AKD Research research@akdsecurities.net

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Weekly Review

KSE-100 remained under pressure during the week where a disappointing budget, providing in-centives only to a few sectors against investor expectations of broad-based relaxations, resulted in index receiving a battering on first trading session of the week. Even the sector which were incentivized in the budget didn't receive a good response as cement and engineering sector wit-nessed a decline of 5.5%WoW each. As soon as index recovered from early onslaught, political uncertainty took a toll after a member party of ruling coalition announced to part ways. Result-antly, KSE-100 closed the week at 33,439pts, down 3.39%WoW. Foreigners remained net sellers during the week with net sell standing at USD4.78mn, taking CYTD net sell to USD274.9mn. Major news flow driving market sentiment included: 1) Prime Minister Imran Khan announcing that the lockdown would be further softened but the hotspots will face strict lockdown, 2) Pakistan's tex-tile and clothing exports tumbling for the third consecutive month in May'20, falling 36.5%YoY, 3) Government unlikely to extend subsidy on urea due to lack of implementation mechanism at least in three provinces, 4) Gas companies seeking a surge in gas tariff by PkR85-623/mmbtu, and 5) Balochistan National Party-Mengal (BNP-M) announcing its decision to quit the ruling coalition at the centre ahead of the vote on the federal budget. KSE-100 average traded volumes during the week grew 1.4%WoW to 228.8mn shares where stocks which generated large volumes in-cluded: 1) KEL (9.13mn shares), 2) UNITY (7.26mn shares), 3) BAFL (5.76mn shares) and 4) BGL (3.75mn shares). Major gainers from KSE-100 were: 1) HMM (+12.7%WoW), 2) JLICL (+11.1%WoW), 3) IDYM (+9.1%WoW) and 4) PTC (+4.1%WoW), whereas laggards dragging the index lower were: 1) IGIHL (-17.6%WoW), 2) GATM (-13.3%WoW), 3) FFBL (-11.2%WoW), and 4) SHEL (-9.7%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

With spread of COVID-19 becoming severe every day and news' of strict lockdown circulating, we believe market is expected to remain rangebound in short term where political noise is only going to increase pressure, particularly as government looks to get the finance bill passed. From next week, market will also start looking towards inflation number for Jun'20 where a low number can propel hopes of further rate cut.

19 June 2020

Outlook

Top-5 Volume Leaders

Symbol Volume (mn)

KEL : 9.13

UNITY : 7.26

BAFL : 5.76

BGL : 3.75

JSCL : 2.70

Source: PSX & AKD Research

Indic e s KSE- 10 0 KSE- 3 0

This week 33,439 14,439

Last week 34,611 15,039

Change - 3.39% - 3.99%

Indic e s KMI- 3 0 Allsha re

This week 53,002 24,072

Last week 55,130 24,703

- 3.86% - 2.55%

Mkt Ca p. PkRbn US$ bn

This week 6,374 38.25

Last week 6,545 39.86

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

This week 228.75

Last week 225.57

Change 1.4%

Source: PSX & AKD Research

Index & Volume Chart Universe Gainers & Losers

33,825

34,019

33,849

33,540

33,439

33,100

33,200

33,300

33,400

33,500

33,600

33,700

33,800

33,900

34,000

34,100

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

15-Jun 16-Jun 17-Jun 18-Jun 19-Jun

(Index)(Shrs'000)

Ready Volume (LHS) KSE100 Index (RHS)

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

HM

M

JLIC

L

IDY

M

PT

C

SY

S

MTL

SH

EL

FFB

L

GA

TM

IGIH

L

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

Jun

-19

Jul-

19

Sep-1

9

Oct-

19

Nov-

19

Jan

-20

Feb-2

0

Mar-

20

May-2

0

Jun

-20

(Index)(share mn)

Volume in million (LHS) KSE-100 Index

AKD Securities Limited

19 June 2020

StockSmart

Pakistan Weekly Update

This Week’s Daily Reports

2

Pakistan Strategy: Turbulent & tough FY20 , (AKD Daily, Jun 19, 2020)

Assessing major index oscillations during the soon to conclude FY20, we highlight the large underperformance of KSE-30 index as an illustration of high market capitalization sectors un-dergoing significant headwinds.

In terms of volumes, brisk rise in average volumes across indices can be seen supporting fu-tures and ready market value as well, with cheap valuations the likely driver of momentum in mainboard names.

Additionally, the general “flight-to-safety” sentiment underpins increasing prominence of KSE-100 and KSE-30 volumes in the share of all stock volume over the period, with investors allo-cating to high D/Y plays.

