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Pakistan Investment Strategy, 2011
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Table of Contents
Pakistan economy
Pakistan political landscape
Karachi Stock Exchange
Disclaimer
Contact
AHCML Strategy, 2011
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Pakistan economy, 2011 Set t o f ace a cha l leng ing & tu rb u len t econom ic env i r onm en t
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Table of Contents
GDP Growth
Circular Debt
Subsidy
IMF
Foreign Exchange Reserves
PKR/ US$
International Oil
Remittances
Inflation & Discount Rate
Currency in circulation
NSS Rates
PI Bs, MRTBs & Sukuk
Key economic indicators
Pakistan economy during 2011
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Pakistan economy during 2011
In 2011, Pakistan may face more difficulties due to supply side shortages resultingin an increase in food prices in the domestic market - and surging oil prices in theinternational market.
Food and POL imports are likely to put pressure on the Balance of Payments despiterecord remittances. Depleting foreign inflows and slow export growth may lower theforex reserves.
While remittance are expected to rise to a record high (US$10.52bn US$11.02bn),a small jump may be seen in the import figure due to higher oil and food prices,which are projected to surpass the US$35bn mark.
The Current Account deficit is projected at 5.25% - 5.50% while fiscal deficit isforecasted at close to the PKR1,150bn - PKR1,250bn mark (6.75% - 7.25% of GDP).
With no positive sign of reversing the rising fiscal deficit, SBP is persisting with itstighter monetary policy stance to tame rising inflation while allowing growth to comedown. We believe this present trend would continue!
We foresee GDP growth hovering between 2.50% to 2.70% stemming from anagriculture sector growth of (2.17%) to (2.41%), Industrial Growth at 2.93% to3.13% and Services Sector growth of 3.80% to 4.10%.
GDP Growth
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Pakistan economy during 2011
We do not see any quick settlement of the energy sector inter-corporate circular debteven in 2011 because of low revenue collection and rising prices of crude in theinternational market.
The latest figure of power sector payables stands at PKR275bn while receivableshave jumped to PKR305bn. A quick price adjustment is the only answer to thisproblem, which is politically a tough decision to make.
Circular debt
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Pakistan economy during 2011
In certain areas, such as energy, it is unavoidable due to current price structuring.Time lag is the main cause, because petroleum prices are quoted on a daily basis inthe international market, but in our country prices are fixed on a monthly basis.
Monthly oil subsidy ranges up to around PKR12bn, which is annually roughlyPKR230bn - PKR240bn. Another PKR50bn annual subsidy is required for wheat andsugar for warehouse cost and wastage, which can be minimized with bettermanagement.
Subsidy
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Pakistan economy during 2011
Pakistan has just received a 9-month extension in the IMFs SBA of Nov 2008implying that unless Pakistan fulfills all of the following conditions it is not going toreceive the last two tranches of a cumulative value of US$3.4bn from the IMF:
Widen the tax base (raise the tax to GDP ratio) by imposition of the ReformedGeneral Sales Tax;
Completion of gradual implementation of a Single Treasury Account;
Limiting govt. borrowings from the Central Bank; and
Implementing power sector reforms;
Given the current precarious political situation that the govt. finds itself in, we doubtany serious forward movement on the above Condition Precedents of the IMF.
This, in turn may push Pakistans credit rating down in 2011 and loans from othermultilateral lending agencies such as the World Bank and Asian Development Bankmay even dry down.
International Monetary Fund (IMF)
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Pakistan economy during 2011
On books, Pakistan has a forex reserves position of US$17.2bn, out of whichcommercial bank deposit is US$3.7bn.
SBP has Fx reserves of US$13.4bn, out of which it owns a little less than US$6bn andthe remaining part is IMF money. There is no other major source of inflow in CY2011.
Hence, surging global oil and food prices could pose a big threat to Balance ofPayments and could even start eating away IMFs money!
Foreign exchange reserves
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Pakistan economy during 2011
The secret of the PKR's current stability is largely based on IMF's stabilizationsupport, higher inflow of remittances and SBP's willingness to hold rupee at currentlevels.
Based on the Relative Purchasing Power Parity Concept, we foresee the PKR settlingin the range of PKR86.71-86.92 against the greenback by June 30, 2011, down1.25%-1.50% from its Dec 31, 2010 close of PKR85.64.
However, in 2HCY11, the PKR could come under increasing pressure due to
deteriorating economic indicators and then settle to PKR88.44-88.88 against the USDby Dec 31, 2011, down 2.00%-2.25% from its June 30, 2011 close.
PKR/ US$
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Pakistan economy during 2011
The Western economies are witnessing a slowdown, but they are still the largestconsumer of oil.
Despite lower growth, demand for global oil inched up in 2010, rising by 2m barrel to88.1m barrel. The global growth projection for 2011 is better than last year's thatargues for more demand for oil.
Opec supply was 40% of the global oil. It has already stated that they arecomfortable with the current price level and they do not think that increase in oil
production is necessary.
Production fundamentals, of the industry and demand indicate that oil production willnot increase and gradual price hike will be seen. Energy sector experts foresee theUS Crude averaging around US$95-100/barrel levels.
International Oil
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Pakistan economy during 2011
These would continue their upward journey to touch an all time high and settle in therange of US$10.521bn to US$11.021bn during FY11 thereby supporting the Balanceof Payments position.
Remittances
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Pakistan economy during 2011
We foresee CPI inflation hovering in the range of 15.50% - 16.00% by June 30, 2011with the result that the SBPs money growth target of 12% may be breached.
Therefore, we foresee another 100bps rate hike in CY2011 with the Policy Ratesettling at 15% by June 30, 2011.
Inflation and discount rate
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Pakistan economy during 2011
Standing currently at PKR1577.814bn and hence contributing to growth in BroadMoney (M2), it appears to be beyond anyone's control.
The fast pace of growth in currency in circulation is caused by weakening of rupee,surge in food prices as a result of sharp hike in governmental support price andexcessive govt. borrowings from the SBP.
Currency in circulation
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Pakistan economy during 2011
Moving in tandem with relative PIB yields, we foresee SSC and SSA yield at around14.00%-14.50%, DSC at 14.30%-14.80%, RIC at 14.25%-14.75% and PBA and BSCat 16.25%-16.75% as at June 30, 2011.
While we understand that a surge in NSS yields would undoubtedly help in attractingcash money; increase the domestic savings ratio; check bourgeoning M2 growth;contain liquidity and reduce excess demand in the economy with a view to restoringfinancial stability in the Country, help the govt. to rely more on non-bank sources offinancing and lower its dependence on the banking system the same would, however,
increase the debt servicing of the govt. thus putting the fiscal position under furtherpressure.
NSS Rates
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Pakistan economy during 2011
Banks & FIs are enjoying hefty returns on investments in govt. securities.
