JS Securities Limited – Weekly review

Karachi, May 15, 2015 (PPI-OT): KSE remains jittery as benchmark index closes 2% WoW down

The market’s sentiments remained jittery during the outgoing week, where on Monday Karachi Stock Exchange (KSE) shed over 1,000 points due to rumours of NAB and SECP becoming active in investigating insider trading.

Political instability mainly marked by polling recount in selective constituencies also added to investors remaining cautious and sidelined, largely ignoring (1) Pakistan successfully completing IMF’s seventh review and (2) favourable MSCI Equity Indexes May 2015 Index review.

Hence, the benchmark KSE-100 index closed down by 2.1% WoW at 33,039 with average trading volumes clocking in at just 191mn shares (but up 2% WoW). Encouragingly though, foreigners remained net buyers worth US$6mn vis-à-vis net buying of US$12mn in the preceding week.

Other key highlights of the week were: (1) Pakistan and IMF reportedly agreeing on a plan to end Rs600bn circular debt, (2) Government will be submitting progress report by May 22nd over 27 conventions agreed with European Union (EU) as part of the commitment under the GSP Plus status, (3) Remittances rising by 16% YoY to US$15bn in 10MFY15, (4) South Africa imposing anti-dumping duty on Pakistan Cements, (5) Auto sales surging by 28% YoY in 10MFY15 and (6) Fertilizer sales rising by 41% YoY in April 2015.
Pak, IMF reach agreement; US$506mn expected in June

Pakistan and IMF reached a staff-level agreement on the seventh review of the IMF’s US$6.6bn Extended Fund Facility (EFF), where Pakistan met all end-March performance criteria. However, indicative target of federal tax revenue was missed by a small margin. IMF Executive Board in June will consider disbursement of ~US$506mn to Pakistan.

MSCI Equity Indexes May 2015 Index Review

MSCI announced the results of the May 2015 Semi Annual Index Review, effective from May 29, 2015. From Pakistan’s perspective, Hub Power Company (HUBC) and Indus Motor Company (INDU) have been added to MSCI Frontier Market Index, while Pakistan Tobacco Company (PAKT) has been deleted.

Pakistan’s trade deficit rises by 11% YoY in 10MFY15

In 10MFY15, Pakistan’s trade deficit widened by 11% YoY to US$17.92bn as Pakistan’s exports contracted by 5% YoY to US$19.93bn while imports in the same period surged by 2% YoY to US$37.85bn. Meanwhile in Apr-2015, trade deficit clocked in 14% YoY lower but 19% MoM higher at US$1.86bn.


This Last
KSE weekly snapshot %
Weekend Weekend
KSE-100 Index 33,039.20 33,742.88 -2.1%
KSE Market Cap (Rs. bn) 7,181.92 7,353.58 -2.3%
KSE Market Cap (US$ bn) 70.55 71.82 -1.8%
Avg daily vol during week (mn shares) 191.05 187.22 2.0%
Avg daily value during week (Rs bn) 9.75 10.77 -9.5%
Avg daily value during week (US$ mn) 100.52 105.84 -5.0%