In the backdrop of emergent macro risks propelled by COVID-19 pandemic and pricing the uncertainty of a waning economic outlook, we believe mean reversion is likely to play out over the medium term, with blue chip plays seeking to re-vamp profitability outlooks.

Any upward momentum in global crude prices, coupled with external pressures forcing PkR depreciation could drive E&P sector performance. Re-iterating our outlook for technology and pro work from home plays taking a lead during the short term, Banks in the mainboard offer attractive valuation based upsides as well.

Pakistan Banks: Interest rate, credit risks priced in valuations, (AKD Daily, Jun 18, 2020)

Mar’20 NPLs of private banks from our banking universe surged to PkR291.1bn (assuming Dec’19 close PkR/US$ parity, total NPLs stands at PkR284.2bn) vis-à-vis PkR281.2bn reported at CY19 close.

Tracking fresh credit charge to performing advances since CY13, the charge ratio for our pri-vate banking universe for Mar’20 at 0.2% remains inline with 5y avg. whereas reversal pipeline slackens (Mar’20 Reversals/NPLs: 1.1% vs. 5y avg. 1.9%) which can potentially pull up net credit charge, going forward.

Valuations (CY20/21F: 0.8/0.7x) adequately incorporate interest rate (AKD expects 100bps cut in FY20) and credit risks (cost of provisioning assumed at 0.5/0.6% for CY20/21F vs. 0.3% in CY19) in our view with CY20/21F ROE at 12.3/10.7%. We have our preference for MCB, MEBL, and UBL due to their relatively low risk profiles.

Given fluid macro situation and SBP’s intention of rolling out reliefs to businesses, further in-terest rate cuts cannot be ruled which could again put pressure on banking sector stocks. Hence, we advice investors to take a longer term investment horizon.

Pakistan OMCs: Out of the frying pan into the fire , (AKD Daily, Jun 17, 2020)

We assess the impact of long running operational impediments in the energy chain and their impacts on OMCs, while quantifying anticipated volumetric slowdowns from the COVID-19 pandemic and delayed margin revision for FY21 in weakening profitability, indicating possible room for re-rating in the space

In a nutshell, COVID-19 and ensuing curbs to industry, business activity, individual movement and transport restrictions only exaggerated the effects of long term forces, where inadequacy of refining infrastructure in ramping MS yields have forced OMCs to source through imports

Mapping stock price moves (as a proxy for investor expectations) for PSO/APL since COVID-19), we highlight possible under-pricing of volumetric growth (~6-7% from stock moves vs. our expectation of 10% for FY21), with expected inventory losses the likely culprit of investor apa-thy.

POL product volumes have shown to rebound at a fast clip globally (Chinese demand already at 90~ of pre-COVID levels), a trend confirmed by channel checks at home, with daily average MS sales for Jun'20 are already up by 42/30% against Jun'19/May'20

Margin indexation is another fundamental driver we study with every month of delay in mar-gin revision decreases our FY21 EPS by 1.8/1.5% for APL/PSO while, given our base case vol-ume assumption of 10/7%YoY growth for FY21/22, every one month delay decreases our TP by 2.3/2.9% for APL/PSO.

Jun 19, 2020

Jun 18, 2020

Jun 15, 2020

Jun 16, 2020

33,400

33,477

33,554

33,631

33,708

33,785

33,862

33,939

34,016

10:0

0

10:2

3

10:4

7

11:1

0

11:3

4

11:5

8

12:2

1

12:4

5

13:0

8

13:3

2

13:5

5

14:1

9

14:4

2

15:0

6

15:2

9

33,200

33,300

33,400

33,500

33,600

33,700

33,800

33,900

34,000

10:0

0

10:2

4

10:4

9

11:1

4

11:3

8

12:0

3

12:2

8

12:5

3

13:1

7

13:4

2

14:0

7

14:3

1

14:5

6

15:2

1

33,750

33,850

33,950

34,050

34,150

34,250

34,350

34,450

34,550

34,650

10:0

0

10:2

5

10:4

9

11:1

4

11:3

9

12:0

4

12:2

8

12:5

3

13:1

8

13:4

3

14:0

7

14:3

2

14:5

7

15:2

2

Source: PSX & AKD Research

33,300

33,350

33,400

33,450

33,500

33,550

33,600

33,650

33,700

33,750

9:4

9

10:1

2

10:3

6

10:5

9

11:2

3

11:4

6

12:1

0

12:3

3

12:5

7

Jun 17, 2020

33,600

33,700

33,800

33,900

34,000

34,100

34,200

34,300

34,400

34,500

10:0

0

10:2

3

10:4

7

11:1

0

11:3

4

11:5

8

12:2

1

12:4

5

13:0

8

13:3

2

13:5

5

14:1

9

14:4

3

15:0

6

15:3

0

AKD Securities Limited

19 June 2020

StockSmart

Pakistan Weekly Update

This Week’s Daily Reports

3

Pakistan Commodities: Limited gains, continued pain of COVID-19 , (AKD Daily, Jun 16, 2020)

Global macros depict a weak picture leading up to May’20 where economic activity took a backseat to enacting unprecedented transport, healthcare and business activity lockdowns to curb the spread of COVID-19. May’20 was the month of limited re-openings in major developed economies pushing the TRJ index ~13%YoY higher, but still down 29%CYTD.

