Research Entity Number – REP-085
Pakistan Strategy
30 July 2023
Market Outlook
The rally has legs
A rip-roaring July
There has been no looking back since Pakistan secured the IMF SBA programme.
The KSE100 gained 13.6% in July, its best month in 3yrs, and is looking
unstoppable at the moment. KSE100 daily traded value jumped to US$32mn, more
than 50% higher than the FY23 average, and meaningful foreign institutional buying
returned after a long hiatus. With forward P/E still below 4x, much below the usual
] our view. Although there is a long road
trough of 6x, the rally has further legs in
ahead - Pakistan needs elections to go smoothly and a successor IMF programme
to be in place quickly - there seems to be enough momentum for the KSE100 to
reach our end-Dec’23 target of 50,000pts.
Watch Elections, Fx reserves buildup and Corporate results
IMF programme is doable
Compared to the previous EFF programme which failed to complete, the objectives
of the recently signed 9m US$3bn SBA programme appear more achievable. The
focus is on preservation of recent macroeconomic gains, ensuring a marketdetermined exchange rate, and keeping a prudent monetary policy (we see a
100bps increase in Monday’s MPS). There is little in the way of meaningful reforms
though, which seem to have been kept aside for a successor IMF programme once
a new government with more buy-in is in place.
Building adequate Fx reserves is key
The SBA programme has unlocked new funding from Saudi Arabia and UAE. This,
together with rollover of US$1bn SAFE deposits (by 1yr) and US$2.4bn by China’s
Eximbank (by 2yrs), has helped SBP Fx reserves cross US$8bn from a low of
nearly US$3bn in January. Ratings agencies have been unusually quick to take
notice, with Fitch raising its rating by one notch to CCC on improved liquidity
conditions. That said, while talks of debt restructuring have been cast aside for now,
it may not take much for these fears to return – the import cover is still less than 2
months, the ongoing run of current account surpluses is partly a function of
exchange restrictions which have to be gradually phased out, and the IMF attaches
high risk to debt sustainability in view of elevated gross financing needs. This feeds
into the urgency to raise additional finances via asset sales / FDI, exemplified by
accelerated efforts to launch a consolidated state-owned enterprises fund and last
week’s MoU with Aramco to set up a US$10bn refinery. Success on this front,
together with selective re-profiling of bilateral debt, may help Pakistan avoid a
wholesale debt restructuring in our view.
Raza Jafri, CFA
raza.jafri@imsecurities.com.pk
+92-21-111-467-000 Ext: 201
Market Snapshot – July 2023
KSE 100 Index (pts)
Market Cap (PKRbn)
Market Cap (US$bn)
Avg. Daily Vol (mn shrs)*
Avg. Daily Td Val (PKR mn)*
Avg. Daily Td Val (US$ mn)*
47,077
7,099
24.8
504
16,338
58
*Ready + Future
Source: PSX
Summary
P/E (x)
P/B (x)
D/Y
KSE 100 MTD (in PKR)
KSE 100 CYTD (in PKR)
KSE 100 MTD (in US$)
KSE 100 CYTD (in US$)
Policy Rate
CPI * YoY
PKR/US$
3.6
0.6
11.0%
13.6%
16.5%
13.4%
-7.9%
22.00%
29.40%
286.45
*Last reported
Elections around the corner
The PML-N led government will leave office in the first half of August, with a
caretaker government to be in place for 2-3 months before national and provincial
elections are held. Given the importance of adhering to the SBA programme and
generating additional funds, the incoming caretaker government has been
empowered to take decisions on existing bilateral/multilateral agreements.
At this point, it appears likely that the new government will be a weak coalition
headed by either the PML-N or the PPP. The PTI has been further hamstrung by
more splinter factions, the latest formed by Khyber Pakhtunkhwa’s erstwhile chief
minister, and Imran Khan himself is beset by legal challenges that may yet see his
disqualification from participating in elections. Although there are question marks
over long-term reforms if the status quo is held, there is also merit in continuity if the
incumbent government returns to power.
More to come
The IMF SBA facility buys Pakistan the runway to hold elections before heading into
a successor IMF programme. With valuations still very attractive and the result
season having kicked off on a strong note, we believe the KSE100 can extend the
rally and reach our end-December Index target of 50,000 points. We do not want to
get ahead of ourselves, but it appears that the ingredients are in place for new alltime highs if Pakistan is able to secure the follow-up IMF programme without
needing to restructure its debt. As a result, we turn more growth-oriented for our top
picks, with high dividend-yielding EFERT being replaced by FFBL which is
undergoing a turnaround.
