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20

Feb-

20

Mar

-20

Apr

-20

May

-20

Jun-

20

Jul-2

0

Aug

-20

KSE-All Share Index AKD Universe

6

AKD Securities Limited StockSmart

Pakistan Weekly Update

Market PER Chart 2021

7 August 2020

AKD Universe Valuations

Source: AKD Research

Market P/BVS Chart 2021

Source: AKD Research

Jan

-08

Jan

-09

Feb

-10

Feb

-11

Mar

-12

Mar

-13

Ap

r-1

4

May

-15

May

-16

Jun

-17

Jun

-18

Jul-1

9

Au

g-2

0

8.9

7.1

5.3

3.5

(x)

Jan-

08

Jan-

09

Feb

-10

Feb

-11

Mar

-12

Mar

-13

Ap

r-14

May

-15

May

-16

Jun-

17

Jun-

18

Jul-1

9

Au

g-20

1.9

1.5

1.0

0.5

(x)

7-Aug-20 2017 2018 2019 2020F 2021F

EPS (PkR) 5.82 6.48 7.70 7.40 7.55

EPS chg (%) (15.24) 11.33 18.76 (3.87) 2.03

EPS chg (%) ex-E&P (24.93) 6.73 (0.50) 27.90 17.60

Book Value per Share (PkR) 41.89 44.59 49.40 53.69 57.87

Payout (%) 55.32 49.43 42.43 43.43 52.86

Valuations

Price to Earnings (x) 9.12 8.23 7.32 8.23 7.85

PER (Ex-Banks & E&Ps) (x) 9.30 8.53 9.42 10.12 7.61

Price to Book (x) 1.26 1.19 1.08 0.99 0.98

Price to CF (x) 12.38 9.32 12.75 9.95 6.40

Earnings Yield (%) 10.97 12.15 13.65 12.15 12.74

Dividend Yield (%) 6.74 6.24 6.31 6.25 7.88

EV / EBITDA (x) 6.40 6.35 5.51 4.65 4.73

Profitability

Return on Equity (%) 13.90 14.54 15.58 13.15 12.89

Return on Assets (%) 2.25 2.29 2.45 2.09 2.03

Chg in Sales (%) 16.05 17.88 21.76 (1.53) (4.08)

Gross Margin (%) 35.96 35.14 34.08 34.12 36.39

Operating Margin (%) 24.83 24.40 24.03 23.08 24.38

Net Margin (%) 11.24 10.62 10.36 9.64 10.62

7

AKD Securities Limited StockSmart

Pakistan Weekly Update

AKD Universe Active Coverage Cluster’s Valuations

7 August 2020

Source: AKD Research

Stock Symbol Price TP Stance

(PkR) (PkR) 19A 20F 21F 19A 20F 21F 19A 20F 21F 19A 20F 21F

Automobile and Parts

*Indus Motors INDU 1,372.63 1,375.00 Sell 174.49 68.27 74.68 7.87 20.11 18.38 2.69 2.49 2.30 8.4 1.8 2.2

Pak Suzuki Motors PSMC 264.83 130.00 Sell (35.45) (38.81) 1.73 n.a n.a 152.95 0.84 0.96 0.95 - - 0.2

Cements

DG Khan Cement DGKC 106.17 117.01 Neutral 3.67 (4.98) 7.40 28.90 n.a 14.34 0.66 0.68 0.65 0.9 - 1.4

Lucky Cement LUCK 601.91 693.49 Buy 32.44 9.85 27.73 18.55 61.11 21.71 2.06 2.04 1.86 1.1 - 1.0

Maple Leaf Cement MLCF 35.90 41.90 Buy 1.33 (4.15) 2.68 26.91 n.a 13.38 1.29 1.19 1.07 0.8 - 1.5

Fauji Cement Company FCCL 21.34 19.38 Sell 2.05 0.16 1.45 10.43 134.23 14.77 1.41 1.39 1.37 7.0 - 5.4

Pioneer Cement Limited PIOC 88.97 64.18 Sell 3.48 (5.09) 1.85 25.57 n.a 48.11 1.52 1.66 1.61 - - 0.4