Intermittent pain caused by severe global lockdowns (peaking in mid-April) are expected to im-pact global growth over the medium term, where questions over “second wave” and “infection peak” have fueled uncertainty over the shape of any recovery

Energy commodity prices responded to Asian economies re-opening, allowing for increased de-mand expectations, showcased by rising Oil benchmarks (up 57-60%MoM, assisted by OPEC+ members complying with agreed cuts) and Coal (+13%MoM, but average price still down). Addi-tionally, large spillovers for chemical feedstocks have caused significant distortions (PVC/Ethylene delta –24%MoM, PTA/PX margins flat Mom).

Dislocated agriculture production, global food supply chains and radical shifts in consumer de-mand (following from historic employment shifts) have softened FAO food price index to 17 month lows, while Urea prices have also receded during May’20. Cotton prices underwent minor moves despite being burdened by weak fundamentals.

Length and severity of global lockdowns, accompanied by consumption data are likely to dictate prices as major economies refrain from setting growth targets. Rise in energy prices are negative for Pakistan, with demand for exported agriculture products (including meat, fruits, vegetables, rice) having to find new markets due to global trade dislocations.

Pakistan Market: Searching for the Comeback Cure! (AKD Research, Jun 15, 2020)

Budget’21 appears an exercise in frailty where the need to provide Covid related relief measures ap-pears held back by IMF mandated austerity requirements. Government targets of i) 2.1% GDP growth, ii) FBR revenue at PkR4.96tn and iii) fiscal and primary deficit targets of 7.0% and 0.5% of GDP, re-spectively, appear ambitious and unlikely to be met. On face, the GoP appears to bank on administra-tive measures to fuel tax collection, where several steps to this end have been announced. From capi-tal markets’ vantage, Budget’21 was anti-climactic and can be characterized as a ‘Construction sector Budget’. Focus will now shift towards Aug/Sep’20 months, the period of expected peak COVID-19 transmission and its fallout on wellbeing – both economic and healthcare. Modeling in a 1Q slow-down in our estimates, we see the index trickling to 39k over the next one year, with upside limited by already justified valuations (P/E: 6.8x) while in a worst case, assuming an aggressive and prolonged slowdown throughout 1HFY21 and de-rating index to 5.3x, we see the market re -testing 27k level intra-year. In terms of preferred plays, technological scrips have lit up screens worldwide particularly given changing corona induced working norms where we like Systems Limited (software development & implementation). On the traditional side, we like MEBL, MCB and UBL in Banks, FFC in Fertz, LUCK & MLCF in Cements and NML in Textiles.