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Pakistan Market
Top Picks – Valuations & Recommendations
Top
Picks
OGDC
MEBL
UBL
SYS
HUBC
BAFL
APL
MLCF
FFBL
PSMC
Mkt Cap
(US$mn)
1,376
781
6M ADTV
US$mn
1.77
0.44
Price
(PKR/sh)
92
125
TP
(PKR/sh)
144
150
Total
Return
68%
30%
EPS (PKR)
23f
24f
41.3
36.4
35.7
39.0
P/E (x)
23f
24f
2.2
2.5
3.5
3.2
P/B (x)
23f
24f
0.4
0.4
1.4
1.1
DY (%)
23f
24f
11%
10%
10%
13%
639
444
0.63
0.70
150
438
155
670
26%
55%
39.5
38.5
45.2
47.0
3.8
11.4
3.3
9.3
0.8
4.5
0.8
3.2
22%
2%
23%
2%
385
216
0.80
0.19
85
39
123
45
79%
27%
29.8
20.2
32.0
20.8
2.8
1.9
2.7
1.9
0.7
0.5
0.6
0.4
34%
13%
19%
13%
135
117
0.06
0.50
311
31
400
30
39%
-4%
97.3
6.0
83.4
3.3
3.2
5.2
3.7
9.4
0.9
0.7
0.8
0.7
11%
0%
11%
0%
63
36
0.04
0.09
14
127
22
160
63%
26%
2.7
(137.9)
4.6
40.3
5.1
(0.9)
3.0
3.2
0.6
1.2
0.5
0.9
4%
0%
7%
0%
Source: IMS Research
IMS Top Covered Stocks
Stocks
Thesis
OGDC
Largest exploration company, with pan-Pakistan assets, and c 40% of the country's 2P reserves. International ventures in oil exploration and mining efforts
towards other minerals makes it the best government entity with the largest on-ground footprint in key exploratory areas of Pakistan.
MEBL
The national champion in Islamic banking, MEBL is also best-in-class on ROE. This is delivered by high margin sensitivity and superior asset quality,
brought together by excellent management. Risks arise from a potential deposit rate floor on Islamic deposits.
UBL
Offers the highest D/Y in our banks coverage and strong growth in CY23/24f. The Middle East book has been cleaned and is profitable again. The local
loan book is conservatively structured and should show limited infection.
SYS
Will deliver revenue and profitability CAGR of c 30% over the next 5yrs, with growth driven by cloud, data and software implementation services. Expansion
into new geographies and a rebound in margins due to greater exports to the US and Middle East are key highlights to focus on.
HUBC
Our liking for HUBC springs from an improving dividend yield in a more accommodative regulatory climate and as previous expansions bear fruit. The next
impetus to payouts should emerge from CPHGC where HUBC is one of the top dividend yield plays in our coverage.
BAFL
BAFL is impressing on multiple fronts, including high margin sensitivity backed by a strong deposit franchise, fast balance sheet growth, and digital banking
initiatives. The valuation set is very attractive.
APL
APL has a consistent history of dividend payouts, is immune from circular debt and has the lowest foreign exchange exposure in the sector due to vertical
integration. Upward revision in OMC margins and the company’s planned retail expansion in the south and KPK are key catalysts.
MLCF
MLCF is less exposed to higher interest rates courtesy a low level of leverage and subsidized loans. Gradual increase in market share post recent
expansion, higher retention prices and recent reduction in coal prices will help the company to sustain higher earnings.
FFBL
Has endured a very difficult period, but is now undergoing a turnaround as underlying problematic subsidiaries are either being fixed or disposed. Will be a
key beneficiary of the interest rate down cycle, expected from 2QCY24. In place to resume cash dividends in CY24f, if not this year.
PSMC
The company's robust operational performance, coupled with its strong market presence in the hatchback segment, makes it an appealing investment for
the long run. Furthermore, the assurances from Suzuki Japan, pledging support to PSMC during tough times, provide an added level of confidence.