Investment in MRTBs has reached PKR1,450bn; PIB holding is PKR516.5bn andSukuk has jumped to PKR131.3bn. Total investment in govt. securities has reached40% while cash reserve money placed with SBP is 5%, NPLs blocked money is 10%,which means tighter credit for private sector.
Caution is required when buying govt. securities, as excessive purchase of govt.security is turning out to be a new problem. Against quarterly maturities, Ministry of
Finance comes up with fresh target of 10% increase, meaning target is rolled overwith (P + Return) and new higher target is offered. In 1QCY11 alone, the auctiontarget for MRTBs stands at PKR980bn, PIBs at PKR35bn and Sukuk at PKR45bn!
Recent downgrading of major Pakistani banks by global rating agencies is due toexcessive investment by banks in govt. securities. The reason is that when banks buy
govt. securities their exposure is on Govt. of Pakistan, which is already struggling onmany economic fronts such as circular debt and loss-making state-owned entities.
The risk is that if revenue collection falls, govt. borrowing targets would be revisedupwards and so would the yields
PIBs, MRTBs and Sukuk
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Pakistan economy during 2011
We foresee 3-month MRTBs yield settling in the range of 14.00% - 14.25%; 6-monthMRTBs at 14.25% - 14.50% and 12-month MRTBs at 14.60% - 14.80% by June 30,2011.
Likewise, we foresee 3-Years PIBs settling between 15.10% - 15.25%, 5-Year PIBs at15.20% - 15.45% and 10-Year PIBs in the range of 15.30% - 15.55% by June 30,2011.
PIBs, MRTBs and Sukuk
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Pakistan economy during 2011
100.0095.00Intl oil (US$/bbl)
11.0210.52Remittances (US$ bn)
16.75%16.25%BSC & PBA (10-Yrs)
14.80%14.30%DSC (10-Yrs)
14.75%14.25%RIC (5-Yrs)
14.50%14.00%SSC & SSA(3-Yrs)
14.85%14.60%12-M MRTBs
14.50%14.25%6-M MRTBs
14.25%14.00%3-M MRTBs
15.55%15.29%10- Yrs PIBs
15.44%15.20%5-Yrs PIBs
15.34%15.10%3-Yrs PIBs
15.00%15.00%Policy rate16.00%15.50%CPI-General
86.9286.71PKR/USD
Key monetary data
Key economic indicators - FY2011
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1,250.001,150.00Fiscal deficit (PKR bn)
7.25%6.75%Fiscal deficit
5.50%5.25%C/A deficit
4.10%3.80%Services
3.13%2.93%Industry
-2.41%-2.17%Agriculture
2.70%2.50%GDP growth
ToFrom
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Pakistan political landscape, 2011
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Table of Contents
Law & Order
Judiciary
Pakistan in committee of nations
Retirement of key public office bearers 2011
Domestic political scenario
I ts all about the numbers!
Pakistan political landscape, 2011
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Pakistan political landscape
Possible operation in North Waziristan Agency and its repercussions on the overalllaw and order situation in the Country;
Ability of the govt. to hold on to its strategic gains in Swat, South Waziristan, Dir,Orakzai, Bajaur, Khyber etc;
Impact of USA withdrawal plan from Afghanistan on Pakistan, its economic, politicaland military future;
Growing religious militancy - in F.A.T.A., most of N.W.F.P., Southern Punjab political violence in Karachi & Balochistan issue etc;
Ability of local law enforcement agencies to uproot domestic terror groups;
With the Army having pushed inside terrorist dens there is evidence that manyterrorists have fled and may be regrouping somewhere else. This could disperseterrorism throughout the Country;
Resettlement of violence, terror and flood hit people & property in a timely manner;
Law & Order
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Pakistan political landscape
Future of the 19th Amendment;
Various cases against President, senior ministers & bureaucrats;
Missing persons cases;
President of Pakistan holding dual offices etc;
Judiciary
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Pakistan political landscape
Pakistans foreign relations especially:
Pak-USA (War Against Terror, Drone Strikes inside Pakistan, USA proposed
withdrawal from Afghanistan etc), Pak-EU; Pak-Iran (Balochistan & Gas Pipeline); Pak-Middle East; Pak-India relations (Kashmir, Water, Siachen, Sirkreek, Mumbai Attacks etc); Pak-Afghan relations (Especially in case of an operation in North Waziristan); US-Iran & Middle Eastern Countries-Iran relations and its impact on Pakistan;
Global concerns regarding Pakistans nuclear and missile program (Sino-Pak NuclearDeal);\
Pakistan in committee of nations
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Pakistan political landscape
Retirement of key public office bearers - 2011
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September 21, 2011Commander, Army StrategicForces Command
Lt Gen Jamil Haider
March 18, 2011DG Inter-ServicesIntelligence
Lt Gen Ahmad Shuja Pasha
(Adhoc Justice SupremeCourt for One Year)
Judge Supreme Court ofPakistanJustice Khalil-ur-Rehman
Ramday
May 31, 2011Judge Supreme Court ofPakistanHon. Justice Raja
Muhammad Fayyaz Ahmad
July 31, 2011Judge Supreme Court of
PakistanHon. Justice Javed Iqbal
Retirement DateDesignationName
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Pakistan political landscape
No joint leader of opposition expected during the year thus preventing any NoConfidence move against the prime minister;
Given the inherent legal weakness in the ruling coalition, it would be quite difficult toexecute the following:
Passage of a Money Bill Federal Budget, Imposition of RGST and Flood Tax? Implementation of the IMF program in letter and spirit; Building consensus on North Waziristan Agency Operation; Taking any unpopular decision(s) that may be beneficial in the long-term;
Change in political situation in the following provinces:
Sindh: No major change expected; Punjab: PML-N may force the PPP to quit the coalition govt. in Punjab & PPP may
form a coalition govt. with PML-Q; Balochistan: PML-Q and JUI-F may form a coalition govt.; NWFP: No major change expected;
Domestic political scenario
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Pakistan political landscape
Demands from various opposition parties to:
Conduct free and fair Local Bodies elections;
Levy agricultural income tax prior to imposition of RGST; Address the issue of rising inflation, poverty, job loss etc; Cap prices of petroleum products, cost of utilities etc; Set-up an independent National Accountability Bureau & Election Commission to
check corruption; Appoint key office bearers of PSEs through a parliamentary committee; Adopt austerity measures at all govt. levels;
A possible mid-way change in the Cabinet and even the slot of Prime Minister can notbe ruled-out;
Domestic political scenario
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Pakistan political landscape
Its all about the numbers!
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177Total163Total
15IND.+FATA
1PPP-S
3FATA1NPPP
8JUI-F1BNP-A
25MQM5PML-F
50PML-Q13ANP
91PML-N127PPP
OppositionRuling Coalition
Party position in National Assembly
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KSE - Reach for the stars!