AKD Securities Limited

19 June 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 19-Jun-20 12-Jun-20 WoW CYTD

TRJ-CRB Points 137.0559 134.3208 2.04% -26.23%

Nymex (WTI) US$/bbl. 40.15 36.26 10.73% -34.25%

ICE Brent US$/bbl. 42.4 38.46 10.24% -36.16%

N. Gas Henry Hub US$/Mmbtu 1.44 1.66 -13.25% -31.10%

Cotton USd/Pound 68.6 67.4 1.78% -12.44%

Gold US$/Tr.Oz 1730.03 1730.75 -0.04% 14.02%

Sliver US$/Tr.Oz 17.5304 17.4916 0.22% -1.80%

Copper US$/MT 5783.5 5761.5 0.38% -5.94%

Platinum US$/Oz 812.34 813.26 -0.11% -15.96%

Coal US$/MT 55.85 57.1 -2.19% -29.92%

SPOT 19-Jun-20 12-Jun-20 Chg +/- WoW CYTD

Dollar Index 97.403 97.319 0.084 0.09% 1.05%

USD/PkR 166.850 164.750 2.100 1.27% 7.72%

USD/JPY 106.960 107.380 -0.420 -0.39% -1.52%

EUR/USD 1.121 1.126 -0.004 -0.40% -0.02%

GBP/USD 1.242 1.254 -0.012 -0.98% -6.34%

AUD/USD 0.687 0.687 0.000 0.04% -2.16%

NZD/USD 0.643 0.645 -0.002 -0.28% -4.64%

CHF/USD 0.951 0.952 -0.001 -0.12% -1.58%

CAD/USD 1.358 1.359 0.000 -0.04% 4.57%

USD/KRW 1,210 1,204 5.750 0.48% 4.62%

CNY/USD 7.074 7.084 -0.011 -0.15% 1.58%

Country Bloomberg Code 19-Jun-20 12-Jun-20 WoW CYTD

Pakistan KSE100 Index 33,439 34,638 -3.46% -17.9%

Srilanka CSEALL Index 4,999 4,915 1.72% -18.4%

Thailand SET Index 1,375 1,383 -0.56% -13.0%

Indonesia JCI Index 4,942 4,880 1.27% -21.5%

Malaysia FBMKLCI Index 1,507 1,546 -2.51% -5.1%

Philippines PCOMP Index 6,315 6,476 -2.49% -19.2%

Vietnam VNINDEX Index 869 864 0.58% -9.6%

Hong Kong HSI Index 24,644 24,301 1.41% -12.6%

Singapore FSSTI Index 2,652 2,685 -1.23% -17.7%

Brazil IBX Index 40,593 39,182 3.60% -16.6%

India SENSEX Index 34,655 33,781 2.59% -16.0%

China SHCOMP Index 2,968 2,920 1.64% -2.7%

S&P SPX Index 3,115 3,041 2.43% -3.6%

DJIA INDU Index 26,080 25,606 1.85% -8.6%

NASDAQ Composite CCMP Index 9,943 9,589 3.69% 10.8%

UK UKX Index 6,277 6,105 2.82% -16.8%

Germany DAX Index 12,374 11,949 3.56% -6.6%

Qatar DSM Index 9,320 9,233 0.94% -10.6%

Abu Dhabi ADSMI Index 4,345 4,295 1.17% -14.4%

Dubai DFMGI Index 2,078 2,103 -1.18% -24.8%

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

Oman MSM30 Index 3,516 3,514 0.06% -11.7%

Saudi Arabia SASEIDX Index 7,356 7,310 0.63% -12.3%

MSCI EM MXEF Index 995 987 0.83% -10.7%

MSCI FM MXFM Index 479 479 -0.11% -18.3%

100

110

120

130

140

150

160

170

180

190

200

Jun

-19

Jul-

19

Aug-1

9

Sep-1

9

Oct-

19

Dec-

19

Jan

-20

Feb-2

0

Mar-

20

Apr-

20

May-2

0

Jun

-20

134.0

139.0

144.0

149.0

154.0

159.0

164.0

169.0

174.0

Jun

-19

Aug-1

9

Oct-

19

Dec-1

9

Feb-2

0

Apr-

20

Jun

-20

5

AKD Securities Limited

19 June 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

-30%

-20%

-10%

0%

10%

20%

30%

Ju

n-1

9

Ju

l-1

9

Au

g-1

9

Se

p-1

9

Oc

t-1

9

Dec-1

9

Ja

n-2

0

Fe

b-2

0

Ma

r-20

Ap

r-2

0

May-2

0

Ju

n-2

0

KSE100

MSCI EM

MSCI FM

1,092

(1,567)

(2,572)

(953)(787)

(3,000)

(2,500)

(2,000)

(1,500)

(1,000)

(500)

-

500

1,000

1,500

15-Jun-20 16-Jun-20 17-Jun-20 18-Jun-20 19-Jun-20

(US$'000)

Ind., 12.25

Co., (2.07)

Bank/DFI,

(0.21)

NBFC, 0.24

M.Funds, (3.00)

Ins , (1.35)Others , (1.61)

Prop. Trading , 0.53

(4.00)

(2.00)

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

0.60

0.90

1.20

1.50

1.80

2.10

2.40

2.70

Jun-1

9

Jul-1

9

Sep

-19

Oct-

19

Nov-1

9

Jan-2

0

Fe

b-2

0

Ma

r-2

0

Apr-

20

Jun-2

0

-40%

-30%

-20%

-10%

0%

10%

20%

Jun-

19

Jul-1

9

Aug

-19

Sep-

19

Oct

-19

Nov

-19

Dec

-19

Jan-

20

Feb-

20

Mar

-20

Apr

-20

May

-20

Jun-

20

KSE-All Share Index AKD Universe

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

17.0%

19.0%

21.0%

23.0%

25.0%

Jun-1

9

Jul-1

9

Sep

-19

Nov-1

9

Jan-2

0

Fe

b-2

0

Apr-

20

Jun-2

0

Earning Yield PIB Yield

6

AKD Securities Limited StockSmart

Pakistan Weekly Update

Market PER Chart 2021

19 June 2020

AKD Universe Valuations

Source: AKD Research

Market P/BVS Chart 2021

Source: AKD Research

Jan

-08

Jan

-09

Jan

-10

Feb

-11

Feb

-12

Mar

-13

Mar

-14

Mar

-15

Ap

r-1

6

Ap

r-1

7

May

-18

May

-19

Jun

-20

6.5

5.5

4.5

3.5

(x)