Cherat Cement Co CHCC 133.49 76.02 Sell 9.98 (9.20) 3.75 13.38 n.a 35.63 2.01 2.37 2.20 0.7 - 0.6

Engineering

*Amreli Steels Ltd. ASTL 50.33 49.00 Sell 0.11 0.29 2.74 455.42 174.25 18.37 1.22 1.22 1.15 - - -

Fertilizers

*Engro Corporation ENGRO 313.92 331.10 Neutral 28.69 47.72 52.27 10.94 6.58 6.01 0.92 0.80 0.70 7.6 8.4 8.4

Engro Fertilizers Limited EFERT 67.76 55.51 Sell 12.63 8.75 8.31 5.36 7.75 8.15 2.09 2.04 2.02 19.2 11.8 11.8

Fauji Fert. Bin Qasim FFBL 19.45 30.0 Buy (6.34) 0.14 1.55 n.a n.a 12.55 2.66 2.61 2.16 - - -

Fauji Fertilizer Company FFC 108.59 127.00 Buy 13.45 15.17 16.07 8.07 7.16 6.76 3.88 3.49 3.09 9.9 11.1 11.1

Fatima Fertilizer FATIMA 28.03 34.43 Buy 7.54 5.98 4.67 3.72 4.69 6.00 0.80 0.72 0.67 7.1 8.4 6.6

Oil & Gas

Oil & Gas Development OGDC 113.15 172.20 Buy 27.53 24.90 20.72 4.11 4.55 5.46 0.66 0.59 0.54 9.7 7.3 6.0

Pak Oilfields POL 408.86 379.00 Sell 59.44 55.58 44.63 6.88 7.36 9.16 1.77 1.57 1.43 12.2 9.8 8.6

Pakistan Petroleum PPL 99.69 143.40 Buy 27.18 18.92 17.05 3.67 5.27 5.85 0.75 0.69 0.63 2.0 - 4.0

Hascol Petroleum HASCOL 13.93 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Attock Petroleum APL 338.01 400.35 Buy 39.79 16.37 29.73 8.49 20.65 11.37 1.78 1.81 1.62 5.9 2.4 5.3

Pakistan State Oil PSO 181.15 214.62 Buy 22.55 8.24 20.20 8.03 22.00 8.97 0.71 0.72 0.67 5.5 1.1 4.7

Power

Hub Power Co. HUBC 79.78 159.96 Buy 9.37 18.09 20.26 8.52 4.41 3.94 2.63 1.91 1.59 - - 8.8

K-Electric Co. KEL 3.79 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Kot Addu Power KAPCO 24.47 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Cable & Electrical Goods

Pak Elektron Ltd PAEL 34.80 24.40 Sell 1.68 0.21 2.15 20.71 165.71 16.19 0.70 0.69 0.67 - - 2.9

Personal Goods

Nishat Mills NML 95.43 132.00 Buy 16.66 8.78 11.00 5.73 10.87 8.68 0.50 0.49 0.47 4.2 2.4 3.4

*Nishat Chunian Ltd. NCL 39.01 60.53 Buy 13.19 5.87 7.08 2.96 6.65 5.51 0.61 0.58 0.54 10.3 5.8 7.1

Banks

Allied Bank Limited ABL 84.48 88.90 Buy 12.65 13.41 10.29 6.68 6.30 8.21 0.83 0.79 0.79 9.5 10.7 10.7

Bank Al Habib BAHL 63.50 65.00 Neutral 10.07 8.18 8.41 6.31 7.77 7.55 1.14 1.02 0.93 5.5 6.3 6.3

Bank AlFalah BAFL 38.10 38.00 Neutral 7.34 6.78 5.61 5.19 5.62 6.80 0.76 0.65 0.62 10.5 7.9 7.9

Habib Bank Limited HBL 127.32 141.63 Buy 10.45 19.66 20.62 12.18 6.48 6.18 0.83 0.70 0.66 3.9 4.7 5.5