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Table of Contents
KSE
MTS
Cheap Valuations LUCK DGKC HUBC KAPCO PSO
APL POL PPL NRL INDU PTCL
ENGRO FFBL NML ICI
KSE - Reach for the stars
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KSE
We foresee the KSE-100 Index at the 13,400 level by June 2011 driven by:
Forecasted better corporate earnings;
Surge in FIPI on the back of strong global liquidity, cheap regional valuations ofthe KSE and no barriers to entry and exit in Pakistans capital markets;
Introduction of Margin Trading System;
Mergers & Acquisitions, especially in banking, energy, fertilizer & telecom sectors;
International Public Offerings & listings OGDCL bonds - & privatization of PSEs;
Impediment to this forward march of the KSE-100 Index could stem from:
Weak macro-economic fundamentals;
Imposition of Flood Tax, Wealth Tax and R.G.S.T.;
Rising energy sector inter-corporate circular debt, subsidies & cost of utilities;
Issuance of rules for Capital Gains Tax;
Rising political instability;
Balancing risks & rewards
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MTS
As per media reports, SECP approved the concept of Margin Trading System (MTS)on Sep 08, 2010 whose key features are:
Settlement of MTS market transaction shall be linked and netted-off with readymarket such that settlement obligation shall be shifted from or to AF & financee;
Default of MTS market & ready market will not be inter-mingled;
All client codes used in the MTS market will be registered on UIN database;
All transaction executed in MTS market will be based on FPR% being higher of
VaR estimate or 25% for financee;
On settlement date of first leg transaction, broker financee shall be require to payFPR% & AF to pay rest of amount of contract price;
FPR% shall be maintained at all time after settlement of first leg transactionthrough MTM adjustment;
Offer of finance on MTS market shall state the number of shares required to befinanced & required rate of return;
Required rate of return shall be determined by each AF & shall not be greaterthen 1-month KIBOR+800bps;
Key highlights
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MTS
Financees will accept AFs offer directly through MTS terminals & be able to placetheir own bid for acquiring financing which any AF may accept;
Trading will be done on an undisclosed basis in MTS Market;
Each new contract will be max. for 60 calendar days;
Broker financee may release availed fund at any time during 60 calendar days onselling his position in ready market or wanting to take delivery;
Broker financee shall release contract on day of its execution. This will cause a
one day charge of funds on value of financed shares to be paid to AF by financee.In case of holidays, compulsory release date will be adjusted accordingly;
MTS contract period shall be limited to 60 days subjected to compulsory releaseby NCCPL at 1/4th of original quantity of contract i.e. at every 15th calendar day.In case of holidays, the compulsory release date will be adjusted accordingly;
Where broker financee releases his open position before force release by NCCPL
such released shares shall not be available for fresh financing in MTS market;
Broker financee may before expiry of the original contract partially or totallyrelease the contract to enable him to settle his sales position in Ready Market;
Settlement of MTS contract will be on T+2 basis;
Key highlights
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MTS
Following reports shall be made public:
Top 15 AFs & financees in MTS market;
Name of financiers in MTS market & amount of financing for MTS scrips;
Total disbursements in the market & per eligible scrips;
Total funds to be released in next 3-days on expiry at every 15th calendarday which may be refinanced;
Total amount of MTS released in the day & for each MTS eligible shares;
Total funding provided in each share;
Percentage of MTS funds invested in each of eligible share;
Amount of MTS funds released during day & refinanced;
Weighted average interest charged in each of eligible scrips for the day;
Amount availed by financee & number of financees in the market;
Key highlights
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MTS
SECP is currently treading a fine line between provision of additional liquidity & riskmanagement. Resultantly, the SECP has subjected approval of MTS to introduction ofadditional risk mitigating measures, to be incorporated in the Rules;
It needs to be seen how financiers would react to MTS. Given poor liquidity in thesystem, relatively high yields being offered on risk free govt. paper, higher riskassociated with equities market and cap on financing charge that can be charged byfinanciers, we foresee low interest by financiers;
The problem of low volumes can be addressed by laying down a clear roadmap tostrengthen standards, build confidence of all including small investors, and attractsustainable business flows that will put the stock exchanges at the centre of capitalraising efforts and attract genuine long term investment. This will warrantstrengthening of the system as opposed to short-term plays which increase risks;
The need of the day is to protect smaller investors. The prime objective of SECPshould be investors' protection and to take all possible measures to restore investors'confidence. There must also be an increased emphasis on adherence to Rules andaccountability for violations thereof by the Exchange itself;
Given the legal formalities surrounding the launch of the product, we foresee formallaunch of MTS in CY2011. With macro-economic fundamentals of Pakistan weak, weironically do not see the MTS pushing the market to the claimed new highs!
The concluding remark
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Cheap Valuations!Equities offering value!