Jan-

08

Jan-

09

Jan-

10

Feb

-11

Feb

-12

Mar

-13

Mar

-14

Mar

-15

Ap

r-16

Ap

r-17

May

-18

May

-19

Jun-

20

1.4

1.1

0.8

0.5

(x)

19-Jun-20 2017 2018 2019 2020F 2021F

EPS (PkR) 5.82 6.48 7.70 7.40 7.55

EPS chg (%) (15.24) 11.33 18.79 (3.91) 2.04

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 53.68 58.24

Payout (%) 55.32 49.43 42.42 48.27 57.79

Valuations

Price to Earnings (x) 7.62 6.88 6.12 6.90 6.58

PER (Ex-Banks & E&Ps) (x) 7.62 6.98 7.71 8.29 6.24

Price to Book (x) 1.05 1.00 0.90 0.83 0.76

Price to CF (x) 10.35 7.80 10.66 7.80 5.36

Earnings Yield (%) 13.12 14.54 16.34 14.49 15.20

Dividend Yield (%) 8.06 7.46 7.54 7.90 9.95

EV / EBITDA (x) 5.73 6.11 5.68 4.87 4.90

Profitability

Return on Equity (%) 13.90 14.54 15.58 13.78 14.08

Return on Assets (%) 2.25 2.29 2.45 2.21 2.27

Chg in Sales (%) 16.05 17.88 21.76 0.01 (3.14)

Gross Margin (%) 35.96 35.14 34.08 34.41 37.11

Operating Margin (%) 24.83 24.40 24.03 23.56 25.43

Net Margin (%) 11.24 10.62 10.36 9.95 11.39

7

AKD Securities Limited StockSmart

Pakistan Weekly Update

AKD Universe Active Coverage Cluster’s Valuations

19 June 2020

Stock Symbol Price TP Stance

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

Automobile and Parts

*Indus Motors INDU 932.79 1,375.00 Buy 174.49 68.27 74.68 5.35 13.66 12.49 1.83 1.69 1.56 12.3 2.7 3.2

Pak Suzuki Motors PSMC 151.80 130.00 Sell (35.45) (38.81) 1.73 n.a n.a 87.67 0.48 0.55 0.55 - - 0.3

Cements

DG Khan Cement DGKC 78.20 104.98 Buy 3.67 (6.39) 5.89 21.28 n.a 13.28 0.48 0.51 0.49 1.3 - 1.5

Lucky Cement LUCK 439.56 635.85 Buy 32.44 8.50 25.86 13.55 51.70 17.00 1.51 1.50 1.38 1.5 - 1.3

Maple Leaf Cement MLCF 24.70 39.89 Buy 2.24 (3.09) 3.34 11.03 n.a 7.39 0.89 0.82 0.74 1.1 - 2.0

Fauji Cement Company FCCL 15.99 18.38 Neutral 2.05 (0.09) 1.32 7.81 n.a 12.15 1.06 1.06 1.04 9.4 - 6.6

Pioneer Cement Limited PIOC 62.79 50.12 Sell 3.48 (5.74) (0.32) 18.05 n.a n.a 1.07 1.19 1.20 - - -

Cherat Cement Co CHCC 84.48 65.61 Sell 9.98 (9.53) 2.39 8.46 n.a 35.28 1.27 1.51 1.44 1.2 - -

Engineering

*Amreli Steels Ltd. ASTL 33.49 49.00 Buy 0.11 0.29 2.74 303.04 115.94 12.22 0.81 0.81 0.77 - - -

Fertilizers

*Engro Corporation ENGRO 277.20 331.10 Buy 28.69 47.72 52.27 9.66 5.81 5.30 0.81 0.71 0.61 7.9 9.5 9.5

Engro Fertilizers Limited EFERT 56.70 55.51 Sell 12.63 8.75 8.31 4.49 6.48 6.82 1.75 1.71 1.69 22.9 14.1 14.1

Fauji Fert. Bin Qasim FFBL 15.19 30.02 Buy (6.34) 0.14 1.55 n.a n.a 9.80 2.08 2.04 1.69 - - -

Fauji Fertilizer Company FFC 103.38 127.00 Buy 13.45 15.17 16.07 7.69 6.81 6.43 3.70 3.32 2.94 10.4 11.6 11.6