Source: IMS Research
2|
Pakistan Market
Valuations Snapshot
July saw a meaningful improvement in the Price-to-Earnings multiple but
valuations are still more than half-way below the mean
2.4
2.0
1.6
1.2
SD-2
SD+1
SD-1
SD+2
FWD-PER (x)
Mean
Source: IMS Research
SD-2
SD+1
SD-1
SD+2
Jul-23
Sep-22
Nov-21
Jan-21
Mar-20
May-19
Jul-18
Sep-17
Nov-16
Jan-16
Mar-15
(x)
May-14
0.4
Aug-13
Jul-23
Sep-22
Nov-21
Jan-21
Mar-20
May-19
Jul-18
Sep-17
Nov-16
Feb-16
Apr-15
Jun-14
0.8
Aug-13
15.0
13.0
11.0
9.0
7.0
5.0
3.0
(x)
The Price-to-Book multiple has significant room to rerate especially as
corporate profitability and cash dividends are holding up well
FWD-PBV (x)
Mean
Source: IMS Research
Valuations finally show an uptick, and there is still room for significant
rerating over the medium-term
The Earnings Yield does not look very attractive relative to interest rates,
but the equity market is (rightly) being forward looking
40.0%
16.0%
12.0%
30.0%
Mean: 19.2%
8.0%
20.0%
4.0%
10.0%
0.0%
Current: 12.4%
Earnings Yield - T-bill
Mean
Jul-23
Aug-22
Sep-21
Oct-20
Dec-19
Jan-19
Feb-18
Mar-17
Apr-16
May-15
Jun-14
Jul-23
Aug-22
Sep-21
Oct-20
Nov-19
Dec-18
Jan-18
Feb-17
Mar-16
Apr-15
May-14
Jul-13
Mkt Cap to GDP (%)
Aug-13
-4.0%
0.0%
Mean
Source: Ministry of Finance, IMS Research
Source: SBP, IMS Research
Meaningful foreign institutional buying returned in July, especially in
banking sector stocks
Despite Pakistan’s world-beating rally in July, its valuation discount to
regional valuations remains wide
US$mn
60.0
30.0
(30.0)
(60.0)
(90.0)
(120.0)
(150.0)
(180.0)
30%
0%
-30%
-60%
Source: NCCPL, IMS Research
Jul-23
Apr-23
Dec-22
Aug-22
May-22
Jan-22
Sep-21
Jun-21
Feb-21
Jul-20
Oct-20
Mar-20
Nov-19
Dec-18
Apr-19
Aug-19
Aug-18
Discount to EM
Avg. Disc EM
Discount to FM
Avg. Disc FM
Source: Bloomberg, IMS Research
3|
Jul-23
Jul-22
Jul-21
Jul-20
Jul-19
Jul-18
Jul-17
Jul-16
Jul-15
Jul-14
Jul-13
-90%
Pakistan Market
Market Review (July 2023)
600
80
500
400
300
200
100
Avg. Daily Vol (mn shrs)*
Jul-23
Jun-23
May-23
Apr-23
Mar-23
Feb-23
Jan-23
Dec-22
Aug-22
Pakistan
Turkey
Sri Lanka
Malaysia
Qatar
Philippines
MSCI EM
Vietnam
-5.0%
0
UAE
20
Nigeria
0.0%
MSCI FM
40
Indonesia
5.0%
India
60
Egypt
10.0%
Nov-22
Returns in USD
15.0%
100
Oct-22
20.0%
Returning investor confidence and the chance to snap up bargains led to a
marked improvement in trading activity
Sep-22
The KSE100 was the best performing market in July as it roared back on
a surprise IMF deal
Avg. Daily Td Val (US$ mn)* - Lhs
Source: Bloomberg
Source: PSX, IMS Research
*Ready + Future
With default fears dissipating, Banks unsurprisingly performed the best.
Power was up on better liquidity after government payments
Top-performing stocks included a bank and an auto assembler but there
were winners spread across multiple sectors
100%
28.0%
24.0%
20.0%
16.0%
12.0%
8.0%
4.0%
0.0%
-4.0%
75%
50%
25%
UNITY
NRL
HCAR
MEBL
YOUW
DAWH
FATIMA
PGLC
GADT
-25%
IBFL
Banks
Power
Engineering
OMCs
Gas Utilities
E&P
Telecom
Pharma.
Others
Cement
Autos
Food
Textile
Fertilizer
0%
Source: PSX, IMS Research
Source: PSX, IMS Research
Share buybacks continued and new investors entered the market.
Institutions sold, as equity AUMs still struggle against high interest rates.