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Buy246.05ENGRO
Reduce33.81FFBL
Neutral67.97NML
Neutral145.37ICI
Accumulate22.25PTCL
Neutral252.39INDU
Neutral278.57NRL
Neutral233.91PPL
Neutral334.20POL
Neutral348.80APL
Accumulate334.49PSO
Accumulate48.21KAPCO
Buy45.71HUBC
Neutral31.79DGKC
Accumulate81.05LUCK
RatingFair ValueCompanies
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LUCK
Eroding macro-economic fundamentals, a weak political govt., deteriorating law &order situation and energy crisis along with a weak infrastructure affected negativelyby Floods 2010 have virtually choked construction activity in the Country;
Indications of substantial cuts in the PSDP program in FY2011 & FY2012 will affectcement demand in the public sector - negative sign for domestic cement dispatches;
However, massive reconstruction is required for rehabilitation of flood affected areas.Once this is done it shall trigger cement demand for the couple of years to come;
Given pressures in the regional market due to capacity additions, we foresee
lackluster export sales at competitive export prices in the years to come; Largest dealer network (200 dealers across the Country); Dedicated storage silos at
Karachi Port capable of storing 24k tons of cement & leader in exporting lose cement;
Stra teg ic Pro jec ts :
LUCK plans to increase its existing fleet of eighteen trailers to accommodate the
entire logistic requirements of its Karachi Plant;
The Waste Heat Recovery Project Plant at Pezu has begun commercial operationsthereby boding favorably for the Companys margins in future;
Hedging costs, reducing leverage & going global
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LUCK
10%21%6%Rel %
1.611.451.74Avg. Vol. Mn
58.0061.2969.20Min
84.3179.9879.98Max
71.0571.0874.32Avg. Price
12M6M3M
Shareholding pattern
5.32%5.32%5.32%DIV. YIELD
4.004.004.00DPS (PKR)
5.706.407.75PER (X)
13.1911.749.70EPS (PKR)
FY12FFY11FFY10A
0.280.28
24.2924.29
129.35129.35
323.38323.38
3,233.753,233.75
Construction &MaterialsConstruction & Materials
LUKC.KALUKC.KA
LUCK:PALUCK:PA
LUCKLUCK
Fair Value: PKR81.05, Price, Jan 07, 2011: PKR75.13, : 8%
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50.79%
29.66% 9.73%
9.81%
Tabba Group Cos. Directors, CEO
Banks, DFI, MF etc Others
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DGKC
Eroding macro-economic fundamentals, a weak political govt., deteriorating law &order situation and energy crisis along with a weak infrastructure affected negativelyby Floods 2010 have virtually choked construction activity in the Country;
Indications of substantial cuts in the PSDP program in FY2011 & FY2012 will affectcement demand in the public sector - negative sign for domestic cement dispatches;
However, massive reconstruction is required for rehabilitation of flood affected areas.Once this is done it shall trigger cement demand for the couple of years to come;
Given pressures in the regional market due to capacity additions, we foresee
lackluster export sales at competitive export prices in the years to come; DGKC offers exposure in various Nishat Group Companies;
Stra teg ic Pro jec ts :
We understand that the Refused Derived Fuel Project first phase to begincommercial operation soon - shall be operational in CY2011. Likewise, power
generation from Khairpur Waste Heat Recovery Project (10MW) - shall commencein CY2012. Both these projects would allow DGKC to replace a substantial part ofits coal usage with cheap alternative fuels thus boding favorably for DGKCsmargins & reducing its dependence on WAPDA;
More than a cement company
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DGKC
-9%28%28%Rel %
3.533.865.02Avg. Vol. Mn
20.3423.0223.40Min
34.0032.1032.10Max
27.6527.0828.58Avg. Price
12M6M3M
0.13Mkt. Cap. (US$ bn)
11.00Mkt. Cap. (PKR bn)
182.55Free Float (Shares mn)
365.10O/S (mn)
3,650.99Paid-up Capital (PKR mn)
Construction &MaterialsSector
DGKH.KAReuter Code
DGKC:PABloomberg Code
DGKCKATS Code
Fair Value: PKR31.79, Price, Jan 07, 2011: PKR30.48, : 4%
ALHabib Capital Markets (Pvt) Ltd
0.39% 31.40%
68.21%
NML AICL Others
Shareholding pattern
1.64%0.00%0.00%DIV. YIELD
0.50--DPS (PKR)
14.4516.6647.63PER (X)
2.111.830.64EPS (PKR)
FY12FFY11FFY10A
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HUBC
HUBC is pursuing two new projects:
Narrowal Project: A 214MW, R.F.O. based project with a C.O.D. of Feb 2011;
HUBCO stakes: 100% (To contribute PKR3/share to HUBCs fair value); Laraib Energy Ltd.: An 84MW, Hydel based project with a C.O.D. of June 2013;
HUBCO stakes: 75%;
We do not foresee any immediate resolution of the inter-corporate circular debt andhence continue to see HUBCs cash flows under stress during 2011;
A modest currency devaluation, higher tariff profile and higher generation bonus stemming from a high load factor shall help strengthen the Companys bottom-lineduring FY2011;
A tax contingency currently being in the last leg of settlement could, however, castits negative spell on the Companys EPS for FY11. If decided against HUBC, it couldpull down FY11s earnings;
We understand that Bycos interest in Asia Petroleum Ltd. pipeline currentlydedicated to supply fuel to HUBC alone shall have no impact on HUBC in long-run;
The growing star
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HUBC
18%20%16%Rel %
1.781.791.88Avg. Vol. Mn
30.5031.5932.90Min
38.2538.2538.25Max
34.1435.0535.32Avg. Price
12M6M3M
0.51Mkt. Cap. (US$ bn)
43.94Mkt. Cap. (PKR bn)
810.01Free Float (Shares mn)
1,157O/S (mn)
11,572Paid-up Capital (PKR mn)
ElectricitySector
HPWR.KAReuter Code
HUBC:PABloomberg Code
HUBCKATS Code
Fair Value: PKR45.71, Price, Jan 07, 2011: PKR38.05, : 20%
ALHabib Capital Markets (Pvt) Ltd
17.44%12.12%
70.44%
National Power Int'l Xenel Int'l Others
Shareholding pattern
15.77%13.14%13.14%DIV. YIELD
6.005.005.00DPS (PKR)
6.186.827.93PER (X)
6.165.584.80EPS (PKR)
FY12FFY11FFY10A
8/7/2019 AHCML - Pakistan Investment Strategy 2011
42/73
KAPCO
Despite discontinuing its proposed expansion project (280MW), the Companycontinues to pursue growth opportunities in the energy sector. We understandKAPCOs management is currently exploring opportunities in the alternate fuel
segment. Any announcement on this end could bode favorably for the scrip;
We do not foresee any immediate resolution of the inter-corporate circular debt andhence continue to see KAPCOs cash flows under stress during 2011;
High dividend yielding stock;
Looking for alternate fuel?
ALHabib Capital Markets (Pvt) Ltd
8/7/2019 AHCML - Pakistan Investment Strategy 2011
43/73
KAPCO
-10%1%2%Rel %
0.380.360.49Avg. Vol. Mn
38.3538.3538.35Min
48.7044.8542.68Max
42.7741.0140.14Avg. Price
12M6M3M
0.43Mkt. Cap. (US$ bn)
37.02Mkt. Cap. (PKR bn)
176.05Free Float (Shares mn)
880.25O/S (mn)
8802.53Paid-up Capital (PKR mn)
ElectricitySector
KAPCO.KAReuter Code
KAPCO:PABloomberg Code
KAPCOKATS Code
Fair Value: PKR48.21, Price, Jan 07, 2011: PKR42.79, : 13%
ALHabib Capital Markets (Pvt) Ltd
45.73%
18.27%36.00%
WAPDA
National Pow. (Kot Addu) Ltd.
