AKD Securities Limited

AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.

AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.

Pakistan Banks_Payouts propel ‘bull-cycle’ expectations, (AKD Daily, Jan 20, 2021)

AKD Daily Pakistan Banks: Payouts propel ‘bull-cycle’ expectations The strong rally in UBL (+10.6%CYTD) can be taken as an indicator of long-awaited structural bull phase in the banking sector likely triggered by dividend payout expectation (c. DY of latest payouts stand at 6.0%) and receding foreign positions (net sell CY20/cumulative since CY14: US$162mn/US$603.1mn). We expect interest to prevail in near term as valuations (CY21F P/B of 0.8x, at a discount of 13.0% to historical multiples) take center stage and expectation of interest rate hikes  (AKD Est. Dec’21-end interest rate of 8....

Ali Asghar Poonawala

PAEL_Power equipment led rebound imminent - BUY!, (AKD Daily, Jan 19, 2021)

AKD Daily PAEL: Power equipment led rebound imminent - BUY! Terse macro conditions have handicapped PAEL’s consumer durables geared investment case long before COVID-19 led shutdowns materially disrupted operations, resulting in sharply divergent sales performance over the period (9MCY20 Appliance/Power sales moved +33.8/-14.7%YoY) While sticking to our base case appliances revenue growth of 15%YoY (raised from 10% in Sept’20) underpinned by a “return to normal” outlook for consumer confidence and consumer credit offtake due to low rates, we now find significant catalysts to accommodate a...

Pakistan Economy_MPC guidance is what the doctor ordered, (AKD Daily, Jan 25, 2021)

AKD Daily Pakistan Economy: MPC guidance is what the doctor ordered MPC of the SBP, expectedly maintained its policy rate at 7.0% while more importantly sending out guidance on future course, and updating its policy setting approach with greater emphasis on external account stability than inflation. SBP signaled status quo on interest rates in the near term barring unforeseen events while stating that potential tightening would be gradual. Basing our understanding for ’near term’ on external account projections (FY21F CAD: 0.6% of GDP, US$1.67bn) and funding status (assuming resumption an...

Team AKD Research

Stock Smart Weekly (Jan 22, 2021)

Weekly Review                                 KSE-100 remained volatile throughout the week, consolidating at 45,868pts after gaining 1,433pts or 3% month-to-date. Lackluster news on macro levels led to profit taking during the outgoing week, offsetting the result season driven exuberance. Major news included: (1) hike in Discos’ unified base tariff by PkR1.95/KWh vs. proposal of PkR3.34/KWh; Rs200bn impact calculated, indicating towards inflationary uptrend in upcoming months (2) decision to disconnect gas supply to captive power plants from Feb 01st and Mar 01st for industries and export o...

Pakistan Economy_MPC to stick with Status Quo, (AKD Daily, Jan 21, 2021)

The MPC of the SBP — scheduled to meet tomorrow — is likely to maintain policy rate at 7.0% to support nascent economic recovery given uncertainties posed by resurfacing COVID cases domestically and internationally, capitalizing on room granted by transitory inflationary readings (mostly food supply led) and adequate external buffers. Jan’21 inflation is likely to stand at 6.1% vs. 7.97% in Dec’20, predominantly due to high base affect while tighter control on food prices (down 2.0%MoM) particularly out-of-season fall in eggs (15.6%MoM) and chicken prices (26.4%MoM) also played its part. Wi...

Team AKD Research

AKD STOCK SMART

Faltering under mounting macro risks and pressured by significant headline risks, the KSE-100 index continued its FYTD tumble, slipping 7.1%WoW to close at 29,429pts, dropping below the physcological 30K mark after a span of five years. Key news flows during the week included: 1) to avoid US$30mn penalty under Take or Pay mechanism and reduce the volume of demurrages, the GoP has minimized FO and coal based power generation to ensure maximum intake of RLNG, 2) FBR announced that it will not take any adverse action against traders on the condition of provision of CNIC numbers till September 30,...

Ali Asghar Poonawala ...
  • Hamza Kamal

Pakistan Strategy_ Perfect storm of risks clouds fundamentals

Week to date decline of 6.1% cover a period of depressed price performance for stocks, with volumes and returns closely resembling FY08-09, a period of record weakness in equity market performance, highlighting the multi-faceted nature of the prevailing market sell-off We segment news reports and policy actions during the year into macro and sectoral items, while underlining the broad pressures at play on both fronts forcing investors to hunker down, refrain from building fresh positions and induce outflows from institutional investors Guiding market sentiment, these developments have broadl...

