AKD STOCK SMART, Sep 11, 2020
StockSmart
Weekly Review
Treading on last week’s gains, KSE-100 index inched up 1.21%WoW to close at 42,531pts supported by prominent performance of heavy-weights banks (+2.0%WoW) and Cements (+3.2%WoW). The former came on the investor’s radar, being trading cheaply as valuations stretched elsewhere while the latter witnessed run up as PM announced Karachi uplift package of PkR1.1trn. E&P sector found its place on the other end of the spectrum (down 2.5%WoW) as international oil price trended downwards (down 6.0%WoW) with Saudi Arabia planning to sell at lower rates in Oct 2020 and cabinet ratifying CCoP’s decision to offload 7% and 10% shares of OGDC and PPL respectively, only to be partially resurrected by large gas discovery in Kalat (over 1tcf) by Pakistan Petroleum Limited (PPL). The same was mimicked by volumes where KSE/KSE-ALL volumes closed the week at 49.8% (Weekly avg.: 47.1%) vs. 45.4% avg. in the previous week, whereas avg. volumes stood at 750.3mn shares vis-à-vis 745.1mn shares in the previous week. Avg. traded value stood at PkR30.2bn in the outgoing week, similar to previous week. Amongst other sectors, Refineries were +15.8%WoW followed by Insurance (+6.3%WoW) and Techs (+6.0%WoW) while Vanaspati, Chemicals and Auto parts manufacturers lost 2.9%, 2.8% and 2.7% respectively. Other news flows during the week were, progress on FATF with NA and Senate taking up more bills, various developments relating to addressing power sector structural issues, and lastly IMF asking Pakistan to increase gas, electricity prices. Flow wise, foreigners stood as net sellers with outflow of US$4.3mn whereas profit taking was conducted mainly by companies (net outflow of US$16.7mn), only to be absorbed by individuals (net inflow of US$22.8mn) and mutual funds (net inflow of US$8.5mn). Top performers in the outgoing week were, i) BYCO (+27.0%WoW), ii) JLICL (+18.0%WoW), iii) KOHC (+13.0%WoW), iv) SYS (+12.2%WoW), and v) NATF (+11.4%WoW), whereas laggards were, i) IDYM (down 11.0%WoW), ii) PIOC (down 7.8%WoW), iii) MEBL (down 6.4%WoW), iv) COLG (down 6.2%WoW), and v) MLCF (down 5.0%WoW).
Outlook
Dominated by liquidity flush, market is expected to remain volatile in the upcoming weeks with valuations stretched in most sectors. In this backdrop, stock-picking with a keen eye on news flow holds the key in our view for generating alpha while we advise caution in building long term positions at current levels barring banks amongst major sectors that are still trading at discounted valuations. Result season continues with Millat Tractors Limited (MTL), Interloop Limited (ILP), Kot Addu Power Company Limited (KAPCO), D.G. Khan Cement Company Limited (DGKC), and Mughal Iron and Steel Industries Limited (MUGHAL) due to announce their financial results in the upcoming week.
AKD Research
Meezan Bank Limited is an Islamic commercial bank. The Bank is engaged in corporate, commercial, consumer, investment and retail banking activities. It offers a range of Islamic banking products and services through a retail banking network of over 550 branches in approximately 140 cities to its corporate, commercial and small and medium-sized enterprise (SME) customers based on their financial requirements. It provides personal banking, business banking, premium banking and branchless banking. The Bank also offers Meezan Rupee Current Account, Karobari Munafa Account, Meezan Rupee Savings Account, Meezan Business Plus Account, Meezan Bachat Account, Meezan Kids Club Account, Meezan Teens Club Account, Meezan Asaan Current Account, Meezan Kafalah, Certificates of Islamic Investment, Meezan Amdan Certificate and Dollar Mudarabah Certificate. It has assets in agriculture, food, forestry and fishing; cement, and others. The Bank operates only in Pakistan.
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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