Others
Shareholding pattern
13.67%12.85%11.68%DIV. YIELD
5.855.505.00DPS (PKR)
6.597.087.40PER (X)
6.496.045.78EPS (PKR)
FY12FFY11FFY10A
8/7/2019 AHCML - Pakistan Investment Strategy 2011
44/73
PSO
Resolution of the issue of turnover tax & forecasted surge in sales volumes postFloods 2010 should boost FY2011 earnings;
The issue of inter-corporate circular debt would have to be addressed by the govt.When ever this is done, PSO would turn out to be its biggest beneficiary it wouldhelp strengthen PSOs cash flows and allow it to execute its strategic plans byinvesting in capacity building & enhancement of its storage network;
With furnace oil constituting 44% of PSOs gross profits, the upcoming 3k-4k thermal
based IPPs due up until FY12 should help augment PSOs gross margins in future;
Rehabilitation & reconstruction activities in flood affected areas and load-shedding ofgas (RFO is the next alternate fuel) should also bode favorably for PSO;
Largest OMC in Pakistan (Market Share: 70%; Furnace Oil Share: 86%) with largestretail and storage infrastructure in the Country (Retail Stations: 3.6k; Storage
Capacity: +1.0mn tons);
The largest energy company
ALHabib Capital Markets (Pvt) Ltd
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PSO
Vulnerable to any depreciation in the value of PKR as almost 90% of Pakistans oilimports are carried out by PSO;
When implemented, IFEM deregulation would allow PSO to become the largestbeneficiary in the OMC sector especially in Sindh, given its large retail network allover the Country;
Stra teg ic Pro jec ts :
PSO is carrying out the due-diligence for acquiring major stakes in PRL, a movewhich would allow PSO to execute its back-ward integration plan;
PSO is also working on a study that aims at connecting Kemari with Port Qasimthrough a White Oil Pipeline. This will help increase the efficiency and flexibility ofthe Company;
The largest energy company
ALHabib Capital Markets (Pvt) Ltd
8/7/2019 AHCML - Pakistan Investment Strategy 2011
46/73
PSO
-3%14%11%Rel %
0.910.830.96Avg. Vol. Mn
233.10233.10262.00Min
324.90300.53300.53Max
284.82271.89281.40Avg. Price
12M6M3M
0.59Mkt. Cap. (US$ bn)
50.57Mkt. Cap. (PKR bn)
74.16Free Float (Shares mn)
171.52O/S (mn)
1,715.19Paid-up Capital (PKR mn)
Oil & GasSector
PSO.KAReuter Code
PSO:PABloomberg Code
PSOKATS Code
Fair Value: PKR334.49, Price, Jan 07, 2011: PKR296.56, : 13%
ALHabib Capital Markets (Pvt) Ltd
22.45%15.89%
41.04% 17.56%
3.06%
GoP PSOCL EET
NIT & ICP Modarbas, MF etc
Others
Shareholding pattern
7.42%6.07%2.70%DIV. YIELD
22.0018.008.00DPS (PKR)
4.565.265.62PER (X)
65.0256.4152.76EPS (PKR)
FY12FFY11FFY10A
8/7/2019 AHCML - Pakistan Investment Strategy 2011
47/73
APL
Resolution of the issue of turnover tax & forecasted surge in sales volumes postFloods 2010 should boost FY2011 earnings;
The issue of inter-corporate circular debt would have to be addressed by the govt.When ever this is done, PSO would turn out to be its biggest beneficiary it wouldhelp strengthen PSOs cash flows and allow it to execute its strategic plans byinvesting in capacity building & enhancement of its storage network;
Vulnerable to any depreciation in the value of PKR;
Stra teg ic Pro jec ts :
APL has undertaken to enhance its operational capacities at both, Rawalpindi BulkOil Terminal and Machike Bulk Oil Terminal. It also plans to establish storageterminals at Mehmood Kot, Multan and Tarru Jabba. With the finalization of thisenhancement, APLs storage capacity shall be significantly enhanced;
APL has also purchased 15 acres of land at Port Qasim, Karachi for construction ofbulk oil terminal;
Grow ing strong
ALHabib Capital Markets (Pvt) Ltd
APL
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APL
APL has also entered into a JV with Askari CNG, which is currently operating 52CNG outlets to convert 20 of its existing CNG outlets into multi-fuel facilityoutlets. These outlets will be converted into the APL brand and commissioned as
soon as the process of acquiring pre-requisite licenses is completed;
APL plans to finance all its future plans and projects through equity financing;
When implemented, IFEM deregulation would benefit APL;
Grow ing strong
ALHabib Capital Markets (Pvt) Ltd
APL
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APL
-5%20%-4%Rel %
0.170.270.39Avg. Vol. Mn
275.00281.26287.99Min
377.24374.20374.20Max
329.39317.17323.19Avg. Price
12M6M3M
0.28Mkt. Cap. (US$ bn)
23.56Mkt. Cap. (PKR bn)
13.82Free Float (Shares mn)
69.12O/S (mn)
691.20Paid-up Capital (PKR mn)
Oil & GasSector
APL.KAReuter Code
APL:PABloomberg Code
APLKATS Code
Fair Value: PKR348.80, Price, Jan 07, 2011: PKR343.60, : 2%
ALHabib Capital Markets (Pvt) Ltd
7.02%34.38% 21.88%
34.53%
2.20%
Pharaon Inv. Grp Ltd.ATRLPOLThe Attock Oil Co. Ltd.Others
Shareholding pattern
9.31%8.73%8.73%DIV. YIELD
32.0030.0030.00DPS (PKR)5.836.386.61PER (X)
58.9753.8252.00EPS (PKR)
FY12FFY11FFY10A
POL
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50/73
POL
Given rising crude prices (US Crude forecasted between US$95-100/barrel duringCY11), we foresee higher well-head prices & hence higher operating margins for POL;
A weak PKR, expected to lose further value against the US$, should augur favorablyfor POLs earnings during FY2011;
Successful commissioning of Manzalai Central Gas Processing Facility, forecastedfurther discoveries from Tal Block & the potential from Domial should help keepproduction numbers high thus auguring positively for the Companys revenues;
With most of its gas priced under the 1994 and 2001 policies, POL enjoys higheraverage gas margins as compared to its peers;
Dividend yield is attractive;
Its all about the Tal Block
ALHabib Capital Markets (Pvt) Ltd
POL
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POL
25%43%28%Rel %
1.681.511.96Avg. Vol. Mn
207.90209.99231.01Min
310.98310.98310.98Max
239.30245.96265.34Avg. Price
12M6M3M
0.85Mkt. Cap. (US$ bn)
72.61Mkt. Cap. (PKR bn)
107.94Free Float (Shares mn)
236.55O/S (mn)
2,365.46Paid-up Capital (PKR mn)
Oil & GasSector
PKOL.KAReuter Code
POL:PABloomberg Code
POLKATS Code
Fair Value: PKR334.20, Price, Jan 07, 2011: PKR321.71, : 4%
ALHabib Capital Markets (Pvt) Ltd
53.75%
46.25%
Attock Oil Company Ltd. Others
Shareholding pattern
