MCB: Relatively attractive
​With earnings growth remaining subpar over the last two years, MCB is likely to resume its growth phase from CY17F onwards with our projected 3yr NPAT CAGR standing at a healthy 13%. Declining NII, higher provisioning charges, lack of support from non-funded income (ex cap. gains growth: -15%YoY) - factors that hurt profitability in CY16 are expected to alleviate going forward while likely discontinuation of super tax in CY18 should help further. While loan growth is expected to remain tepid (8% growth expected in CY17F vs. avg. 13% for peers), the bank's C/A focus (39% of total deposits in CY17F) is likely to provide support, keeping NIMs >4.5% in CY17F. While NIB acquisition has its associated pros and cons, we believe the move is encouraging, indicating the bank's push for growth opportunities. Having lost 5.9% MTD, MCB is currently trading at its 9-mth low. This underperformance, in our opinion, has opened up valuations with PB/PER at 1.56x/10.2x vs. 1.73x/11.2x for peers. In addition, an attractive D/Y at 7.7% remains the second highest in AKD Banking Universe, furthering our investment case. Adjusting for super tax, our revised CY17F earnings/TP stand at PkR20.4/PkR232.5 per share Accumulate!
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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