Team AKD Research

Pakistan Commodities_July’19 Signals prolonged deceleration

  Global economic growth entered a late-cycle slowdown in the outgoing month, as US China trade tensions creeped into consumer and business confidence while global trade metrics (CPB World Trade monitor slowing from Oct’18 onwards) deteriorated at their fastest pace since the Global Financial Crisis. Signaling weakness in global economic outlook, the US Fed cut its policy rate, it’s first since 2008, signaling the precautionary commencement of a new round of global monetary easing (followed recently by India, Thailand and New Zealand), while steeper inversion in US bond markets illustrate...

Team AKD Research

Pakistan Commodities: Risk of slowdown aggravates global markets

Amidst the continued easing of global economic activity, looming threats of tariffs and most leading indicators of consumer/producer confidence softening, extending volatility to global commodity markets where the TRJ Commodity index moved +3.3%MoM but remaining lower by -9.6%YoY. The most direct impact of trade tensions yet was witnessed in slowing PMI numbers from China, India, Germany, while a downturn in consumer confidence readings from the US indicate significant spillovers from a potential trade tussle between the US and Chine, where on the flipside, ASEAN nations witnessed significant...

Team AKD Research

Pakistan Commodities: Global commodities witnessing mixed trends,

Global commodities printed a mixed trend where a host of factors including slow demand growth in China and tight supply conditions in oil market contributed to the cause. Resultantly, TRJ Commodities Index remained flat with a change of -0.7%. Energy commodities were led by rising crude prices (Arab Light/Brent was up 7.0/6.4% MoM) as US State Department decided against extension waiver on imports from Iran, while Richard's Bay coal prices dipped 12.95%MoM with weak imports from China proving to be a major dampener. Amongst soft commodities, the FAO food price index climbed 1.8%MoM gaining ...

Pakistan Economy: Drastic measures make for an unruly quarter

Headline inflation continues its upward trajectory, with the upcoming Jun'19 reading expected to touch a multi-year high of 9.65%YoY vs. 9.11%YoY in the preceding month and 5.21%YoY in Jun'18. Sequentially, the consumer price index is likely to go up by 1.06%MoM. Inflationary pressures are primarily stemming from i) rising food prices (food index: up 1.77%MoM), ii) higher retail fuel prices pushed by PkR weakness (transport index: up 1.86%MoM) and iii) general price hike in certain categories (i.e. tobacco & sugar) in anticipation of FY20 budget. With macro-adjustments (i.e. both in fiscal a...

Team AKD Research

Pakistan Strategy: Another round on the IMF rollercoaster

Sticking with the trend established in previous programs, the release highlighted some structural benchmarks, namely: 1) Budget FY20 aims to limit primary deficit to 0.6% of GDP, 2) support autonomy of SBP to continue stabilization measures, 3) improve tax collections, administration and modernization of public finance management framework, and 4) long term goals of continued stability measures enacted prior to this program, accompanied by moves to maintain institutional autonomy. Confirming the much-awaited staff-level agreement, the IMF in a press release issued yesterday laid out the ‘bare...

Ali Asghar Poonawala

OMCs_1QCY18 Retail Operations Update

Transportations sector demand continues to remain firmly in the driver seat for OMC volumes, as power sector demand takes the long spiral down (secular, gradual decline in FO sales, where we expect FY19-21F sales declining at CAGR of 21%). Throughput calculations suggest an uptrend in retail volumes moved, where the industry's average quarterly volume sales per outlet stood at 828.6K ltrs/outlet (+18%QoQ/+10%YoY). Daily average throughput per retail output clocked at 9,207ltrs/day where 10.3%YoY climb drives home the growth of supply chain and storage to buttress growing retail POL volumes. HA...

Pakistan Economy: Growth remains on track

Based on provisional PBS data for 8MFY18, the GoP expects GDP growth for FY18E to settle at 5.8%YoY crossing the 11 year high-watermark for growth vs 5.4%YoY (revised upwards) in FY17A. Key catalysts for growth remain ongoing implementation of early harvest infrastructure projects under the ambit of CPEC, net energy supply growth (net generated units up 11.3%YoY for 8MFY18), and sustained credit uptick (8MFY18 private sector credit stock grew 9.9% since Jun’17, adding PkR391.3bn offtake during the period increasing 8.3%YoY). Ancillary support factors including contained law and order situation...