9.40%8.39%7.77%DIV. YIELD
30.2527.0025.00DPS (PKR)
6.797.6910.23PER (X)
47.4141.8531.44EPS (PKR)
FY12FFY11FFY10A
PPL
8/7/2019 AHCML - Pakistan Investment Strategy 2011
52/73
PPL
Given rising crude prices (US Crude forecasted between US$95-100/barrel duringCY11), we foresee higher well-head prices & hence higher operating margins for PPL;
A weak PKR, expected to loses further value against the US$, should augur favorablyfor PPLs earnings during FY2011;
While significant increase in gas and condensate sales are expected from Tal, Halaand Napsha Blocks, the same may be off-set by decrease in gas sales from Sui,Kandhkot, Adhi and Qadirpur fields;
However, installation of Kandhkot Gas Field Compression Station may push gasproduction up in 2011;
High investments should allow high Interest Income during 2011;
We understand that the issue of inter-corporate circular debt would have to beaddressed by the govt. When ever this is done, PPL with PKR21bn tied in inter-
corporate circular debt as at June 30, 2010 would also benefit;
The premier producer of hydrocarbons
ALHabib Capital Markets (Pvt) Ltd
PPL
8/7/2019 AHCML - Pakistan Investment Strategy 2011
53/73
PPL
12%20%28%Rel %
1.040.991.08Avg. Vol. Mn
168.70168.70173.45Min
225.48225.48225.48Max
195.50197.45198.65Avg. Price
12M6M3M
3.09Mkt. Cap. (US$ bn)
264.39Mkt. Cap. (PKR bn)
247.57Free Float (Shares mn)
1,194.98O/S (mn)
11,949.78Paid-up Capital (PKR mn)
Oil & GasSector
PPL.KAReuter Code
PPL:PABloomberg Code
PPLKATS Code
Fair Value: PKR233.91, Price, Jan 07, 2011: PKR225.73, : 4%
ALHabib Capital Markets (Pvt) Ltd
69.77%
21.60%8.62%
GoP
PPL Employee Empowerment Trust
Others
Shareholding pattern
6.65%6.65%3.32%DIV. YIELD
15.0015.007.50DPS (PKR)7.567.9211.56PER (X)
29.8528.5119.52EPS (PKR)
FY12FFY11FFY10A
NRL
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54/73
NRL
The Company is and shall continue to face liquidity crunch due to the inter-corporatecircular debt. Settlement of this issue would bode favorably for NRLs cash flows;
NRL is in no position to increase the price of base oil in tandem with rising prices ofinternational crude (US Crude forecasted between US$95-100/barrel during CY11).We thus do not foresee NRL realizing any extra-ordinary margins in 2011;
We understand that NRL may even export base oil to clear its inventory. This wouldprevent NRL from reaping the benefits of customs duty and C&F charges built in locallanded costs of base oil;
While a lot of hue and cry has been raised about the negative impact of the newpricing formula on NRLs fuel segment by reducing its GRM margins, the same hasbeen overplayed given the volatile nature of this segments GRMs;
Vulnerable to any depreciation in the value of PKR;
The lube business
ALHabib Capital Markets (Pvt) Ltd
NRL
8/7/2019 AHCML - Pakistan Investment Strategy 2011
55/73
NRL
55%49%35%Rel %
0.120.150.24Avg. Vol. Mn
160.00183.25203.00Min
282.00282.00282.00Max
198.67220.48247.05Avg. Price
12M6M3M
0.26Mkt. Cap. (US$ bn)
22.13Mkt. Cap. (PKR bn)
25.21Free Float (Shares mn)
79.97O/S (mn)
799.67Paid-up Capital (PKR mn)
Oil & GasSector
NRL.KAReuter Code
NRL:PABloomberg Code
NRLKATS Code
Fair Value: PKR290.92, Price, Jan 07, 2011: PKR278.57, : 4%
ALHabib Capital Markets (Pvt) Ltd
15.01%25.00% 25.00%
34.99%
ATRL POL IDB, Jeddah Others
Shareholding pattern
5.16%6.02%6.87%DIV. YIELD
15.0017.5020.00DPS (PKR)
6.976.467.08PER (X)
41.7645.0441.08EPS (PKR)
FY12FFY11FFY10A
INDU
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56/73
INDU
Eroding macro-economic fundamentals do not bode favorably for the long-term salesof the Company;
Uncertainty over the govt.s plan to allow import of used cars under the transfer of
residence & baggage scheme could negatively affect sales of locally assembled cars;
Forecasted weakness of the PKR against the Yen and USD could push raw materialsprice up & negatively affect the Companys margins;
The recently signed Afghan Transit Trade Agreement, unless managed properly,could adversely affect local sales and especially INDUs spare parts business;
Expiry of AIDP in 2011 offers both opportunities & challenges to the sector;
The recent launching of Toyotas 4x4 LCV Toyota Hilux presents an opportunity forINDU to establish itself among a niche market;
St r a teg ic Pro j ect :
The Board has recently approved a PKR1.6bn appropriation for Phase-2 of thePress Shop for making additional body parts. This would promote furtherlocalization of auto parts;
Moving forward
ALHabib Capital Markets (Pvt) Ltd
INDU
8/7/2019 AHCML - Pakistan Investment Strategy 2011
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INDU
28%-1%17%Rel %
0.060.040.05Avg. Vol. Mn
196.02212.29218.00Min
287.00287.00282.45Max
236.23244.63246.80Avg. Price
12M6M3M
0.24Mkt. Cap. (US$ bn)
20.20Mkt. Cap. (PKR bn)
19.65Free Float (Shares mn)
78.60O/S (mn)
786.00Paid-up Capital (PKR mn)
Automobile & PartsSector
INDM.KAReuter Code
INDU:PABloomberg Code
INDUKATS Code
Fair Value: PKR252.39, Price, Jan 07, 2011: PKR259.30, : 3%
ALHabib Capital Markets (Pvt) Ltd
0.05%
81.27%
6.22%12.45%
Foreign Investors Thall HICL Others
Shareholding pattern
7.13%5.78%5.78%DIV. YIELD
18.5015.0015.00DPS (PKR)
6.877.495.92PER (X)
37.7434.6343.81EPS (PKR)
FY12FFY11FFY10A
PTCL
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58/73
PTCL
In FY2011, we foresee a drop in PTCLs revenue due to Pakistan Floods 2010 withattrition being witnessed in the PSTN, International Business and Carrier andWholesale segments to be partly mitigated by a surge in revenue from BroadbandServices (wire line and wireless);
Expenses to increase during FY2011 stemming from a surge in employeescompensation costs and aggressive marketing campaigns;
Other Operating Income shall increase due to healthy return on the Companysinvestments and enhanced availability of funds;
Ufone shall continue to maintain its high performance and growth in the industry ---its revenue and profitability should see continued growth in the next few years;
We foresee the project of Revenue Assurance and Fraud Management helping curbthe menance of grey traffic in the next few years;
