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Weekly Review

Marking the first positive return on FY basis in the past 3y (FY20 KSE-100: +1.5%YoY) and holding gains in the remaining week, KSE-100 index closed the first week of FY21 at 35,051pts - +3.28%WoW with almost all sectors closing in green vindicating strong investor confidence (Avg. vol-umes for the week stands at 250.8mn shares vs. 176.8mn in the previous week). Attack on PSX in early trading hours on Monday turns out to be non-event for the market where successful pas-sage of Finance Bill 2020 with additional incentives for the businesses (particularly cement sec-tor, +6.5%WoW) and debarring of institutional investments in National Saving Schemes (NSS) expected to direct flows to equity market helped in sustaining the upward rally. Amongst other news flows were, i) World Bank approving US$500mn loan for budgetary support, ii) SBP receiv-ing US$1.3bn from Chinese banks, iii) Jun’20 inflation edging up slightly to 8.59%YoY, and iv) OG-DCL starting commercial production of gas from its exploratory wells Thal East-1 and Bhambhra-1, located in district Sukkur (Sindh). Sectoral performances was led by Techs (+8.7%WoW) and Sugar (+7.2%WoW) while amongst the major sectors Cements (+6.5%WoW), Engineering (+6.3%WoW), Textiles (+5.9%WoW on currency depreciation and export order book), Commercial Banks (+3.1%WoW), and Fertilizers (+3.1%WoW on potential urea shortage and indecisiveness of the Govt. on resumption of subsidized gas to LNG based manufacturers) stood tall. Flow wise, for-eigners continue to churn positions (Net sell: US$20.5mn) which was absorbed by Insurance (Net Buy: US$17.4mn) and Companies (Net Buy: US$9.6mn). Scrip wise top gainers were, i) TRG (+21.4%WoW), ii) SHFA (+15.0%WoW), iii) PTC (+12.7%WoW), iv) KTML (+10.2%WoW), and v) KEL (+10.0%WoW), while laggards were, i) JLICL (down 10.0%WoW), ii) IDYM (down 9.7%WoW), iii) JDWS (down 3.7%WoW), iv) BNWM (down 3.4%WoW), and v) AGIL (down 3.1%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

Taking cue from recent performance, equities is expected to continue its momentum in the com-ing weeks however, a keen eye on COVID-19 roll out in the medium run (Aug/Sep’20 – expected peak COVID-19 transmission period) and possible impact of locust attack would be prudent in our view hence, short term trading strategies are advocated in the near term. For a longer term hori-zon, we advise gradual accumulation in for Banks (on valuations), E&Ps (upward momentum in global crude prices, coupled with external pressures forcing PkR depreciation), Cyclicals (particularly leveraged – DGKC and MLCF) and Textiles (NML, export orders despite slowdown and portfolio value).

3 July 2020

Outlook

Top-5 Volume Leaders

Symbol Volume (mn)

TRG : 95.50

WTL : 76.73

KEL : 69.59

MLCF : 66.50

HUMNL : 63.68

Source: PSX & AKD Research

Indic e s KSE- 10 0 KSE- 3 0

This week 35,051 15,203

Last week 33,939 14,680

Change 3.28% 3.56%

Indic e s KMI- 3 0 Allsha re

This week 56,459 25,087

Last week 54,585 24,254

3.43% 3.43%

Mkt Ca p. PkRbn US$ bn

This week 6,642 39.97

Last week 6,422 38.30

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

This week 250.82

Last week 176.85

Change 41.8%

Source: PSX & AKD Research

Index & Volume Chart KSE100 Gainers & Losers

34,182

34,422

34,889 34,978

35,051

33,600

33,800

34,000

34,200

34,400

34,600

34,800

35,000

35,200

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

29-Jun 30-Jun 1-Jul 2-Jul 3-Jul

(Index)(Shrs'000)

Ready Volume (LHS) KSE100 Index (RHS)

-13.0%

-8.0%

-3.0%

2.0%

7.0%

12.0%

17.0%

22.0%

TR

G

SH

FA

PT

C

KT

ML

KE

L

AG

IL

BN

WM

JDW

S

IDY

M

JLIC

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

Jul-

19

Aug-1

9

Oct-

19

Dec-

19

Jan

-20

Mar-

20

May-2

0

Jul-

20

(Index)(share mn)

Volume in million (LHS) KSE-100 Index

AKD Securities Limited

3 July 2020

StockSmart

Pakistan Weekly Update

This Week’s Daily Reports

2

Pakistan OMCs: Stable Jun’20 brings turbulent FY20 to a close, (AKD Daily, Jul 03, 2020)

FY20 ended on a high for local OMCs with sales for Jun’20 increasing by 19/9% YoY/MoM with highest ever MS sales of 726k tons recorded during the month (up 28/14% YoY/MoM) while HSD/FO volumes moved by +68/-59% on YoY basis.