JS Universe – Valuation Snapshot (Y/E: 31 Dec)
Price Target Diluted EPS (Rs) EPS Growth (%) PER (x) Price/BV (x) D/Y (%) EV/EBITDA (x) ROE (%)
Company Name Rating
15-May Price 2014A 2015E 2014A 2015E 2014A 2015E 2014A 2015E 2014A 2015E 2014A 2015E 2014A 2015E
JS UNIVERSE 20% 14% 8.5 7.5 1.8 1.8 5.6% 6.2% 4.3 4.7 21% 24%
Oil and Gas Exploration OW 31% 9% 6.6 6.0 1.9 1.8 6% 6% 2.9 2.6 29% 30%
Oil and Gas Devp. Co. 187.06 Buy 220.00 28.81 22.40 37% 11% 6.5 8.4 1.9 1.9 5% 5% 3.2 3.1 29% 32%
Pakistan Petroleum 172.26 Buy 205.00 26.08 18.81 23% 14% 6.6 9.2 1.8 1.5 7% 8% 2.3 1.9 27% 26%
Pakistan Oilfields 384.14 Buy 514.00 54.48 41.01 19% -25% 7.1 9.4 2.6 2.6 14% 10% 3.3 4.4 37% 27%
Banks MW 42% 14% 9.2 8.1 1.4 1.3 6% 7% 16% 16%
MCB Bank 266.10 Buy 331.00 21.85 26.43 13% 21% 12.2 10.1 2.3 2.0 5% 6% 20% 21%
Habib Bank Limited 197.23 Buy 233.00 21.63 23.98 39% 11% 9.1 8.2 1.7 1.5 6% 7% 20% 20%
United Bank Limited 167.01 Buy 250.00 19.32 22.45 23% 16% 8.6 7.4 1.5 1.3 7% 8% 19% 19%
National Bank of Pakistan 57.04 Hold 66.00 7.06 6.86 173% -3% 8.1 8.3 0.7 0.7 10% 8% 9% 8%
Allied Bank Limited 107.86 Buy 148.00 13.11 14.78 3% 16% 8.2 7.3 1.5 1.3 6% 7% 20% 20%
Bank Al-Falah 28.42 Buy 32.00 3.55 4.19 21% 18% 8.0 6.8 1.0 0.9 7% 9% 15% 14%
Askari Bank Limited 20.92 Hold 23.00 3.19 2.98 NM 0% 6.6 7.0 1.1 1.0 10% 10% 19% 16%
Bank Al-Habib 45.35 Buy 59.00 5.71 6.80 23% 17% 7.9 6.7 1.5 1.3 7% 8% 22% 21%
Faysal Bank Limited 17.31 Buy 20.00 2.06 2.10 34% 63% 8.4 8.2 0.8 0.7 0% 0% 10% 14%
Fertilizer MW -3% 26% 12.2 9.7 3.2 2.8 6% 7% 5.0 4.3 26% 29%
Fauji Fertilizer Co. 139.76 Buy 145.00 14.28 14.83 -10% 4% 9.8 9.4 7.0 6.5 10% 10% 6.0 5.8 72% 69%
Engro Corporation 285.49 Buy 337.00 13.38 24.68 -14% 84% 21.3 11.6 2.3 2.0 2% 4% 8.2 6.2 11% 17%
Fauji Fertilizer Bin Qasim 47.62 Sell 46.00 4.30 4.32 -31% 0% 11.1 11.0 3.4 3.4 8% 9% 5.3 5.3 31% 31%
Fatima Fertilizer 37.60 Buy 42.00 4.29 4.84 12% 13% 8.8 7.8 2.1 1.9 8% 8% 4.7 4.4 24% 25%
Engro Fertilizers 85.16 Buy 97.00 6.17 9.35 49% 52% 13.8 9.1 3.4 2.7 3% 6% 6.2 5.0 24% 29%
Power Generation OW 15% 50% 9.3 6.2 2.6 2.1 6% 7% 4.3 3.2 27% 33%
Hub Power Co. 95.43 Buy 67.00 5.66 7.76 -30% 37% 16.9 12.3 3.5 3.5 7% 8% 8.3 8.4 21% 28%
Kot Addu Power 86.38 Buy 70.00 8.78 10.25 5% 22% 9.8 8.4 2.8 2.7 8% 11% 6.2 3.6 29% 34%
Nishat Chunian Power 61.11 Hold 39.00 7.90 7.20 6% -9% 7.7 8.5 2.8 2.7 11% 10% 7.4 5.4 36% 32%
K-Electric Limited 7.46 Buy 12.50 0.47 0.87 92% 86% 16.0 8.6 4.7 3.1 0% 0% 6.8 5.8 30% 36%
Technology and Comm. UW -37% 11% 10.8 9.7 1.0 1.1 7% 9% 2.8 2.8 9% 11%
P.T.C.L. 21.49 Sell 23.00 1.20 2.21 -37% 11% 17.9 9.7 1.0 1.1 7% 9% 2.8 2.8 9% 11%
Cement OW 9% 26% 12.6 10.0 2.0 1.7 2% 3% 6.8 5.4 16% 17%
Lucky Cement 455.33 Buy 635.00 35.08 39.24 17% 12% 13.0 11.6 3.0 2.5 2% 2% 8.4 7.1 23% 21%
DG Khan Cement 125.37 Buy 163.00 13.62 17.76 8% 30% 9.2 7.1 0.9 0.8 3% 3% 2.2 1.5 10% 11%
Lafarge Pakistan Cement 16.34 Hold 9.30 1.02 1.38 -18% 23% 16.1 11.8 1.9 1.7 2% 2% 7.2 5.4 12% 13%
Fauji Cement 32.54 Buy 40.00 1.80 2.94 27% 63% 18.1 11.1 2.7 2.5 5% 8% 8.8 6.8 15% 23%
Maple Leaf Cement 62.47 Buy 73.00 5.36 7.73 -12% 44% 11.7 8.1 2.3 1.8 0% 2% 8.2 6.3 19% 22%
Oil and Gas Marketing MW 59% -26% 5.5 7.4 1.6 1.3 4% 4% 4.2 5.6 28% 18%
Pakistan State Oil 366.03 Buy 456.00 80.31 57.95 74% -28% 4.6 6.3 1.3 1.1 2% 2% 3.9 5.5 28% 17%
Attock Petroleum 529.16 Buy 579.00 52.16 44.91 11% -14% 10.1 11.8 3.2 3.1 9% 8% 5.8 6.5 31% 26%
Textile OW -15% 22% 6.5 5.3 0.7 0.6 5% 6% 6.3 5.5 10% 12%
Nishat Mills 107.59 Hold 111.00 15.67 17.29 -6% 10% 6.9 6.2 0.6 0.6 4% 5% 5.6 5.1 9% 10%
Nishat Chunian Limited 34.42 Buy 52.00 7.09 11.76 -38% 66% 4.9 2.9 0.8 0.8 9% 12% 9.4 6.8 16% 26%
Auto Assembler MW 15% 83% 20.9 11.4 3.2 2.7 2% 4% 10.9 5.8 15% 24%
Indus Motors 1,150.16 Hold 981.00 49.28 93.71 15% 90% 23.3 12.3 4.5 3.8 3% 5% 13.3 5.9 19% 31%
Pak Suzuki Motors 418.31 Hold 399.00 25.65 43.80 14% 71% 16.3 9.6 1.8 1.6 1% 2% 7.4 5.7 11% 17%
Refinery MW -61% 7% 6.8 6.4 0.6 0.6 1% 1% 2.0 3.1 9% 9%
Attock Refinery 209.51 Buy 246.00 29.82 32.72 -33% 7% 7.0 6.4 0.6 0.6 1% 1% 2.0 3.1 9% 9%
Miscellaneous
Engro Foods 140.69 Buy 175.00 1.16 4.72 316% 306% 121.2 29.8 9.3 7.1 0% 0% 28.0 13.4 8% 24%
Adamjee Insurance 45.13 Hold 50.00 7.28 8.46 30% 16% 6.2 5.3 1.0 0.9 7% 8% 16% 16%

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