AKD Quotidian about — OGDC: FY11 Result Preview

Karachi: OGDC is scheduled to announce its full year FY11 result tomorrow where AKD Securities expects the company to post NPAT of PkR63.4bn against NPAT of PkR59.17bn in FY10.

According to AKD Securities, the result translates into an EPS of PkRI4.75/share versus EPS of PkR1 3.76/share in the corresponding period last year, a restricted growth of 7%YoY. Despite higher development returns and improving gas volume (up an estimated 3%YoY), AKD Securities expects earnings growth to be clipped by one-off charges related to revision in Kunnar COSA (estimated at PkR16bn pre-royalty) coupled with amortization (one-off -PkR4bn) and asset impairment (PkR800mn) related to TRACS reserve assessment. Sequentially, AKD Securities expects OGDC to post earnings of PkR3.31/share in 4QFY11, down 19% due to one-off charges taken during the quarter. Alongside the result, AKD Securities expects OGDC to announce a final DPS of PkR2.5/share taking full year payout to PkR5.5/share. Post the recent sell-off, OGDC has lost 15% in absolute terms leading current market price to offer an upside of 9.2% to AKD Securities’ target price of PkR145/share.

NBP: 1HCY11 Result Preview
National Bank of Pakistan (NBP) is scheduled to announce its 1HCY11 result on Aug 18’11. On a consolidated basis, AKD Securities expects NBP to post NPAT of PkR8.75bn (EPS: PkR5.20) in 1HCY11 against NPAT of PkR7.88bn (EPS: PkR4.68) in 1HCY10, translating into modest 11%YoY growth. On a sequential basis, 2QCY11 NPAT should register at PkR2.66bn (EPS: PkR2.66), up 5%QoQ. Judging by past precedence, AKD Securities do not expect NBP to announce any interim payout. Key highlights of 1HCY11 results are expected to be:

• 8%YoY Nil growth, with flat NIMs (-5.9%) countered by some asset expansion

• 23%YoY decline in provisions due to a sharp reduction in impairment on shares

• 4/0YoY decline in non-interest income due to lower capital gains

• 5%YoY growth in admin exp due to high base (one-off pension charge last year).

NBP trades at a CY11F P/B of 0.50x, PER of 3.9x and dividend yield of 14.25%. This is one of the most attractive valuation sets in the AKD coverage cluster, let alone our banking universe. Accordingly, AKD Securities advocates a Buy stance where AKD Securities’ target price of PkR65/share offers an upside of 42.5%.

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