Overall, FY20 turned out to be another disappointing year with overall volumes declining by 10% YoY where MS turned out to be only respite, remaining flat on YoY basis while HSD/FO depicted a decline of 9/36%YoY.

Market shares remain in flux with PSO/APL/HASCOL/SHEL accounting for market shares of 52/10/4/7% during Jun'20 where a comparison with Jun'19 reveals increasing share of PSO by 14ppts while market shares of APL/HASCOL/SHEL decreased by 1ppts each.

We maintain APL (TP: PkR400.2/sh, 32.2% upside) as our preferred play from the sector with high refinery upliftment (guarding against fluctuating oil prices) while PSO’s (TP: PkR214.6/sh, 33.4% upside) worsening balance sheet puts the company in an unfavorable position, barring aggressive policy response.

Pakistan Energy: Cracks end FY20 on stable footing, (AKD Daily, Jul 02, 2020)

POL product cracks recovered during June’20, driven higher on cautious optimism of post-COVID recoveries in developed economies and Asian refiners raising utilization to meet de-mand, with underlying crude benchmarks higher (June’20 Arab Light average at US$35.1/bbl up 33%MoM) taking monthly HSD/MS crack to Arab Light to average US$+7.9/+4.4/bbl, above 4QFY20 (US$5.6/-0.9/bbl) and near/above FY20 averages (US$+8.2/+1.4/bbl).

HSFO cracks recovered 51%MoM to US$-2.7/bbl (vs. 4QFY20/FY20 avg of US$-2.9/-12.9/bbl), contrary to expectations of worsening pricing dynamics under IMO-2020 regulations (limiting HSFO usage as bunker fuel), while prices were assisted by healthy Asian refining margins as a result of recovering demand.

Conforming with wider market expectations, Asian POL product demand has driven refined fuel demand higher, with refiners raising utilization levels to meet demand, while the overhang from recent reversal in openings in the US remains a dampener on the horizon.

In terms of impacts at home, international POL product prices and product-wise ex-refinery prices set by the GoP show a mixed trend, where a comparison of FY20 vs. 3yr average correla-tions reveals higher correlations for HSD, MS and to a lesser degree HSFO in FY20 vs. 3YR avg. Moreover, taxes at import stage levied on POL products and PkR depreciation against the US$ continue to impose burdens on ex-refinery product pricing.

Pak Strategy_FY20 rise reflects tenacity - NSS curb could open doors, (AKD Daily, Jul 01, 2020)

Yesterday’s notification by the Finance Division to limit institutional participation in National Savings Scheme instruments has the potential to support interest in high D/Y stocks, where corporate funds, trusts and other domestic financial flows may deepen long-term institutional shareholding, supporting equities in a low rate setting where low-risk alternatives are scarce

Countering 2HFY20 uncertainty in the context of tough macros, weak demand outlook and persevering economic policies to tackle persistent “twin-deficits”, the KSE-100 index returned 1.5%YoY, breaking the rough spell of negative returns through FY18-19, while recording healthy uptick in avg. volumes (+41.3%YoY for KSE-100) and value traded (up 14.7%YoY to PkR7.2bn).

Large unhindered FIPI outflows continued, with FY20 cumulative outflow of US$284.9mn (softer than US$351.8mn outflow in FY19) continuing the trend set in motion from FY16, while the mantle of absorbing these outflows was largely taken over by Individuals (US$213.2mn), Insurance Cos (US$127.6mn), Funds, Trusts & Others (US$31.5mn) and Companies (US$26.8mn).

