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Results Previews APL, HBL & UBL,(AKD Daily, Oct 11, 2019)

APL's EPS expected at PkR8.2 for 1QFY20: We expect Attock Petroleum Limited (APL) to post PAT of PkR816mn (EPS: PkR8.2) for 1QFY20, down 48/47% QoQ/YoY as volumes went down by 1/12% QoQ/YoY after overall economic slowdown imparted its effect on the company. Among the major fuels, HSD suffered the most with a 11/16% QoQ/YoY decline as influx of grey product exacerbated the effect of the slowing economy while company's market share for 1QFY20 decreased to 9.8% vs. 10.3/9.9% in 1QFY19/4QFY19. Another major reason for the decline will be expected inventory losses of PkR384mn for the quarter against estimated inventory gain of PkR1.1bn in 4QFY19. PkR remained volatile and closed the quarter with an average of PkR156.3 for Sep'19 vs. PkR156.4 in Jun'19 which can result in minor exchange gains for the company (estimated at PkR50mn) as 1.8% depreciation in Jul'19 is expected to eroded major part of gains made during subsequent two months of the quarter (PkR appreciated ~1.8% cumulatively in Aug'19 and Sep'19). Also, we expect turnover tax to come into play for the quarter, taking the effective tax to 34% in 1QFY20 against 33/27% in 4QFY19/1QFY19.  â€‹

HBL 9MCY19E earnings likely to be recorded at PkR5.26/sh: Habib Bank Limited (HBL) 9MCY19 earnings are expected to be announced on October 15th 2019. In this regard, we expect the bank to announce an NPAT of PkR7.7bn (EPS: PkR5.26) vs. an NPAT of PkR9.9bn (EPS: PkR6.57) in the corresponding period last year. Together, with the result we expect the bank to announce a dividend of PkR1.25/sh taking cumulative payout to PkR4.25/sh CY19TD. Consequently, 3QCY19E EPS is likely to be recorded at PkR2.74 vs. PkR0.44/1.15 in 2QCY19/3QCY18 where sequential growth is expected on the back of recovery in NFI, +6xQoQ, overshadowing a possible contracted Net Interest Income (NII), down 5.3%, as a result of repricing lag on assets. To highlight, market-related losses (FX and Capital Losses) dented NFI by 79.5%QoQ in 2QCY19 which taking cue from management concall should have been near their end. Administrative expenses are likely to remain elevated along with normalization in tax rate (2HCY19 effective tax rate: 11.8%), keeping earnings growth depressed.   

UBL’s earnings to fall to PkR3.86/sh in 3QCY19E: United Bank Limited (UBL) BOD meeting is likely to be held on October 16th, 2019 to announce 9MCY19 results where we expect the bank to record an NPAT of PkR13.9bn (EPS: PkR11.4) vs. PkR9.5bn (EPS: PkR8.0) in the corresponding period last year. The bank along with the result is likely to announce a dividend of PkR2.5/s, taking cumulative payout to PkR7.5/sh. On a quarterly basis, 3QCY19E earnings are likely to be recorded at PkR4.7bn (EPS: PkR3.86), down 7.7%QoQ but up 39.6%YoY. Earnings on a sequential basis is likely to be depressed due to, i) lower NFI owing to absence of PkR1.3bn one-off gain (due to international branch closure) in the 3Q, ii) higher credit charge credited to possible slowdown in domestic recoveries (3Q: PkR4.5bn), offsetting strong growth in NII of 29.8%QoQ to PkR20.2bn vs. PkR15.6bn in the corresponding period last year.  Administrative costs are likely to remain flat QoQ, jumping 11.7%YoY particularly due to currency devaluation.

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