MCB_Gaining prominence as a dividend play, (AKD Daily, Jul 09, 2021)
AKD Daily
MCB: Gaining prominence as a dividend play
- Updating our macro assumptions post budget FY22, we revise up our CY21-23F estimate for MCB Bank Limited (MCB) by 5.2% on avg., whereas LT earnings remains largely stable. Recalibrated TP stands at PkR239.6/sh (Previously: PkR223.4/sh) — an upside of 50.4% from last close while CY22 DY stands at an attractive 12.6%.
- The catalyst for stock performance could be the beginning of monetary tightening possibly by 4QCY21/1QCY22. That said, concerns on potential exclusion of Pakistan from MSCI EM to MSCI FM could keep near term performance in check, providing attractive entry points in the stock.
- MCB features robust earnings quality relative to its peers with CY21-23F ROE avg. at 15.7% vs. 12.8% of peers — a product of, i) bank refining its deposit mix in favor of CAs (1QCY21: 39.0% vs. 35.7% in the same period last year), ii) recoveries from NIB portfolio amid limited risks of credit fallout from existing portfolio and unwinding of COVID-related provisioning (cumulative provisioning of PkR4.5bn), and iii) strong value creation through cost containment (C/I: 44.4% avg. CY21-23F, lowest amongst peers).
- Previewing 2QCY21 results, we expect MCB to post an NPAT of PkR6.9bn (EPS: PkR5.75), flat QoQ/YoY while dividend payout should stand at PkR5/sh taking cumulative payout to PkR9.5/sh in 1HCY21.
AKD Research
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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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