Banks saw the bulk of foreign institutional buying in July, which helped in
making the sector the best performing on the KSE100
24.0
18.0
12.0
6.0
(6.0)
(12.0)
(18.0)
(24.0)
Foreign Corporate Net FI Buy/(Sell) by Sector
10.0
7.0
4.0
Source: NCCPL, IMS Research
Source: NCCPL, IMS Research
4|
Banks
Tech.
E&Ps
Food
Cement
Fertilizer
Textile
OMCs
US$mn
Power
(2.0)
Others
Foreign Co's
Insurance
Companies
Individuals
NBFC
Broker
Others
Banks / Dfi
Overseas Paki.
1.0
Mutual Funds
US$mn
13.0
Net Buy/(Sell) by Investor Type
Pakistan Market
Economic Trends
CPI is expected to drop from 29% in June to 26% in July but this may not
stop the SBP from another 100bps rate hike in the July 31 MPS
50.0%
Import restrictions are being phased out, but only gradually, given that
the import cover is still less than 2 months
CPI (yoy)
Policy Rate
Goods Exports
Core
Remittances
Jun-23
Dec-22
Jun-22
Dec-21
Jun-21
Jun-23
Jan-23
Aug-22
Mar-22
Oct-21
May-21
Dec-20
Jun-23
Jan-23
Aug-22
Mar-22
Oct-21
May-21
Dec-20
Jul-20
Feb-20
Sep-19
Apr-19
1,000
Jul-20
1,500
Feb-20
2,000
Sep-19
2,500
Apr-19
3,000
US$mn
1,000
500
(500)
(1,000)
(1,500)
(2,000)
(2,500)
(3,000)
Nov-18
US$mn
3,500
Current Acc. Bal. (US$mn)
Source: SBP
Source: Bloomberg
The 1st tranche under the IMF SBA together with fresh GCC funding has
enabled a quick increase in Fx reserves
The PKR may be vulnerable to bouts of weakness as import restrictions
are eased, but we think it is broadly near market-clearing levels
(US$mn)
25,000
5.0
20,000
4.0
15,000
3.0
10,000
2.0
180
5,000
1.0
130
330
SBP Reserves - LHS
Source: SBP, IMS Research
SBP Import Cover (mths)
115
110
105
100
95
90
85
80
280
230
USD/PKR - EoM
REER - Rhs (EoM)
Source: Bloomberg, IMS Research
5|
Jul-23
Mar-23
Nov-22
Jul-22
Mar-22
Nov-21
Jul-21
Mar-21
Nov-20
Jul-20
Mar-20
Nov-19
Jul-19
Mar-19
Jul-18
80
Nov-18
Jul-23
Jan-23
Jul-22
Jan-22
Jul-21
Jan-21
Jul-20
Jan-20
Jul-19
Jan-19
Jul-18
Trade Balance
The current account has turned a surplus for the last 4 months. We
expect a modest deficit across FY24 as import restrictions are eased
Jun-18
The IMF SBA requires a +/- 1.25% gap between the interbank and open
market exchange rate. This can help attract remittances to official channels
Nov-18
Goods Imports
Source: PBS, SBP, IMS Research
Source: PBS, SBP, IMS Research
Jun-18
US$mn
Dec-20
Jul-23
Mar-23
Nov-22
Jul-22
Mar-22
Jul-21
Nov-21
Mar-21
Nov-20
Jul-20
Mar-20
Jul-19
Nov-19
Mar-19
Nov-18
Jul-18
0.0%
Jun-20
10.0%
Dec-19
20.0%
Jun-19
30.0%
Dec-18
40.0%
Jun-18
4,000.00
2,000.00
(2,000.00)
(4,000.00)
(6,000.00)
(8,000.00)
(10,000.00)
Pakistan Market
Annual Economic Estimates
FY20
FY21
FY22
FY23
FY24f
GDP Size (PKRbn)
47,540
55,836