Pakistan Economy: Rupee depreciation is a blessing in disguise

The Rupee depreciated another 4.4% against the greenback yesterday with interbank rate ending at PkR115.5/US$ reflecting existing pressures on the external front and central bank's reserves declining to US$12.13bn (down US$1.98bn CYTD; import cover: 2.69x). With regards to the external sector, as per latest data 8MFY18 CAD surged to its highest level ever at US$10.83bn (up 50.3%YoY) vs US$7.22bn in 8MFY17. While devaluation is likely to ease off pressures on external account in the long run (weaker rupee shall restore export competitiveness apart from impeding import growth), CAD at such high ...

Pakistan Banks_Payouts propel ‘bull-cycle’ expectations, (AKD Daily, Jan 20, 2021)

AKD Daily Pakistan Banks: Payouts propel ‘bull-cycle’ expectations The strong rally in UBL (+10.6%CYTD) can be taken as an indicator of long-awaited structural bull phase in the banking sector likely triggered by dividend payout expectation (c. DY of latest payouts stand at 6.0%) and receding foreign positions (net sell CY20/cumulative since CY14: US$162mn/US$603.1mn). We expect interest to prevail in near term as valuations (CY21F P/B of 0.8x, at a discount of 13.0% to historical multiples) take center stage and expectation of interest rate hikes  (AKD Est. Dec’21-end interest rate of 8....

Ali Asghar Poonawala

PAEL_Power equipment led rebound imminent - BUY!, (AKD Daily, Jan 19, 2021)

AKD Daily PAEL: Power equipment led rebound imminent - BUY! Terse macro conditions have handicapped PAEL’s consumer durables geared investment case long before COVID-19 led shutdowns materially disrupted operations, resulting in sharply divergent sales performance over the period (9MCY20 Appliance/Power sales moved +33.8/-14.7%YoY) While sticking to our base case appliances revenue growth of 15%YoY (raised from 10% in Sept’20) underpinned by a “return to normal” outlook for consumer confidence and consumer credit offtake due to low rates, we now find significant catalysts to accommodate a...

Pakistan Economy_MPC guidance is what the doctor ordered, (AKD Daily, Jan 25, 2021)

AKD Daily Pakistan Economy: MPC guidance is what the doctor ordered MPC of the SBP, expectedly maintained its policy rate at 7.0% while more importantly sending out guidance on future course, and updating its policy setting approach with greater emphasis on external account stability than inflation. SBP signaled status quo on interest rates in the near term barring unforeseen events while stating that potential tightening would be gradual. Basing our understanding for ’near term’ on external account projections (FY21F CAD: 0.6% of GDP, US$1.67bn) and funding status (assuming resumption an...

Team AKD Research

Stock Smart Weekly (Jan 22, 2021)

Weekly Review                                 KSE-100 remained volatile throughout the week, consolidating at 45,868pts after gaining 1,433pts or 3% month-to-date. Lackluster news on macro levels led to profit taking during the outgoing week, offsetting the result season driven exuberance. Major news included: (1) hike in Discos’ unified base tariff by PkR1.95/KWh vs. proposal of PkR3.34/KWh; Rs200bn impact calculated, indicating towards inflationary uptrend in upcoming months (2) decision to disconnect gas supply to captive power plants from Feb 01st and Mar 01st for industries and export o...

Pakistan Economy_MPC to stick with Status Quo, (AKD Daily, Jan 21, 2021)

The MPC of the SBP — scheduled to meet tomorrow — is likely to maintain policy rate at 7.0% to support nascent economic recovery given uncertainties posed by resurfacing COVID cases domestically and internationally, capitalizing on room granted by transitory inflationary readings (mostly food supply led) and adequate external buffers. Jan’21 inflation is likely to stand at 6.1% vs. 7.97% in Dec’20, predominantly due to high base affect while tighter control on food prices (down 2.0%MoM) particularly out-of-season fall in eggs (15.6%MoM) and chicken prices (26.4%MoM) also played its part. Wi...

