AKD Quotidian about — Pakistan Market: Apr’13 Review and Outlook

Karachi, May 02, 2013 (PPI-OT): The KSE-100 Index gained 5.2% in Apr’13 to close at 18,982 points, bringing CYI3TD gains to 12.3%.

According to AKD Securities the strong gains during the month coincided with the corporate result season, where resilient profitability overcame macroeconomic and political concerns. Market volumes during Apr’13 came in at 194mn shares, with average daily traded value at US$77.6mn. Foreign interest in the market also continued to be strong, with cumulative CVI 3TD net inflows clocking in at US$98mn. Among major gainers, Food Producers and Automobiles remained in the limelight while Telecom sector companies largely underperformed. Going forward, although corporate profitability should continue humming, market gains could remain in check with general elections and a potential re-entry into the IMF being key concerns. That said, AKD Securities would take any correction as an opportunity to build fresh positions. AKD Securities revised end-Dec’13 Index target is 19,950 where AKD Securities tops picks are ENGRO, POL, KAPCO, NML and UBL.

Apr’13 Review: After a subdued performance in Mar’13, the KSE-100 rebounded with a return of 5.2% in Apr’13, bringing CYTD gains to 12.3%. Strong gains coincided with results season where generally resilient profitability enabled the market to overcome headwinds emanating from contracting fx reserves, deterioration in law and order conditions and a shakeup in the market’s own dynamics with change in top SECP management. Overall market volumes came in at l94nin shares with average daily traded value clocking in at U$$776mn. Foreign interest continued to be strong, with Apr’13 net FPI of US$2Bmn.

The main category of sellers was Banks/DFIs with net sell of US$1 5.5mn. Sectors and Stocks: Within main board sectors, top gainers during the month under review included Food Producers (+15%M0M primarily on ULEVER’s run-up to buyback price), Automobiles (+12%M0M on improved outlook) and Textiles (+7%MoM). On the flipside, main decliners included Fixed Line Telecoms (-8.6%M0M due to CCP action) and Multiutilities (- 4.9%MoM on UFG uncertainty). Within the AKD Universe, notable gainers

during Apr13 included PSMC (+46%M0M on a strong sequential turnaround in 1QCY13), EFOODS (+12%M0M) and AICL (+1fJ%MOM in Lockstep with the market). Laggards included PTC (-1O%M0M), AKBL (-9%MOM after book closure of tender offer) and HBL (-8%M0M).

Outlook: The benchmark Index trades at a forward PIE of 7.95x and D/Y of 7.3%. Although corporate profitability remains resilient and valuations are not stretched, with the result season now over the market will likely enter a tough period with key upcoming checkpoints including general elections and a likely re-entry into an IMF program. This may give the market reason to take a temporary breather although AKD Securities would take any correction as an opportunity to build fresh positions. AKD Securities revised end- Dec13 Index target is 19,950 where AKD Securities tops picks are ENGRO, POL, KAPCO, NML and UBL.

Leave a Reply