66,624
84,658
105,817
GDP Size (US$bn)
300.8
348.9
375.4
341.6
352.7
GDP Growth
-0.9%
5.8%
6.1%
0.3%
2.5%
GDP per Capita
1,458
1,677
1,766
1,568
1,480
Population (mn)
220
225
229
234
238
External Sector
FY20
FY21
FY22
FY23
FY24f
Exports (US$bn)
21.4
25.6
31.8
27.7
27.3
Imports (US$bn)
44.6
54.3
80.1
55.4
54.0
(23.2)
(28.7)
(48.3)
(27.7)
(26.7)
Services Balance (US$bn)
(2.9)
(1.9)
(5.0)
(2.5)
(2.0)
Remittances (US$bn)
23.1
29.4
31.3
27.0
30.6
Current Account Balance (US$bn)
(4.4)
(2.8)
(17.5)
(2.6)
(3.5)
-1.5%
-0.8%
-4.7%
-0.8%
-1.0%
2.6
1.8
1.9
1.5
2.5
Fiscal Sector
FY20
FY21
FY22
FY23
FY24f
Tax Revenue (PKRbn)
3,908
4,691
6,050
7,200
9,415
Non Tax Revenue (PKRbn)
1596
1,704
1,315
1,618
2,963
Tax Revenue % of GDP
8.2%
8.4%
9.1%
8.5%
8.9%
Interest Payments (PKRbn)
2,620
2,850
3,182
3,950
7,303
Primary Balance % of GDP
-2.3%
-1.4%
-2.4%
-0.5%
0.4%
Fiscal Balance (PKRbn)
-3,809
-3,403
-4,739
-6,404
-7,505
Fiscal Balance % of GDP
-8.0%
-6.1%
-7.1%
-7.6%
-7.1%
Monetary Sector
FY20
FY21
FY22
FY23
FY24f
CPI Inflation (average)
10.8%
9.0%
12.1%
29.0%
19.8%
Policy Rate (average)
12.0%
7.0%
9.7%
17.5%
21.0%
Policy Rate (period end)
8.0%
7.0%
13.8%
22.0%
16.0%
Private Sector Credit Growth
4.9%
4.3%
17.7%
11.8%
5.0%
12.1
17.3
9.8
4.5
9.0
3.3
3.8
1.5
1.0
2.0
PKR/USD (average)
158.9
160.4
177.8
247.7
300.0
PKR/USD (period end)
168.1
157.6
205.1
286.0
310.0
Real Sector
Trade Balance (US$bn)
CA Balance % of GDP
Net FDI (US$bn)
SBP Fx Reserves (US$bn)
Import Cover (months)
6|
Pakistan Market
Key Notes
Strategy & Economy
Economy - IMF staff report focuses on interest rates and Fx market
Economy - IMF SBA Programme: Energy tariffs on the rise
Sectors
Autos: Jun'23 Result Previews – Rising gross margins to improve sector profitability
Banks: 2QCY23 Result Previews - Strong core performance to continue
Textiles: June 2023 - Textile exports continue to show respite
Autos : June 2023 - Modest recovery
Banks: Returning conviction
OMCs: Sales update - MS sales lifted demand in Jun’23
Companies
Honda Atlas Cars Ltd – 1QMY24 Result Review: Strong other income leads to a profit
Habib Bank Ltd: 2QCY23 Review - Record high pre-tax profits
United Bank Ltd – 2QCY23 Result Review: Another stellar payout
7|
Pakistan Market
IMS Universe
As of
E&P
OGDC
PPL
POL
Banks
MCB
HBL
UBL
BAFL
MEBL
BAHL
Cement
DGKC
LUCK
MLCF
CHCC
FCCL
KOHC
PIOC
Fertilizer
FFC
EFERT
FFBL
ENGRO
FATIMA
OMCs
PSO
APL
Steel
ASTL
MUGHAL
ISL
Power
HUBC
Autos
PSMC
HCAR
INDU
Tractors
MTL
AGTL
Pharma
AGP
SEARL
Tech
AVN
SYS
OCTOPUS
Chemical
LCI
LOTCHEM
EPCL
Textiles
NML
GATM
NCL
ILP
KTML
Glass
TGL
Consumers
FCEPL
IMS-Universe
July 27, 2023
Mkt Cap
Price
(US$Bn)
(PKR)
EPS (PKR)
TP
(PKR)