Pakistan Economy_MPC faces a tough choice, expect 50bps rate cut , (AKD Daily, May 14, 2020)

The MPC of the SBP - scheduled to meet on Friday, 15th May 2020 – faces a dilemma, with a need to strike balance between providing immediate relief to the economy and preserving macro stability over the medium term. On one hand, the inflationary backdrop is benign (~6.8%YoY over the next six months), with corona induced decline in consumption and consequently commodity prices, along with scrapping of utility adjustments, translating into steep decline in inflation readings. This coupled with a need to kick-start the economy or at least alleviate debt servicing burden merits further easing ac...

Pakistan Economy: Current Account gives a green light to Macro Consolidation

Latest SBP data on external account show marked improvement in the current account balance, with the country running a current account surplus of US$99mn in Oct’19 after 49months compared to CAD of US$284mn in the preceding month and US$1,280mn in Oct’18. Encouragingly, unlike the past few months where YoY deficit reduction was primarily import led, the Oct’19 improvement in current account balance was driven both by i) export growth (+10%YoY) and ii) import contraction (-21%YoY). While the current account balance improved sequentially (CA surplus of US$99mn in Oct’19 vs. CA deficit of US$...

Shahrukh Saleem

Pakistan OMCs: Much ado about margins,(AKD Daily, Nov 11, 2019)

After a delay of five months, Economic Coordination Committee (ECC) finally accorded approval to revision in OMC margins, setting them at PkR2.81/liter for MS and HSD for rest of FY20 (effective Dec’19) — increasing by 6.4%. Margin revision did not compensate OMCs for the delay where we had already incorporated margins of PkR2.77/liter for FY20 vs. now applicable weighted average margins of PkR2.74 resting lower than our estimates, pruning earnings of PSO/APL by 1.5/1% (avg. FY20-22). Though chances of passing the proposal for incorporation of exchange losses into the pricing mechanism remai...

Team AKD Research

AKD STOCK SMART, Nov 08, 2019

Index continued the momentum gained towards the end of last week and started the week on a strong footing, increasing by ~900 points in first trading session, supported by declining yields in the PIB auction held last week while additional stimulus was provided by easing tensions on the political front between government and opposition. Moreover, encouraging numbers clocked in for external account which provided further support. The enthusiasm based on aforesaid factors was carried for the whole week as index closed all 5 trading days of the week in green. KSE-100 closed the week at 35,978pts,...

Team AKD Research

Pakistan Strategy: Risk appetite, not fundamentals driving performance,

Confronting a slew of macro, peripheral and political shocks to continue its climb, the KSE-100 index has risen 4% during the last five trading sessions taking returns from Aug’16 (CYTD low) onward to 24% Isolating sectoral performance CYTD we highlight the role of side-stocks and sectoral plays in driving market performance, where further comparison to CYTD market low (Aug 16th) highlights the role played by off-board sectors (Refinery/Transport/Sugar were up 50/32/15%) favored by retail investors, where improved risk appetite played a greater role than improved fundamentals Conducive pol...

Ali Asghar Poonawala

Pakistan Oil & Gas_Cracks holding steady on hope of sustained rebound , (AKD Daily, Dec 09, 2020)

AKD Daily Pakistan Oil & Gas: Cracks holding steady on hope of sustained rebound POL product cracks for second-half Nov’20 (11 trading days 12-26th) remained sticky - particularly for HSD (largest refining segment, 46%/44% of 1QFY21/FY20 output), despite underlying crude benchmarks inching higher (Arab Light during the period average at US$44.3/bbl up 14.1% over previous 14 days) fueled by COVID-19 vaccine efficacy and expectations of fiscal stimulus. HSD crack to Arab Light averaged US$+2.92/bbl remaining above 5MFY21 avg. of US$1.7/bbl but well below 5MFY20 of US$10.7/bbl, while the sa...

Team AKD Research

Pakistan Commodities_Quick to celebrate the end of COVID-19, (AKD Daily, Dec 08, 2020)

AKD Daily Pakistan Commodities: Quick to celebrate the end of COVID-19 Investors strengthened bullish outlooks following robust COVID-19 vaccines efficacy data, reduced global political uncertainty fueling expectations of continued stimulus in developed markets and Asian economies resuming industrial production activity driving the TRJ commodity index higher by 10.6%MoM. The pace of industrial growth broadly hastened Nov’20, as highlighted by both global and economy specific PMIs for manufacturing climbing higher into expansionary territory, where China, Brazil, India were notable. US con...