Fatima Fertilizer FATIMA 25.75 34.43 Buy 7.54 5.98 4.67 3.42 4.31 5.51 0.73 0.67 0.62 6.8 9.1 7.2

Oil & Gas

Oil & Gas Development OGDC 108.85 172.20 Buy 27.53 24.90 20.72 3.95 4.37 5.25 0.66 0.59 0.54 10.1 7.6 6.2

Pak Oilfields POL 345.30 379.00 Buy 59.44 55.58 44.63 5.81 6.21 7.74 1.77 1.57 1.43 23.3 11.6 10.1

Pakistan Petroleum PPL 89.39 143.40 Buy 27.18 18.92 17.05 3.29 4.72 5.24 0.75 0.69 0.63 2.2 - 4.5

Hascol Petroleum HASCOL 13.69 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Attock Petroleum APL 269.65 400.35 Buy 39.79 16.37 29.73 6.78 16.47 9.07 1.42 1.45 1.30 7.4 3.0 6.6

Pakistan State Oil PSO 144.30 214.62 Buy 22.55 8.24 20.20 6.40 17.52 7.14 0.57 0.57 0.53 5.8 1.4 5.9

Power

Hub Power Co. HUBC 70.70 159.96 Buy 9.37 18.09 20.26 7.55 3.91 3.49 2.33 1.69 1.41 - - 9.9

K-Electric Co. KEL 2.84 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Kot Addu Power KAPCO 19.90 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Cable & Electrical Goods

Pak Elektron Ltd PAEL 22.51 24.40 Sell 1.68 0.21 2.15 13.40 107.19 10.47 0.45 0.45 0.43 - - 4.4

Personal Goods

Nishat Mills NML 74.08 132.00 Buy 16.66 8.78 11.00 4.45 8.44 6.73 0.39 0.38 0.36 5.4 3.0 4.4

*Nishat Chunian Ltd. NCL 33.52 60.53 Buy 13.19 5.87 7.08 2.54 5.71 4.73 0.52 0.50 0.47 11.9 6.7 8.2

Banks

Allied Bank Limited ABL 73.50 88.90 Buy 12.65 13.41 10.29 5.81 5.48 7.14 0.72 0.69 0.68 10.9 12.2 12.2

Bank Al Habib BAHL 52.68 65.00 Buy 10.07 8.18 8.41 5.23 6.44 6.26 0.95 0.85 0.78 6.6 7.6 7.6

Bank AlFalah BAFL 33.89 48.90 Buy 7.34 6.63 5.87 4.62 5.11 5.78 0.67 0.63 0.59 11.8 11.8 14.8

Habib Bank Limited HBL 98.75 154.40 Buy 10.45 14.47 12.02 9.45 6.82 8.21 0.64 0.60 0.58 5.1 6.1 7.1

Habib Metropolitn Bank HMB 28.10 45.70 Buy 6.34 6.63 6.46 4.43 4.24 4.35 0.62 0.53 0.49 8.9 8.9 8.9

MCB Bank Limited MCB 155.18 211.00 BUY 20.14 18.57 17.29 7.70 8.36 8.98 1.07 1.02 0.95 11.0 11.0 11.0

Meezan Bank Limited MEBL 65.09 100.00 Buy 12.12 11.92 10.09 5.37 5.46 6.45 1.33 1.20 1.13 6.1 9.2 9.2

National Bank of NBP 26.58 45.60 Buy 7.79 7.96 6.81 3.41 3.34 3.90 0.24 0.22 0.21 - - -

United Bank Limited UBL 102.29 160.00 Buy 15.60 15.58 15.70 6.56 6.57 6.52 0.66 0.62 0.59 11.7 11.7 12.7

The Bank Of Punjab BOP 8.38 13.90 Buy 3.12 2.60 1.88 2.69 3.22 4.45 0.47 0.43 0.42 11.9 14.9 17.9

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

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

8

AKD Securities Limited

19 June 2020

StockSmart

Pakistan Weekly Update

AKD Universe Coverage Cluster’s Performance

Source: PSX & AKD Research

Stocks Symbol Price 1 Year 1 Year

19-Jun-20 1M 3M 6M 12M CYTD High Low

KSE-100 Index 33,438.95 -2.1 11.0 -17.8 -3.5 -17.9 43,218.7 27,228.8

Automobile and PartsIndus Motors INDU 932.79 -3.9 13.3 -21.0 -19.9 -19.7 1253.12 700.38Pak Suzuki Motors PSMC 151.80 -7.7 -3.3 -37.8 -43.9 -34.2 290.93 124.21