Upside
(%)
Stance
23f
PER (x)
24f
1.4
0.7
0.4
92
73
440
144
105
524
57
44
19
Buy
Buy
Buy
41.29
33.19
114.42
36.41
31.86
92.11
0.6
0.5
0.6
0.2
0.8
0.2
147
91
150
39
125
53
155
100
155
45
150
70
5
10
4
15
20
31
Buy
Buy
Buy
Buy
Buy
Buy
44.78
31.69
39.50
20.23
35.71
26.28
51.85
41.87
45.18
20.84
38.99
27.63
0.1
0.6
0.1
0.1
0.1
0.1
0.1
55
587
31
127
12
177
90
65
770
30
130
17
210
19
31
(4)
2
41
18
Under-review
Buy
Buy
Buy
Buy
Buy
Buy
6.42
99.05
5.96
30.83
2.63
33.97
5.00
117.16
3.32
11.43
0.74
22.23
0.4
0.4
0.1
0.5
0.2
101
82
14
254
28
120
95
22
350
40
19
16
60
38
44
Buy
Buy
Buy
Buy
Neutral
15.76
14.99
2.75
53.23
5.15
21.85
13.99
4.64
56.32
5.97
0.2
0.1
131
311
185
400
41
29
Buy
Buy
30.90
97.26
69.12
83.42
0.0
0.1
0.1
21
56
48
23
90
75
10
62
56
Neutral
Buy
Buy
3.61
8.26
4.09
6.38
12.67
7.22
0.4
85
123
45
Buy
29.82
32.00
0.0
0.1
0.3
127
136
959
160
120
1,200
26
(12)
25
Buy
Neutral
Buy
-137.90
1.82
109.89
40.29
7.71
158.15
0.3
0.1
395
280
444
340
12
21
Neutral
Sell
29.57
45.91
40.10
47.42
0.1
0.1
60
46
80
75
34
62
Buy
Buy
6.26
3.50
8.45
5.57
0.1
0.4
0.0
55
438
46
84
670
87
52
53
89
Buy
Buy
Buy
5.77
38.53
4.48
7.17
47.03
7.76
0.2
0.1
0.1
680
28
44
875
26
40
29
(6)
(9)
Buy
Sell
Sell
85.62
4.10
4.53
100.11
3.76
7.36
0.1
0.0
0.0
0.2
0.1
67
19
23
38
52
82
35
35
85
78
23
84
54
125
49
Buy
Neutral
Neutral
Buy
Buy
27.52
6.50
6.71
7.98
7.60
23.18
6.92
9.61
9.79
9.32
0.1
85
115
35
Buy
11.14
13.83
0.2
70
89
27
Neutral
4.23
5.28
EPS Growth (%)
24f
PBV (x)
DY (%)
ROE (%)
23f
24f
23f
23f
24f
23f
24f
23f
24f
2.4
2.2
2.2
3.8
3.1
3.3
2.9
3.8
1.9
3.5
2.0
5.7
8.5
5.9
5.2
4.1
4.6
5.2
2.7
2.5
2.3
4.8
2.7
2.8
2.2
3.3
1.9
3.2
1.9
6.8
10.9
5.0
9.4
11.1
16.3
8.0
40%
33%
66%
25%
52%
54%
36%
53%
73%
42%
75%
13%
-5%
5%
40%
34%
-9%
36%
-10%
-12%
-4%
-19%
14%
16%
32%
14%
3%
9%
5%
-16%
-22%
18%
-44%
-63%
-72%
-35%
0.5
0.4
0.4
2.2
0.7
0.8
0.4
0.8
0.5
1.4
0.5
0.9
0.3
1.3
0.7
1.1
0.5
1.0
0.4
0.4
0.4
2.1
0.6
0.7
0.4
0.8
0.4
1.1
0.4
0.8
0.3
1.2
0.7
1.0
0.4
0.9
12%
11%
7%
22%
14%
17%
8%
22%
13%
10%
15%
0%
0%
0%
0%
0%
0%
0%
10%
10%
5%
18%
16%
18%
12%
23%
13%
13%
16%
0%
0%
0%
0%
0%
0%
0%
19%
19%
19%
61%
25%
26%
16%
22%
28%
46%
28%
15%
4%
23%
15%
30%
10%
22%
16%
15%
16%
45%
25%
27%
18%
24%
24%
38%
24%
12%
3%
24%
8%
9%
3%
12%
5.4
6.4
5.5
5.1
4.8
5.4
3.8
4.2
3.2
8.1
5.8
6.7
11.7
2.8
2.8
(42.9)
(0.9)
74.5
8.7
11.0
13.4
6.1
11.2
9.6
13.2
11.0
9.6
11.4
10.3
7.9
7.9
6.8
9.7
3.8
2.4
2.9
3.4
4.7
6.9
7.6
7.6
16.5
16.5
3.8
4.7
4.6
5.9
3.0
4.5
4.7
2.3
1.9
3.7
4.9
3.3
4.4
6.6
2.7
2.7
6.2
3.2
17.6
6.1
8.8
9.9
5.9
7.7
7.1
8.3
8.8
7.7
9.3
6.0
6.7
6.8
7.4
6.0
3.5
2.9
2.7
2.4
3.9
5.6
6.1
6.1
13.2
13.2
3.6
11%
0%
25%
52%
26%
-22%
-75%
-83%
-35%
-54%
-19%
-49%
-67%
35%
35%