Sectoral performance through the year masks significant portfolio alignments taking place throughout the year, where we bifurcate returns in to two halves highlighting relative under-performance for mainboard sectors in 2HFY20, while relative to intra-year KSE-100 index high (on 13th Jan), mainboard sectors are shown to clearly lag behind, with investors aligning portfolios to unconventional sectors, relatively cushioned in the post COVID-19 backdrop

Jul 03, 2020

Jul 02, 2020

Jun 29, 2020

Jun 30, 2020

34,800

34,850

34,900

34,950

35,000

35,050

35,100

35,150

35,200

10:0

0

10:2

3

10:4

7

11:1

1

11:3

4

11:5

8

12:2

1

12:4

5

13:0

9

13:3

2

13:5

6

14:1

9

14:4

3

15:0

6

15:3

0

34,000

34,050

34,100

34,150

34,200

34,250

34,300

34,350

34,400

34,450

10:0

0

10:2

4

10:4

9

11:1

4

11:3

9

12:0

3

12:2

8

12:5

3

13:1

7

13:4

2

14:0

7

14:3

3

14:5

8

15:2

3

33,600

33,720

33,840

33,960

34,080

34,200

34,320

10:0

0

10:2

4

10:4

9

11:1

4

11:3

8

12:0

3

12:2

8

12:5

2

13:1

7

13:4

2

14:0

7

14:3

1

14:5

6

15:2

1

Source: PSX & AKD Research

34,900

34,933

34,966

34,999

35,032

35,065

35,098

35,131

10:0

0

10:2

3

10:4

7

11:1

0

11:3

4

11:5

7

12:2

1

12:4

5

Jul 01, 2020

34,300

34,400

34,500

34,600

34,700

34,800

34,900

35,000

10:0

0

10:2

3

10:4

7

11:1

0

11:3

4

11:5

7

12:2

1

12:4

4

13:0

8

13:3

2

13:5

5

14:1

9

14:4

2

15:0

6

15:3

0

AKD Securities Limited

3 July 2020

StockSmart

Pakistan Weekly Update

This Week’s Daily Reports

3

We continue to advocate for Banks (on valuations), E&Ps (upward momentum in global crude prices, coupled with external pressures forcing PkR depreciation), Cyclicals (particularly leveraged – DGKC and MLCF) and Textiles (NML, export orders despite slow-down and portfolio value). In addition to the usual suspects, technological scrips have lit trading screens worldwide where we have a keen liking for Systems Limited engaged in the business of software development & implementation services.

Pakistan Strategy: Exploring amendments to Finance Bill 2020, (AKD Daily, Jun 30, 2020)

In a relatively smooth legislative process (18 sessions from 5th June onwards), the Finance Bill 2020 passed the lower House (with 160 votes vs. 119 votes against), with thirty key amendments under the domain of income, sales and FED levies.

We assess sectoral moves since the Budget speech highlighting the relatively muted re-sponse from market forces following the unveiling of key measures, while major sectors (energy chain in particular) were largely absent from Budgetary policy.

Covering major amendments, we highlight significant relief provided to Cement sector with FED levy reduction of 0.25/kg (PkR1.5/kg passed vs. PkR1.75/Kg proposed) while increased demand has helped players in passing on the impact of increase in toll rates.

Lastly, we sort sectoral performances highlighting the prevalence of selling activity amongst high weightage sectors during the budget announcement to adoption period, while top performing sectors during the period hold little sway (top ten hold ~14% weight vs. ~39% for bottom ten laggards) and are largely pairing back CYTD declines.

Broadly, wider stability enacted by market participants confirms our take on the budget being far from a “Comeback Cure” while reiterating a buy on dips approach highlighting potential for performance in E&Ps (OGDC and POL on renewed OPEC+ cut compliance), Cements (MLCF & LUCK) and Banks (MEBL, UBL).

Pakistan Cement: Debt relief much welcome, (AKD Daily, Jun 29, 2020)

In a bid to provide relief to corporates in times of slowdown induced by COVID-19, SBP an-nounced a principal deferral scheme whereby principal to be repaid in FY21 could be de-ferred for an year with repayment to resume after, cushioning cement sector profitability for the year.

Amongst levered players, DGKC has already been granted approval to defer principal repay-ment for FY21 (having a positive EPS impact of PkR0.72/sh for FY21) while according to our estimates, PIOC and CHCC are slated to repay PkR4.3bn and PkR2.4bn, respectively for FY21.

MLCF on the other hand already opted for complete restructuring of its debt after repaying PkR5.8bn during 9MFY20 (utilizing proceeds from right issue) while repayment tenure of remaining debt has been extended, resulting in positive EPS impact of PkR0.45/sh for FY21—already incorporated.