We foresee continued focus on broadband services (wire line and wireless),commercial operation of 3rd International Submarine Cable, integrated businesssolutions for corporate customers, drop in domestic revenue (stemming from fierceprice competition & mobile substitution) & surge in international traffic & its revenue;
The leading integrated telecom company
ALHabib Capital Markets (Pvt) Ltd
PTCL
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PTCL
Transfer of properties under PTCLs name coupled with payment worth US$1.20bn byEtisalat to the Govt. of Pakistan on account of sale of PTCL shall serve as a short-term trigger for the scrip;
Attractive dividend yield;
The leading integrated telecom company
ALHabib Capital Markets (Pvt) Ltd
PTCL
8/7/2019 AHCML - Pakistan Investment Strategy 2011
60/73
PTCL
6%10%3%Rel %
3.681.601.52Avg. Vol. Mn
16.5017.2018.21Min
22.4920.2220.12Max
19.5518.9819.26Avg. Price
12M6M3M
0.85Mkt. Cap. (US$ bn)
72.95Mkt. Cap. (PKR bn)
585.00Free Float (Shares mn)
3,774.00O/S (mn)
37,740.00Paid-up Capital (PKR mn)
Fixed Line Tele.Sector
PTCA.KAReuter Code
PTC:PABloomberg Code
PTCKATS Code
Fair Value: PKR22.25, Price, Jan 07, 2011: PKR19.50, : 14%
ALHabib Capital Markets (Pvt) Ltd
26.00%
62.21%
11.79%
Etisalat Int'l Pak. GoP Others
Shareholding pattern
8.46%8.97%8.97%DIV. YIELD
1.651.751.75DPS (PKR)
8.238.9010.71PER (X)
2.372.191.82EPS (PKR)
FY12FFY11FFY10A
ENGRO
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ENGRO
Gas curtailment: The govt. has decided to ensure 45 days closure of all fertilizerfactories effective Jan 7, 2011 and 20% curtailment of gas on an open ended basis.This shall affect Engros new urea plant, commissioned on Dec 29, 2010. It has also
been decided that 12% curtailment of gas shall be done on an open ended basis forfertilizer plants that are supplied from the Mari Gas Field. This shall affect Engrosexisting fertilizer plant & prevent the Company from reaping the gains in productionand efficiencies of its investments for the time being;
Off-take: Demand in the upcoming Rabi season is expected to rebound as higherexpected wheat prices, better water availability and increase in acreage in non-flood
areas is likely to off-set lower demand in the flood affected areas. However,curtailment of gas will affect industry situation and alter the supply situation;
Urea imports: Given gas curtailment and resultant low urea production in theCountry, we foresee urea imports worth an incremental 500k-600k tons;
Engro Foods: We foresee continued growth in this segment given the inelasticity ofits demand. Imposition of RGST on packaged milk, ice cream, tea whiteners etccould, however, temporarily dampen related sales;
The ever diversifying conglomerate
ALHabib Capital Markets (Pvt) Ltd
ENGRO
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ENGRO
PVC: Given deteriorating macro-economic fundamentals & their negative impact onconstruction we foresee a weak PVC market only to be mitigated by a surge inexports of PVC at better margins. Caustic Soda sales should, however surge!
Financial management: In a rising interest rate scenario, the Company issubstituting its expensive KIBOR based commercial loans with relatively cheap, fixedinterest rate retail Engro Rupiya Certificates. This strategy, if continued, should helprationalize Engros financial charges in the long-run;
Engro Avanceon: Further slow down may be witnessed in Engro AvanceonsPakistan and UAE business thus pushing its accumulated losses upwards;
Stra teg ic Pro jec ts :
Engro Foods shall commission its rice husking and storage unit on a commercialscale in FY2011 for international export of rice by Engro Eximp to Midddle Eastand the European Union;
Engro Corp. would keep on pursuing the Thar Coal Mining and Power Project aswell as the North African Fertilizer Venture; however, both of these are notexpected to materialize within the next 1-2 years!
The ever diversifying conglomerate
ALHabib Capital Markets (Pvt) Ltd
ENGRO
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3%13%11%Rel %
1.721.191.60Avg. Vol. Mn
165.50165.60173.30Min
216.00200.88200.88Max
186.18181.25183.71Avg. Price
12M6M3M
0.74Mkt. Cap. (US$ bn)
63.64Mkt. Cap. (PKR bn)
147.48Free Float (Shares mn)
327.74O/S (mn)
3,277.37Paid-up Capital (PKR mn)
ChemicalsSector
EGCH.KAReuter Code
ENGRO:PABloomberg Code
ENGROKATS Code
Fair Value: PKR246.05, Price, Jan 07, 2011: PKR201.55, : 22%
ALHabib Capital Markets (Pvt) Ltd
6.71% 38.13%
3.62%
51.54%
DAWH CICL Patek (Pvt.) Ltd. Others
Shareholding pattern
5.95%4.47%2.98%DIV. YIELD
12.009.006.00DPS (PKR)7.178.8411.79PER (X)
28.1122.8117.09EPS (PKR)
FY12FFY11FFY10E
FFBL
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64/73
Gas curtailment: The govt. has decided to ensure 45 days closure of all fertilizerfactories effective Jan 07, 2011 and 20% curtailment of gas on an open ended basis.This decision shall negatively affect FFBLs plant operations thus constraining local
DAP production and hence pushing DAPs domestic prices further up;
Off-take: A further increase in DAP prices, internationally, along with local marketdynamics (as mentioned above) may push DAP prices up domestically therebynegatively affecting DAP off-take in 2011. However, favorable weather and adequatefinancial support by the govt. in the form of subsidy on inputs and adequate wheatsupport prices shall mitigate the negative fall-outs of the same and bring favorable
impact for the industry;
Urea imports: Given gas curtailment and resultant low urea production in theCountry, we foresee urea imports worth an incremental 500k-600k tons;
Pakistan Maroc Phosphore (PMP): Given improvement in international price of
phosphoric acid, stable phos rock prices and sustained plant operations, we foresee asurge in PMP profitability during FY2011;
DAP is the way
ALHabib Capital Markets (Pvt) Ltd
FFBL
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Stra teg ic Pro jec ts :
FFBL is actively looking out for further diversification opportunities by either going
for own projects or participating with other investors in opportunities likeprivatization, LNG Terminal, IPPs, cement sector etc.
In the power sector, FFBL is studying setting up an independent 125MW powergeneration company (COD: End 2012; Cost: US$180mn) & three wind powerprojects of 50MW each (COD: 2012/13; Cost: US$135mn each).