-120%
79%
-90%
-45%
1%
-3%
12%
-21%
12%
-42%
56%
10%
69%
74%
-40%
-7%
-39%
-65%
-34%
-6%
-51%
-78%
-10%
-52%
-54%
-54%
-27%
-27%
10%
15%
39%
-7%
69%
6%
16%
61%
124%
-14%
65%
77%
53%
76%
7%
7%
-787%
-129%
323%
44%
25%
36%
3%
46%
35%
59%
25%
24%
22%
73%
19%
17%
-8%
63%
9%
-16%
6%
43%
23%
23%
24%
24%
25%
25%
7.6%
0.9
2.4
2.6
0.6
0.5
0.6
0.4
0.3
0.9
0.7
0.4
0.8
0.9
0.7
0.7
1.2
1.2
1.0
1.3
6.7
7.8
4.1
0.8
1.5
0.6
3.5
1.6
4.5
2.4
1.7
1.8
1.8
1.4
0.5
0.3
0.3
0.2
1.4
0.6
0.9
0.9
3.3
3.3
0.7
0.8
2.2
2.6
0.5
0.4
0.6
0.3
0.2
0.8
0.7
0.3
0.7
0.9
0.6
0.6
1.1
0.9
0.9
1.2
6.6
7.7
4.1
0.8
1.3
0.5
2.6
1.3
3.2
1.9
1.5
1.6
1.6
1.4
0.5
0.2
0.3
0.2
1.1
0.5
0.8
0.8
2.5
2.5
0.6
16%
18%
18%
4%
16%
13%
7%
5%
11%
3%
0%
3%
4%
34%
34%
5%
0%
0%
7%
12%
11%
16%
4%
5%
2%
2%
1.8%
2%
0%
5%
6%
0%
10%
7%
6%
11%
9%
8%
2%
2%
2%
0%
0%
11%
16%
18%
17%
7%
16%
13%
9%
8%
11%
5%
0%
4%
6%
19%
19%
8%
0%
2%
11%
17%
16%
17%
4%
7%
2%
2%
2%
2%
0%
8%
7%
0%
16%
8%
6%
16%
9%
8%
2%
4%
4%
8|
0%
0%
11%
16%
39%
47%
13%
11%
11%
10%
7%
30%
9%
7%
13%
8%
26%
28%
-3%
-81%
1%
15%
61%
60%
67%
7%
16%
4%
32%
18%
47%
27%
21%
24%
29%
14%
14%
12%
12%
7%
33%
9%
13%
13%
22%
22%
19%
17%
50%
44%
20%
10%
12%
14%
14%
23%
13%
11%
17%
13%
24%
25%
18%
33%
5%
21%
75%
78%
69%
10%
20%
7%
30%
19%
41%
35%
22%
25%
23%
23%
13%
9%
12%
9%
31%
10%
14%
14%
22%
22%
18%
Pakistan Market
I, Raza Jafri, CFA certify that the views expressed in the report reflect my personal views about the subject securities. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific
recommendations made in this report. I further certify that I do not have any beneficial holding of the specific securities that I have recommendations on in this report.
Ratings Guide*
Buy
Neutral
Sell
Upside
Total return expectation of > 15% or expected to outperform the KSE-100 index
Total return expectation of > -5% or expected to match the return of KSE-100 index
Expected downside of more than 5% or expected to underperform the KSE-100 index
*Based on 12 month horizon unless stated otherwise in the report. Upside is the percentage difference between the Target Price and Market Price.
Valuation Methodology: We use multiple valuation methodologies in arriving at a Target Price including, but not limited to, Discounted Cash Flow (DCF), Dividend Discount Model (DDM) and relative multiples based
valuations.
Risks: (i) Failure to sustain the IMF programme, (ii) higher-for-longer global commodity prices that may risk a wide current account deficit, (iii) further political disruption, (iv) high interest rates on continued escalation in
inflation, and (v) a downturn in corporate profitability.
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