We maintain LUCK (TP: PkR635.9/sh—40.5% upside), DGKC (TP: PkR105.0/sh—24.6% up-side) and MLCF (TP: PkR39.9/sh—53.8% upside) as our preferred play from the sector with LUCK being the safest play with a diversified portfolio, while MLCF and DGKC have managea-ble debt levels where cost saving measures are expected to significantly improve efficiency.

AKD Securities Limited

3 July 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 3-Jul-20 26-Jun-20 WoW CYTD

TRJ-CRB Points 140.5978 134.4133 4.60% -24.32%

Nymex (WTI) US$/bbl. 40.09 38.49 4.16% -34.34%

ICE Brent US$/bbl. 42.24 40.02 5.55% -36.40%

N. Gas Henry Hub US$/Mmbtu 1.64 1.4 17.14% -21.53%

Cotton USd/Pound 70.45 68.2 3.30% -10.08%

Gold US$/Tr.Oz 1774.43 1771.29 0.18% 16.95%

Sliver US$/Tr.Oz 17.9904 17.805 1.04% 0.77%

Copper US$/MT 6071 5953.25 1.98% -1.27%

Platinum US$/Oz 814.61 805.75 1.10% -15.72%

Coal US$/MT 54.9 56.05 -2.05% -31.12%

SPOT 3-Jul-20 26-Jun-20 Chg +/- WoW CYTD

Dollar Index 97.282 97.433 -0.151 -0.15% 0.93%

USD/PkR 166.925 167.725 -0.800 -0.48% 7.77%

USD/JPY 107.520 107.220 0.300 0.28% -1.00%

EUR/USD 1.123 1.122 0.001 0.11% 0.16%

GBP/USD 1.246 1.234 0.012 0.97% -6.04%

AUD/USD 0.693 0.687 0.007 0.99% -1.25%

NZD/USD 0.652 0.642 0.010 1.53% -3.25%

CHF/USD 0.947 0.948 -0.001 -0.12% -2.07%

CAD/USD 1.357 1.369 -0.012 -0.88% 4.44%

USD/KRW 1,199 1,201 -2.050 -0.17% 3.67%

CNY/USD 7.066 7.078 -0.012 -0.17% 1.48%

Country Bloomberg Code 3-Jul-20 26-Jun-20 WoW CYTD

Pakistan KSE100 Index 35,051 33,939 3.28% -14.0%

Srilanka CSEALL Index 5,051 5,163 -2.18% -17.6%

Thailand SET Index 1,372 1,330 3.15% -13.1%

Indonesia JCI Index 4,974 4,904 1.42% -21.0%

Malaysia FBMKLCI Index 1,553 1,488 4.33% -2.3%

Philippines PCOMP Index 6,373 6,192 2.92% -18.5%

Vietnam VNINDEX Index 848 852 -0.51% -11.8%

Hong Kong HSI Index 25,373 24,550 3.35% -10.0%

Singapore FSSTI Index 2,653 2,605 1.86% -17.7%

Brazil IBX Index 40,742 39,675 2.69% -16.3%

India SENSEX Index 36,021 35,171 2.42% -12.7%

China SHCOMP Index 3,153 2,980 5.82% 3.4%

S&P SPX Index 3,130 3,009 4.02% -3.1%

DJIA INDU Index 25,827 25,016 3.25% -9.5%

NASDAQ Composite CCMP Index 10,208 9,757 4.62% 13.8%

UK UKX Index 6,190 6,159 0.50% -17.9%

Germany DAX Index 12,578 12,089 4.04% -5.1%

Qatar DSM Index 9,212 9,185 0.29% -11.6%

Abu Dhabi ADSMI Index 4,312 4,286 0.61% -15.1%

Dubai DFMGI Index 2,061 2,087 -1.20% -25.4%

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

Oman MSM30 Index 3,512 3,526 -0.40% -11.8%

Saudi Arabia SASEIDX Index 7,312 7,232 1.10% -12.8%

MSCI EM MXEF Index 1,023 999 2.46% -8.2%

MSCI FM MXFM Index 482 483 -0.26% -17.8%

100

110

120

130

140

150

160

170

180

190

200

Jul-

19

Aug-1

9

Sep-1

9

Nov-

19

Dec-

19

Feb-2

0

Mar-

20

May-2

0

Jun

-20

134.0

139.0

144.0

149.0

154.0

159.0

164.0

169.0

174.0

Jul-

19

Sep-1

9

Nov-1

9

Jan

-20

Mar-

20

May-2

0

Jul-

20

5

AKD Securities Limited

3 July 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%

Ju

l-1

9

Au

g-1

9

Se

p-1

9

Oc

t-1

9

No

v-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

(2,570)