Habib Metropolitn Bank HMB 35.45 45.70 Buy 6.34 6.63 6.46 5.59 5.35 5.49 0.78 0.67 0.61 7.1 7.1 7.1

MCB Bank Limited MCB 181.43 211.00 BUY 20.14 18.57 17.29 9.01 9.77 10.49 1.26 1.19 1.11 9.4 9.4 9.4

Meezan Bank Limited MEBL 85.12 100.00 Buy 12.12 11.92 10.09 7.02 7.14 8.44 1.74 1.57 1.48 5.9 7.0 7.0

National Bank of NBP 33.21 45.60 Buy 7.79 7.96 6.81 4.26 4.17 4.87 0.30 0.27 0.26 - - -

United Bank Limited UBL 116.49 160.00 Buy 15.60 15.58 15.70 7.47 7.48 7.42 0.75 0.70 0.67 10.3 10.3 11.2

The Bank Of Punjab BOP 10.20 13.90 Buy 3.12 2.60 1.88 3.27 3.93 5.42 0.57 0.52 0.51 7.4 9.8 9.8

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

DGKC, LICK & MLCF - Unconsolidated

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

8

AKD Securities Limited

7 August 2020

StockSmart

Pakistan Weekly Update

AKD Universe Coverage Cluster’s Performance

Source: PSX & AKD Research

Stocks Symbol Price 1 Year 1 Year

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

KSE-100 Index 40,029.69 13.2 20.2 -0.3 32.2 -1.7 43,218.7 27,228.8

Automobile and Parts

Indus Motors INDU 1,372.63 22.8 38.6 31.9 26.3 18.2 1429.98 700.38

Pak Suzuki Motors PSMC 264.83 51.8 61.3 20.1 59.9 14.8 290.93 124.21

Cements

DG Khan Cement DGKC 106.17 14.1 31.4 59.7 142.1 43.0 107.77 43.77

Lucky Cement LUCK 601.91 21.7 33.0 28.4 60.7 40.5 603.22 310.30

Maple Leaf Cement MLCF 35.90 27.5 36.4 64.6 109.0 55.1 36.10 13.79

Fauji Cement Company FCCL 21.34 20.9 26.9 34.0 62.0 37.1 21.68 11.68

Pioneer Cement Limited PIOC 88.97 33.4 51.1 223.4 399.6 191.8 91.46 17.37

Cherat Cement Limited CHCC 133.49 35.7 63.3 158.7 407.6 151.6 136.12 24.78

Engineering

Amrel i Steel Ltd ASTL 50.33 36.2 43.5 52.3 214.8 39.3 50.33 15.83

Fertilizers

Engro Ferti l i zers Ltd. EFERT 67.76 9.0 10.1 2.7 5.9 -7.7 78.57 50.72

Engro Chemica l ENGRO 313.92 6.1 2.8 -6.1 24.3 -9.1 366.00 234.78

Fatima Ferti l i zer FATIMA 28.03 -1.0 22.9 13.4 9.1 5.4 29.23 20.82

Fauji Fert. Bin Qas im Ltd. FFBL 19.45 17.6 12.8 7.3 19.8 -0.4 24.54 11.79

Fauji Ferti l i zer Company FFC 108.59 -2.1 1.1 2.7 13.8 7.0 112.14 82.71

Cable & Electrical Goods

Pak Elektron Limited PAEL 34.80 32.6 54.3 37.7 136.4 28.6 34.80 14.32

Oil & Gas

Oi l & Gas Development OGDC 113.15 -0.7 9.9 -12.4 -8.9 -20.5 154.21 75.01

Pak Oi l fields POL 408.86 14.8 30.6 0.0 1.4 -8.5 473.43 241.11

Pakis tan Petroleum Ltd. PPL 99.69 8.8 10.8 -24.3 -19.8 -27.3 151.82 69.13

Pakis tan State Oi l PSO 181.15 10.7 14.0 -5.5 28.3 -5.5 216.54 113.98

Attock Petroleum Ltd. APL 338.01 11.5 27.6 3.5 24.6 -8.6 394.43 211.87

Hascol Petroleum HASCOL 13.93 -2.0 -6.5 -39.5 -66.4 -48.2 52.08 10.65

Power

Hub Power Co. HUBC 79.78 12.8 3.4 -16.1 18.1 -14.5 103.21 57.40

K-Electric Limited KEL 3.79 17.3 33.0 -9.8 17.7 -13.3 4.77 2.65

Kot Addu Power Company KAPCO 24.47 17.7 11.9 -10.4 -21.5 -22.4 35.46 15.00

Personal Goods

Nisaht (Chunian) Ltd. NCL 39.01 14.0 25.0 -13.2 47.3 -8.5 47.63 23.78

Nishat Mi l l s NML 95.43 16.4 26.4 -7.9 34.9 -10.1 117.81 54.07

Banks

Al l ied Bank Limited ABL 84.48 11.2 9.0 -10.7 -5.6 -11.6 104.71 66.82

Bank AlHabib Limited BAHL 63.50 21.6 7.2 -20.5 -9.5 -16.6 82.00 50.98

Bank AlFa lah BAFL 38.10 10.9 25.7 -22.1 -3.3 -16.6 52.99 28.79

Habib Bank Limited HBL 127.32 28.9 34.3 -18.7 9.9 -19.1 171.24 94.78

Bank of Punjab BOP 10.20 17.1 11.2 -19.7 37.1 -10.0 14.13 7.01

Habib Metropol i tan Bank HMB 35.45 26.2 22.6 -9.7 4.3 -2.5 42.00 27.30

MCB Bank Limited MCB 181.43 12.4 15.1 -11.9 12.6 -11.5 224.53 132.89