CementsDG Khan Cement DGKC 78.20 -6.3 19.5 5.1 32.6 5.3 87.90 42.31Lucky Cement LUCK 439.56 -2.5 18.3 6.1 9.7 2.6 566.47 310.30Maple Leaf Cement MLCF 24.70 -5.6 13.9 9.3 -2.3 6.7 30.74 13.79Fauji Cement Company FCCL 15.99 -8.1 17.1 0.6 -0.6 2.8 18.69 11.68Pioneer Cement Limited PIOC 62.79 1.3 101.7 123.1 161.5 105.9 66.41 17.37Cherat Cement Limited CHCC 84.48 -6.4 35.9 55.6 155.0 59.2 95.91 24.78

EngineeringAmreli Steel Ltd ASTL 33.49 -5.2 20.4 -6.7 35.0 -7.3 41.61 15.83

FertilizersEngro Fertil izers Ltd. EFERT 56.70 -9.8 -0.2 -22.4 -12.2 -22.8 78.57 50.72Engro Chemical ENGRO 277.20 -8.3 5.5 -15.8 1.4 -19.7 366.00 234.78Fatima Fertil izer FATIMA 25.75 -5.7 21.6 -2.2 -4.7 -3.2 30.00 20.82Fauji Fert. Bin Qasim Ltd. FFBL 15.19 -12.8 17.0 -23.9 -20.1 -22.2 24.54 11.79Fauji Fertil izer Company FFC 103.38 -6.3 16.2 1.4 11.0 1.9 111.79 82.71

Cable & Electrical Goods

Pak Elektron Limited PAEL 22.51 -4.6 7.8 -14.4 5.0 -16.8 29.50 14.32

Oil & GasOil & Gas Development OGDC 108.85 -3.5 27.4 -21.1 -17.1 -23.5 154.21 75.01Pak Oilfields POL 345.30 5.9 42.3 -22.8 -14.1 -22.7 473.43 241.11Pakistan Petroleum Ltd. PPL 89.39 -6.6 18.3 -34.5 -42.1 -34.8 155.57 69.13Pakistan State Oil PSO 144.30 -10.9 9.4 -22.6 -16.5 -24.7 216.54 113.98Attock Petroleum Ltd. APL 269.65 -0.8 9.5 -28.0 -15.7 -27.1 394.43 211.87Hascol Petroleum HASCOL 13.69 -9.2 1.9 -45.7 -81.2 -49.1 73.34 10.65

PowerHub Power Co. HUBC 70.70 -9.1 8.9 -20.5 -8.4 -24.3 103.21 57.40K-Electric Limited KEL 2.84 -11.3 -6.6 -31.4 -30.9 -35.0 4.77 2.65Kot Addu Power KAPCO 19.90 -11.7 22.4 -35.7 -44.6 -36.9 37.46 15.00

Personal Goods

Nisaht (Chunian) Ltd. NCL 33.52 7.7 10.3 -20.0 -9.0 -21.4 47.63 23.78Nishat Mills NML 74.08 -0.3 3.9 -31.1 -27.1 -30.2 117.81 54.07

BanksAllied Bank Limited ABL 73.50 1.9 0.0 -26.5 -29.1 -23.1 105.19 66.82Bank AlHabib Limited BAHL 52.68 77.6 -9.3 -32.5 -34.1 -30.8 82.00 28.79Bank AlFalah BAFL 33.89 14.8 4.1 -26.0 -24.6 -25.8 52.99 28.79Habib Bank Limited HBL 98.75 1.5 -9.0 -38.9 -19.7 -37.3 171.24 94.78Bank of Punjab BOP 8.38 -6.1 10.3 -29.2 -8.8 -26.0 14.13 7.01Habib Metropolitan HMB 28.10 -2.1 -10.7 -25.0 -24.8 -22.7 42.00 27.30MCB Bank Limited MCB 155.18 4.0 1.8 -26.2 -9.6 -24.3 224.53 132.89Meezan Bank Limited MEBL 65.09 5.3 -3.4 -31.5 -25.3 -31.6 106.21 55.66National Bank of NBP 26.58 -2.1 -6.4 -40.2 -30.3 -38.6 46.30 25.55United Bank Ltd UBL 102.29 2.7 -4.0 -39.8 -33.2 -37.8 181.96 89.44

Absolute Performance (%)

9

AKD Securities Limited

19 June 2020

StockSmart

Pakistan Weekly Update

Economic Snapshot

Source: SBP, PBS & AKD Research

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

Monetary Rates

T-Bills - 3M % 11.54 12.39 12.93 13.43 13.43 13.43 13.43 13.43 13.53 13.43 13.1 n.a n.a

T-Bills - 6M % 11.68 12.46 12.98 13.48 13.48 13.48 13.48 13.48 13.48 13.48 13.15 n.a n.a