In the cement sector, the Company has invested in Fauji Cement therebyincreasing the latters capacity from 1.17 MTPA to 3.51 MTPA
FFBL offers one of the best dividend yields at KSE;
DAP is the way
ALHabib Capital Markets (Pvt) Ltd
FFBL
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42%42%33%Rel %
3.442.403.30Avg. Vol. Mn
25.0025.9027.51Min
38.0538.0538.05Max
30.3230.6633.22Avg. Price
12M6M3M
0.40Mkt. Cap. (US$ bn)
34.58Mkt. Cap. (PKR bn)
326.94Free Float (Shares mn)
934.11O/S (mn)
9,341.10Paid-up Capital (PKR mn)
ChemicalsSector
JORD.KAReuter Code
FFBL:PABloomberg Code
FFBLKATS Code
Fair Value: PKR33.81, Price, Jan 07, 2011: PKR38.44, : 12%
ALHabib Capital Markets (Pvt) Ltd
9.54%
50.88%
17.29%22.30%
FFC Fauji Foundation
Banks, DFI, MF etc Others
Shareholding pattern
10.41%10.41%12.36%DIV. YIELD
4.004.004.75DPS (PKR)
8.208.397.11PER (X)
4.694.585.41EPS (PKR)
FY12FFY11FFY10E
NML
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Ever increasing production costs, uncertainty about cotton supply and prices,deteriorating economic fundamentals, power and gas outages are the majorchallenges being faced by the Company;
Loss of cotton crop due to Floods 2010 may cause reduction in cotton supply. Thisshall push domestic cotton prices up; along with high international cotton pricesthismay erode NMLs margins and negatively affect its export business;
Increase in textile demand in Europe & America along with announcement ofreduction in import duty on a number of textile products by the EU should provide
some support to the Companys top-line;
St ra t eg ic Plans:
NML is installing 17 additional air-jet looms to increase its production capacity inthe Weaving Business giving it added advantage for specialized products;
NML is also increasing its capacity to 600,000 garments/month to allow itsgarment business to post great results in future;
Staying competitive
ALHabib Capital Markets (Pvt) Ltd
NML
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Plans are afoot for setting up a wholly owned subsidiary in UAE for operatingwholesale and retail outlets of the Company in UAE;
The management has approved the divestment of 10% of its shareholding inPakgen Power through an Offer for Sale and Listing of Pakgen whose possibledivestment is likely to go through in 3QFY11;
Sound core business & strong equity portfolio comprising MCB Bank, DGKC, NishatPower Limited, AES Lalpir and Pakgen Power;
Staying competitive
ALHabib Capital Markets (Pvt) Ltd
NML
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-7%58%43%Rel %
3.073.765.34Avg. Vol. Mn
40.8140.8146.80Min
73.2068.0068.00Max
53.4451.5256.60Avg. Price
12M6M3M
0.27Mkt. Cap. (US$ bn)
23.54Mkt. Cap. (PKR bn)
175.80Free Float (Shares mn)
351.60O/S (mn)
3,516.00Paid-up Capital (PKR mn)
Personal GoodsSector
NISM.KAReuter Code
NML:PABloomberg Code
NMLKATS Code
Fair Value: PKR67.97, Price, Jan 07, 2011: PKR68.14,: 0%
ALHabib Capital Markets (Pvt) Ltd
65.81%
0.36%
8.61%
25.22%
DGKC AICL Mansha Family Others
Shareholding pattern
17.61%13.21%8.81%DIV. YIELD
12.009.006.00DPS (PKR)
2.502.502.50PER (X)
10.989.378.29EPS (PKR)
FY12FFY11FFY10A
ICI
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PSF: We foresee high domestic PSF prices stemming from increased downstreammarket demand, rising global cotton prices and a surge in international PSF prices.This should bode favorably for ICI;
Paints: Forecasted high inflation & interest rates & resultant contraction in aggregatedemand particularly in the construction sector may push sales of paints down to bemitigated by a surge in demand of paints in auto sector. We foresee reduced marginsin this segment stemming from high cost of input materials;
Pharmaceuticals: With land being reclaimed from flood waters and sowing seasons
for wheat & sunflower in full swing, we foresee pharmaceuticals, animal health andvegetable seeds businesses performing during FY2011;
Chemicals: Margins may come under pressure due to high raw material prices;
Overall: Shortage of gas supply & weakening macro-economic fundamentals shall
keep cost of business up in 2011 thus eroding margins of some segments of theCompanys business. Further, Afghan Transit Trade Agreement, which facilitates dutyfree re-entry of goods in domestic market; under-invoicing of imports; inefficienttariff on import of PSF (allowing dumping of cheap imported PSF) & persistent energyshortages may cumulatively hurt ICIs profitability in the long-run;
Diversified yet focused
ALHabib Capital Markets (Pvt) Ltd
ICI
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-14%26%27%Rel %
0.330.450.43Avg. Vol. Mn
109.50109.50116.95Min
190.40149.89149.89Max
139.60126.28133.55Avg. Price
12M6M3M
0.24Mkt. Cap. (US$ bn)
20.60Mkt. Cap. (PKR bn)
30.75Free Float (Shares mn)
138.80O/S (mn)
1,388.02Paid-up Capital (PKR mn)
ChemicalsSector
ICI.KAReuter Code
ICI:PABloomberg Code
ICIKATS Code
Fair Value: PKR145.37, Price, Jan 07, 2011: PKR150.38, : 3%
ALHabib Capital Markets (Pvt) Ltd
24.19%
75.81%
ICI Omicron BV Others
Shareholding pattern
7.65%6.98%6.65%DIV. YIELD
11.5010.5010.00DPS (PKR)
6.957.778.30PER (X)
21.6419.3618.12EPS (PKR)
FY12FFY11FFY10E
Disclaimer
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All rights reserved. The informationpresented in this report is compiled fromsources that we believed to be reliable in thepreparation of this report. However, we donot accept any responsibility for its accuracyand completeness. This report is notintended to be an offer or solicitation to buyor sell any security. ALHabib Capital Markets(Pvt.) Ltd. and its employees may or maynot have a position in or with respect to thesecurities mentioned in this report. Inparticular, the report takes no account of theinvestment objectives, financial situationand particular needs of investors who shouldseek further professional advice or rely upontheir own judgment before making anyinvestment.
All prices are as of Jan 07, 2011 Date of Distribution: Jan 08, 2011
ALHabib Capital Markets (Pvt) Ltd
Infinity-20%Sell
-5%-20%Reduce
Infinity20%Buy
20%5%Accumulate
5%-5%Neutral
Max C.I .Min C.I .
Rating Definitions
GF-01, Techno City, Hasrat Mohani Road, Karachi
Head Office
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Ph: +(92-21) 32460867- 32460869
Stock Exchange Road, KarachiRoom No. 16 Ground Floor, New Stock Exchange Building,
Stock Office
Fax: +(92-21) 32270519Ph: +(92-21) 32270808-13
+(92-21) 32270801-7Research Team
+(92-21) 32270801-7Sales Team
PhoneCompany Representatives
ALHabib Capital Markets (Pvt) Ltd