(5,488)

(3,388)

(7,726)

(1,353)

(9,000)

(8,000)

(7,000)

(6,000)

(5,000)

(4,000)

(3,000)

(2,000)

(1,000)

-

29-Jun-20 30-Jun-20 1-Jul-20 2-Jul-20 3-Jul-20

(US$'000)

Ind., (7.07)

Co., 9.59

Bank/DFI, (0.18)

NBFC, 0.14

M.Funds, (0.65)

Ins , 17.45

Others , 1.64

Prop. Trading , (0.40)

(10.00)

(5.00)

-

5.00

10.00

15.00

20.00

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

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Apr-

20

Jun-2

0

-40%

-30%

-20%

-10%

0%

10%

20%

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

Jul-2

0

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%

Jul-1

9

Aug

-19

Oct-

19

Nov-1

9

Jan-2

0

Fe

b-2

0

Apr-

20

Ma

y-20

Jul-2

0

Earning Yield PIB Yield

6

AKD Securities Limited StockSmart

Pakistan Weekly Update

Market PER Chart 2021

3 July 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

7.3

6.0

4.8

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

1.8

1.4

0.9

0.5

(x)

3-Jul-20 2017 2018 2019 2020F 2021F

EPS (PkR) 5.82 6.48 7.70 7.40 7.55

EPS chg (%) (15.24) 11.33 18.77 (3.88) 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 53.60 58.07

Payout (%) 55.32 49.43 42.43 48.02 57.06

Valuations

Price to Earnings (x) 8.00 7.22 6.42 7.22 6.89

PER (Ex-Banks & E&Ps) (x) 8.25 7.56 8.35 8.97 6.75

Price to Book (x) 1.10 1.04 0.95 0.87 0.85

Price to CF (x) 10.85 8.18 11.18 8.19 5.63

Earnings Yield (%) 12.51 13.86 15.57 13.85 14.52

Dividend Yield (%) 7.68 7.11 7.19 7.49 9.37

EV / EBITDA (x) 5.96 6.35 5.91 5.06 5.09

Profitability

Return on Equity (%) 13.90 14.54 15.58 13.62 13.86

Return on Assets (%) 2.25 2.29 2.45 2.17 2.21

Chg in Sales (%) 16.05 17.88 21.76 (0.96) (3.56)

Gross Margin (%) 35.96 35.14 34.08 34.42 37.10

Operating Margin (%) 24.83 24.40 24.03 23.47 25.27

Net Margin (%) 11.24 10.62 10.36 9.91 11.34

7

AKD Securities Limited StockSmart

Pakistan Weekly Update

AKD Universe Active Coverage Cluster’s Valuations

3 July 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 993.96 1,375.00 Buy 174.49 68.27 74.68 5.70 14.56 13.31 1.95 1.80 1.67 11.6 2.5 3.0

Pak Suzuki Motors PSMC 161.89 130.00 Sell (35.45) (38.81) 1.73 n.a n.a 93.50 0.51 0.59 0.58 - - 0.3

Cements

DG Khan Cement DGKC 90.45 104.98 Buy 3.67 (6.39) 5.89 24.62 n.a 15.36 0.56 0.59 0.56 1.1 - 1.3

Lucky Cement LUCK 489.76 635.85 Buy 32.44 8.50 25.86 15.10 57.60 18.94 1.68 1.67 1.53 1.3 - 1.1

Maple Leaf Cement MLCF 27.01 39.89 Buy 2.24 (3.09) 3.34 12.06 n.a 8.08 0.97 0.89 0.80 1.0 - 1.8

Fauji Cement Company FCCL 17.08 18.38 Neutral 2.05 (0.09) 1.32 8.34 n.a 12.98 1.13 1.13 1.11 8.8 - 6.2

Pioneer Cement Limited PIOC 64.35 50.12 Sell 3.48 (5.74) (0.32) 18.49 n.a n.a 1.10 1.22 1.23 - - -