Shahrukh Saleem

Pakistan Cement_Seasonality weighs heavily on local demand, (AKD Daily, Dec 07, 2020)

AKD Daily Pakistan Cement: Seasonality weighs heavily on local demand Local cement dispatches continue to increase with a 6%YoY growth in Nov’20 where South continues to lead (up 15%YoY for Nov’20) amidst a multitude of factors are at play including increasing demand in urban centers on the back of resumption in housing projects and North-based players decreasing their supply to the region. However, significant sequential decline was witnessed in dispatches of both the regions (South/North down by 12/25%MoM) as commencement of winter leads to a slowdown in construction activities. Winte...

Team AKD Research

Stock Smart Weekly (Dec 04, 2020)

StockSmart                        Weekly Review                                 The KSE-100 remained buoyant during the outgoing week, where tough measures for containing COVID-19 cases taken the previous week, as well as potential measures to revitalize the IMF program already forgotten by the investors. The exuberance was majorly led by GoP reportedly budgeting US$150mn for procurement of vaccines by 1QCY21. The inflation reading at 8.35% was up by 0.82ppt MoM, where Pakistan now has a negative real interest rate of 1.35%. Yet, the bullish momentum in the market indicated the investors pl...

HUBC_Base plant up for sale; Buy stance maintained, (AKD Daily, Dec 04, 2020)

AKD Daily HUBC: Base plant up for sale; Buy stance maintained HUBC’s management has reportedly proposed GoP to buy its base plant at a transaction price of PkR65bn (PkR50/sh). While we ignore the reported book value on unconsolidated basis, summing the PV of future cashflows from base plant, net receivables and plant’s value as reported in Jun’20 financial statements, the 1,200MW Base plant should be valued at PkR91/sh, in our view. We believe the management proposed a lower value for the sale of Base plant as a result of uncertainty on realizing capacity payments for the remaining PPA pe...

Team AKD Research

HBL_Attractive valuations call for accumulation

HBL's 1HCY17 earnings were down 3%YoY on spread compression, credit quality infection an higher expenses (tax and otherwise). Pick up in advances was the key highlight where materialization of CPEC investments led 11.2%YoY growth in loans. Corporate book continues to form the major chunk, however HBL is also keenly building on its consumer portfolio which while accretive to margins can lead to higher domestic NPLs. This together with continued pressure on NIMs at least until CY18F when interest rates are expected to reverse, has led us to revise down our CY17F/CY18F earnings estimates by 5%/7%...

Team AKD Research

ENGRO_1HCY17 Analyst Briefing Notes

ENGRO held its analyst briefing on Friday (Aug 18'17) to discuss its 1HCY17 earnings performance. To recall, ENGRO announced consolidated/unconsolidated NPAT of PkR3.78bn/PkR4.10bn (EPS: PkR7.21/PkR7.84) in 1HCY17, down 32%YoY/79%YoY. Key highlights of 1HCY17 consolidated result included: 1) weakening topline (down 22%YoY) due to classification of EFOODS as associates (post its partial divestment) despite 23%YoY/17% jump in EFERT/EPCL topline and 2) significantly higher effective tax rate of 64% in 2QCY17 vs. 40% in 2QCY16 on account of retrospective provisioning of ~PkR2.1bn super tax in this...

Team AKD Research

NML_Fundamentals remain intact

​Based on its continued focus on value added segment and higher expected payout from portfolio companies, NML (TP: PkR185.3/sh, upside: 23.7%) remains our preferred play in the sector. Benefitting from its garment capacity expansion, NML registered 38%YoY sales growth in garment segment in 9MFY17, where we expect this trend to continue and support topline growth (FY18F: 11%YoY) despite declining trend in non-value added sales. In addition, textile export package (FY17/FY18F incremental EPS: PkR2.35/PkR6.5/sh) and healthy payout from associated companies (FY17/FY18F: +12%/+5%YoY) are likely t...

Team AKD Research

Budget FY18_Proposals and Implications

​The incumbent government is due to present its last federal budget on May 26'17 where we expect the government to move ahead with its growth agenda. Setting an ambitious GDP growth target of 6% in FY18F, the GoP is likely to enhance its development expenditure primarily making its case on uptick in CPEC led activity, with news flows suggesting federal PSDP allocation at PkR1,001bn vs. PkR800bn in FY17B. However, fiscal constraints will remain in play where higher tax collection is likely to be supported by increase in duties and continued penalization for non-filers. For capital market, inc...

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