ASTL: Regulatory protection is here to stay, Maintain Buy
Steel sector lost out 10.4% since commerce division on Mar 22'18 moved a proposal seeking tariff rationalization on 515 items, including withdrawal of regulatory duty on certain steel products in FY19 budget. Though no specific announcement was made regarding the said proposal in the budget, market participants remained apprehensive due to lack of clarity in this regard. In the latest development, the gov't issued amended statutory order (SRO # 640 (I) 2018), maintaining existing duty structure (in line with our earlier assertion, see our report titled 'RD reduction is more bark than bite'). With regulatory protection being the key especially in the backdrop of an ongoing expansionary cycle, we view clarity with regards to regulatory regime as a positive that can potentially catalyze price performance in the sector from hereon. Additionally, we revised down our FY18F/FY19F earnings estimate for ASTL by 3%/10% adjusting for 1) recent budgetary measures (continuation of super tax, additional sales tax levy on electricity consumption), and 2) lower than expected utilization post late commissioning of Dhabeji plant. Our revised Dec'18 TP of PkR135/sh (previously PkR138/sh) offers 60% upside, Buy!
Amreli Steels Limited is a Pakistan-based steel manufacturing company. The Company is engaged in the manufacture and sale of steel bars and billets. The Company offers a range of steel bars for all construction needs.
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.
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