Cherat Cement Co CHCC 91.88 65.61 Sell 9.98 (9.53) 2.39 9.21 n.a 38.37 1.38 1.64 1.57 1.1 - -

Engineering

*Amreli Steels Ltd. ASTL 35.83 49.00 Buy 0.11 0.29 2.74 324.22 124.05 13.07 0.87 0.87 0.82 - - -

Fertilizers

*Engro Corporation ENGRO 298.16 331.10 Buy 28.69 47.72 52.27 10.39 6.25 5.70 0.88 0.76 0.66 7.3 8.8 8.8

Engro Fertilizers Limited EFERT 63.07 55.51 Sell 12.63 8.75 8.31 4.99 7.21 7.59 1.95 1.90 1.88 20.6 12.7 12.7

Fauji Fert. Bin Qasim FFBL 16.17 30.02 Buy (6.34) 0.14 1.55 n.a n.a 10.43 2.21 2.17 1.80 - - -

Fauji Fertilizer Company FFC 112.14 127.00 Buy 13.45 15.17 16.07 8.34 7.39 6.98 4.01 3.60 3.19 9.6 10.7 10.7

Fatima Fertilizer FATIMA 27.40 34.43 Buy 7.54 5.98 4.67 3.63 4.58 5.87 0.78 0.71 0.66 6.4 8.6 6.8

Oil & Gas

Oil & Gas Development OGDC 112.91 172.20 Buy 27.53 24.90 20.72 4.10 4.54 5.45 0.66 0.59 0.54 9.7 7.3 6.0

Pak Oilfields POL 354.39 389.00 Buy 59.44 55.58 44.63 5.96 6.38 7.94 1.77 1.57 1.43 22.7 11.3 9.9

Pakistan Petroleum PPL 89.99 143.40 Buy 27.18 18.92 17.05 3.31 4.76 5.28 0.75 0.69 0.63 2.2 - 4.4

Hascol Petroleum HASCOL 13.71 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Attock Petroleum APL 299.44 400.35 Buy 39.79 16.37 29.73 7.53 18.29 10.07 1.57 1.61 1.44 6.7 2.7 6.0

Pakistan State Oil PSO 159.35 214.62 Buy 22.55 8.24 20.20 7.07 19.35 7.89 0.63 0.63 0.59 5.2 1.3 5.3

Power

Hub Power Co. HUBC 73.68 159.96 Buy 9.37 18.09 20.26 7.87 4.07 3.64 2.43 1.77 1.47 - - 9.5

K-Electric Co. KEL 3.18 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Kot Addu Power KAPCO 20.25 UR UR UR UR UR UR UR UR UR UR UR UR UR UR

Cable & Electrical Goods

Pak Elektron Ltd PAEL 24.46 24.40 Sell 1.68 0.21 2.15 14.56 116.48 11.38 0.49 0.48 0.47 - - 4.1

Personal Goods

Nishat Mills NML 79.63 132.00 Buy 16.66 8.78 11.00 4.78 9.07 7.24 0.42 0.41 0.39 5.0 2.8 4.1

*Nishat Chunian Ltd. NCL 33.54 60.53 Buy 13.19 5.87 7.08 2.54 5.72 4.74 0.53 0.50 0.47 11.9 6.7 8.2

Banks

Allied Bank Limited ABL 75.80 88.90 Buy 12.65 13.41 10.29 5.99 5.65 7.37 0.74 0.71 0.71 10.6 11.9 11.9

Bank Al Habib BAHL 52.48 65.00 Buy 10.07 8.18 8.41 5.21 6.42 6.24 0.94 0.84 0.77 6.7 7.6 7.6

Bank AlFalah BAFL 33.53 48.90 Buy 7.34 6.63 5.87 4.57 5.06 5.71 0.67 0.62 0.58 11.9 11.9 11.9

Habib Bank Limited HBL 97.84 154.40 Buy 10.45 14.47 12.02 9.36 6.76 8.14 0.64 0.60 0.57 5.1 6.1 7.2

Habib Metropolitn Bank HMB 27.70 45.70 Buy 6.34 6.63 6.46 4.37 4.18 4.29 0.61 0.52 0.48 9.0 9.0 9.0

MCB Bank Limited MCB 161.42 211.00 BUY 20.14 18.57 17.29 8.01 8.69 9.34 1.12 1.06 0.98 10.5 10.5 10.5