Meezan Bank Limited MEBL 85.12 23.8 29.4 -13.9 7.6 -10.5 106.21 55.66

National Bank of NBP 33.21 22.0 18.7 -22.1 9.7 -23.3 46.30 25.53

United Bank Ltd UBL 116.49 9.8 10.9 -31.1 -12.5 -29.2 181.96 89.44

Absolute Performance (%)

9

AKD Securities Limited

7 August 2020

StockSmart

Pakistan Weekly Update

Economic Snapshot

Source: SBP, PBS & AKD Research

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

Monetary Rates

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

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

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

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

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

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

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

Inflation

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

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

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

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

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

External Indicators

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

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

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

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

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

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

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

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

Banking Sector

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

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

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

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

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

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

Public Finance

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

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

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

Currency

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

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

10

AKD Securities Limited StockSmart

Pakistan Weekly Update

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AKD Research Team

Analyst Tel no. E-mail Coverage

Usman Zahid +92 111 253 111 (693) usman.zahid@akdsecurities.net Executive Director Research

Ali Asghar Poonawala +92 111 253 111 (646) ali.poonawala@akdsecurities.net E&Ps, Cable & Electrical & Automobiles

Hamza Kamal +92 111 253 111 (634) Hamza.kamal@akdsecurities.net Commercial Banks

Umer Farooq +92 111 253 111 (602) umer.farooq@akdsecurities.net Pakistan Economy, Textiles & Steel Sector

Shahrukh Saleem +92 111 253 111 (685) shahrukh.saleem@akdsecurities.net Cement & OMCs Sector

AIlia Naeem +92 111 253 111 (603) ailia.naeem@akdsecurities.net Fertilizer & Power Sector

Qasim Anwar +92 111 253 111 (680) qasim.anwar@akdsecurities.net Technical Analysis

Nasir Khan +92 111 253 111 (639) nasir.khan@akdsecurities.net Research Production

Faisal Tufail +92 111 253 111 (647) faisal.tufail@akdsecurities.net Research Production

Tariq Mehmood +92 111 253 111 (643) tariq.mehmood@akdsecurities.net Library Operations

7 August 2020

New Rating Definitions

Buy > 14.5% expected total return (Rf: 8.5% + Rp: 6%)

Neutral > 8.5% to < 14.5% expected total return

Sell < 8.5% expected total return (Rf: 8.5%)