T-Bills - 12M % 11.81 12.6 13.1 13.6 13.6 13.6 13.6 13.6 13.2 13.6 13.26 n.a n.a

PIB 10Y % 13.5 13.68 13.67 13.29 12.18 11.3 11.35 11.09 11.04 11.18 10.16 8.47 8.25

KIBOR 6M % 11.92 12.86 13.3 13.82 13.65 13.08 13.48 13.5 11.23 13.23 12.34 12.08 7.75

Discount rate % 12.75 13.75 13.75 13.75 13.75 13.75 13.75 13.75 13.75 13.75 12.0 10.0 9.0

Policy rate % 12.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25 11.0 9.0 8.0

Inflation

National CPI Inflation % 8.4 8 8.4 10.5 11.4 11.0 12.7 12.6 14.6 12.0 10.2 8.5 8.2

Core inflation (Urban) % 7.2 7.3 8.2 8.5 8.4 7.7 7.5 7.5 7.9 8.0 7.4 7.7 7.3

Core inflation (Rural) % 6.8 6.7 7.8 8.8 8.8 8.6 8.4 8.1 9 9.4 9.4 9.8 9.7

Food inflation (Urban) % 9.0 7.5 7.9 11.9 15.0 13.7 16.6 16.7 19.5 15.2 13.0 10.4 10.6

Food inflation (Rural) % 9.7 9.1 9.3 12.6 15.0 14.6 19.3 19.7 23.8 19.7 15.5 12.9 13.7

External Indicators

Export (PBS) US$ (mn) 2,102 1,717 1,894 1,859 1,769 2,024 2,011 1,993 1,970 2,140 1,814 957 1,391

Import (PBS) US$ (mn) 5,042 4364 4019 3658 3,785 4,074 3,940 4,037 4,037 4,185 3,316 3,088 2,851

Trade Deficit (PBS) US$ (mn) (2,940) (2,647) (2,125) (1,799) (2,016) (2,050) (1,929) (2,044) (2,067) (2,045) (1,502) (2,131) (1,460)

Export (SBP) 2,318 1800 2228 1,894 1,888 2,189 2,111 2,108 2,052 1,993 1,818 1,392 n.a

Import (SBP) 4,381 3997 4182 3,523 3,326 3,632 3,682 3,791 3,912 3,563 3,325 3,159 n.a

Trade Deficit (SBP) (2,063) (2,197) (1,954) (1,629) (1,438) (1,443) (1,571) (1,683) (1,860) (1,570) (1,507) (1,767) n.a

Home Remittances US$ (mn) 2,316 1,646 2,039 1,691 1,748 2,001 1,820 2,097 1,907 1,825 1,894 1,790 1,873

Current Account US$ (mn) (1,089) (995) (678) (614) (284) 70 (364) (367) (534) (210) n.a n.a n.a

Banking Sector

Deposits PkR (bn) 13,460 14,458 13,747 13,977 14,026 13,912 14,312 14,632 14,673 14,815 15,126 14,476 15,481

Advances PkR (bn) 8,022 8,097 7,991 7,994 7,975 8,019 8,095 8,158 8,164 8,212 8,259 8,217 8,357

Investments PkR (bn) 7,300 7,624 8,731 8,019 9,269 7,918 7,886 8,801 8,366 8,725 9,297 9,794 10,382

W. A. lending rate % 11.39 11.87 12.69 12.99 13.31 13.52 12.74 12.73 13.35 13.23 13.01 12.00 n.a

W. A. deposit rate % 5.34 5.71 6.18 6.47 6.52 6.69 6.73 6.65 6.95 7.00 6.91 6.91 n.a

Spread rate % 6.05 6.16 6.51 6.52 6.79 6.83 6.01 6.08 6.40 6.23 6.10 5.09 n.a

Public Finance

Tax collection PkR (bn) 330.10 508.40 277.30 298.60 383.10 n.a n.a n.a n.a n.a n.a n.a n.a

Direct taxes PkR (bn) 112.00 251.00 95.90 88.00 165.30 n.a n.a n.a n.a n.a n.a n.a n.a

Indirect Taxes PkR (bn) 218.10 257.40 181.40 210.60 217.80 n.a n.a n.a n.a n.a n.a n.a n.a

Currency

Fx Reserves US$ (mn) 14,882 14,477 15,144 15,644 15,228 15,424 16,003 17,930 18,645 18,881 17,098 18,755 16,920

USDPkR - Interbank PkR/USD 146.17 156.41 159.19 158.24 156.33 156.04 155.40 155.01 154.74 154.34 159.02 164.43 160.58

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

19 June 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%)