Meezan Bank Limited MEBL 67.57 100.00 Buy 12.12 11.92 10.09 5.58 5.67 6.70 1.38 1.25 1.17 5.9 8.9 8.9

National Bank of NBP 26.23 45.60 Buy 7.79 7.96 6.81 3.37 3.29 3.85 0.23 0.22 0.20 - - -

United Bank Limited UBL 104.92 160.00 Buy 15.60 15.58 15.70 6.73 6.74 6.68 0.67 0.63 0.60 11.4 11.4 12.4

The Bank Of Punjab BOP 8.50 13.90 Buy 3.12 2.60 1.88 2.73 3.27 4.52 0.47 0.44 0.42 11.8 11.8 11.8

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

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

8

AKD Securities Limited

3 July 2020

StockSmart

Pakistan Weekly Update

AKD Universe Coverage Cluster’s Performance

Source: PSX & AKD Research

Stocks Symbol Price 1 Year 1 Year

3-Jul-20 1M 3M 6M 12M CYTD High Low

KSE-100 Index 35,051.38 1.9 10.8 -17.2 0.4 -14.0 43,218.7 27,228.8

Automobile and PartsIndus Motors INDU 993.96 5.1 27.4 -16.5 -16.5 -14.4 1253.12 700.38Pak Suzuki Motors PSMC 161.89 -1.3 6.4 -29.9 -27.8 -29.8 290.93 124.21

CementsDG Khan Cement DGKC 90.45 11.4 43.3 16.5 58.0 21.8 91.39 42.31Lucky Cement LUCK 489.76 8.8 25.0 5.7 27.7 14.3 566.47 310.30Maple Leaf Cement MLCF 27.01 4.9 19.2 11.4 11.9 16.7 30.74 13.79Fauji Cement Company FCCL 17.08 1.5 7.4 4.3 6.8 9.8 18.69 11.68Pioneer Cement Limited PIOC 64.35 7.1 112.2 106.1 179.3 111.1 66.41 17.37Cherat Cement Limited CHCC 91.88 6.7 47.2 69.2 187.0 73.2 95.91 24.78

EngineeringAmreli Steel Ltd ASTL 35.83 4.2 12.6 -8.8 55.3 -0.8 41.61 15.83

FertilizersEngro Fertil izers Ltd. EFERT 63.07 4.5 10.4 -14.3 -4.3 -14.1 78.57 50.72Engro Chemical ENGRO 298.16 3.7 7.5 -16.1 10.9 -13.6 366.00 234.78Fatima Fertil izer FATIMA 27.40 2.0 16.5 1.0 -7.9 3.0 30.00 20.82Fauji Fert. Bin Qasim Ltd. FFBL 16.17 -5.6 14.4 -22.1 -14.6 -17.2 24.54 11.79Fauji Fertil izer Company FFC 112.14 3.6 20.6 9.8 21.1 10.5 112.14 82.71

Cable & Electrical Goods

Pak Elektron Limited PAEL 24.46 3.1 15.5 -15.6 19.6 -9.6 29.50 14.32

Oil & GasOil & Gas Development OGDC 112.91 -1.0 28.1 -24.5 -14.1 -20.7 154.21 75.01Pak Oilfields POL 354.39 6.5 18.3 -25.1 -14.7 -20.7 473.43 241.11Pakistan Petroleum Ltd. PPL 89.99 -4.0 7.4 -37.2 -38.0 -34.4 151.82 69.13Pakistan State Oil PSO 159.35 2.1 15.1 -23.1 -7.3 -16.8 216.54 113.98Attock Petroleum Ltd. APL 299.44 6.9 7.7 -20.1 3.3 -19.0 394.43 211.87Hascol Petroleum HASCOL 13.71 -4.4 -0.5 -52.7 -79.9 -49.0 69.06 10.65

PowerHub Power Co. HUBC 73.68 -3.7 -3.5 -25.1 -7.2 -21.1 103.21 57.40K-Electric Limited KEL 3.18 4.3 6.4 -31.2 -27.4 -27.2 4.77 2.65Kot Addu Power KAPCO 20.25 -16.0 -8.2 -34.7 -45.8 -35.8 37.46 15.00

Personal Goods

Nisaht (Chunian) Ltd. NCL 33.54 6.1 10.2 -23.7 -7.5 -21.4 47.63 23.78Nishat Mills NML 79.63 6.8 21.8 -26.2 -16.9 -25.0 117.81 54.07

BanksAllied Bank Limited ABL 75.80 5.3 -8.4 -24.3 -27.1 -20.7 105.02 66.82Bank AlHabib Limited BAHL 52.48 62.9 55.5 -35.8 -33.5 -31.1 82.00 28.79Bank AlFalah BAFL 33.53 4.6 -6.3 -30.6 -23.5 -26.6 52.99 28.79Habib Bank Limited HBL 97.84 -2.8 -8.5 -40.1 -16.6 -37.8 171.24 94.78Bank of Punjab BOP 8.50 -4.3 7.1 -28.3 -9.8 -25.0 14.13 7.01Habib Metropolitan HMB 27.70 -1.1 -11.4 -27.1 -23.7 -23.8 42.00 27.30MCB Bank Limited MCB 161.42 -0.9 2.1 -25.3 -7.3 -21.2 224.53 132.89Meezan Bank Limited MEBL 67.57 3.5 5.2 -30.0 -20.7 -29.0 106.21 55.66National Bank of NBP 26.23 -5.9 -13.8 -40.9 -29.0 -39.4 46.30 25.53United Bank Ltd UBL 104.92 -2.5 -1.9 -40.1 -29.5 -36.2 181.96 89.44

Absolute Performance (%)

9

AKD Securities Limited

3 July 2020

StockSmart

Pakistan Weekly Update

Economic Snapshot

Source: SBP, PBS & AKD Research

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

Monetary Rates

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

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

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

PIB 10Y % 13.68 13.67 13.29 12.18 11.3 11.35 11.09 11.04 11.18 10.16 8.47 8.25 8.61

KIBOR 6M % 12.86 13.3 13.82 13.65 13.08 13.48 13.5 11.23 13.23 12.34 12.08 7.75 7.58

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

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

Inflation

National CPI Inflation % 8 8.4 10.5 11.4 11.0 12.7 12.6 14.6 12.0 10.2 8.5 8.2 8.6

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

Core inflation (Rural) % 6.7 7.8 8.8 8.8 8.6 8.4 8.1 9 9.4 9.4 9.8 9.7 10.0

Food inflation (Urban) % 7.5 7.9 11.9 15.0 13.7 16.6 16.7 19.5 15.2 13.0 10.4 10.6 12.9

Food inflation (Rural) % 9.1 9.3 12.6 15.0 14.6 19.3 19.7 23.8 19.7 15.5 12.9 13.7 15.2

External Indicators

Export (PBS) US$ (mn) 1,717 1,894 1,859 1,769 2,024 2,011 1,993 1,970 2,140 1,814 957 1,396 1,592

Import (PBS) US$ (mn) 4364 4019 3658 3,785 4,074 3,940 4,037 4,037 4,185 3,316 3,088 2,863 3,715

Trade Deficit (PBS) US$ (mn) (2,647) (2,125) (1,799) (2,016) (2,050) (1,929) (2,044) (2,067) (2,045) (1,502) (2,131) (1,467) (2,123)

Export (SBP) 1800 2228 1,894 1,888 2,189 2,111 2,108 2,052 1,993 1,820 1,407 1,272 n.a

Import (SBP) 3997 4182 3,523 3,326 3,632 3,682 3,791 3,912 3,563 3,321 3,140 2,806 n.a

Trade Deficit (SBP) (2,197) (1,954) (1,629) (1,438) (1,443) (1,571) (1,683) (1,860) (1,570) (1,501) (1,733) (1,534) n.a

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

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

Banking Sector

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

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

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

W. A. lending rate % 11.87 12.69 12.99 13.31 13.52 12.74 12.73 13.35 13.23 13.01 12.00 11.57 n.a

W. A. deposit rate % 5.71 6.18 6.47 6.52 6.69 6.73 6.65 6.95 7.00 6.91 6.91 5.11 n.a

Spread rate % 6.16 6.51 6.52 6.79 6.83 6.01 6.08 6.40 6.23 6.10 5.09 6.46 n.a

Public Finance

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

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

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

Currency

Fx Reserves US$ (mn) 14,477 15,144 15,644 15,228 15,424 16,003 17,930 18,645 18,881 17,098 18,755 16,943 n.a

USDPkR - Interbank PkR/USD 156.41 159.19 158.24 156.33 156.04 155.40 155.01 154.74 154.34 159.02 164.43 160.58 165.53

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

3 July 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%)