Report
EUR 9.28 For Business Accounts Only

Result Previews: INDU 1HFY20 & UBL CY19, (AKD Daily, Feb 18, 2020), (AKD Daily, Feb 18, 2020)

INDU: 1HFY20 Result Preview

1HFY20E earnings expected at PkR32.74/sh: INDU is scheduled to announce earning for 1HFY20 on 19th Feb, where we expect the company to post NPAT of PkR2.57bn (EPS: PkR32.74) in 1HFY20 vs. PkR6.91bn (EPS: PkR57.50) in 1HFY19 cratering by 63%YoY, continuing YoY earnings slide into its fifth consecutive quarter. This earning decline is on the back of: 1) depleting GMs as the lasting repercussion of FY17-19 PkR devaluations, translating to persistent price hikes in an environment for weak consumer demand significantly depleting gross margins (9.3% vs. 13.3% in 1HFY19), 2) rising administrative & distribution expenses to sales (total operating expenses rise 12%YoY) and 3) depleted other income due to depletion in ST investments (down 34%YoY) to enhance CAPEX and mitigate working capital strains despite improving yields on short term investments. On a quarterly basis, INDU earnings are expected to clock in at PkR1.25bn (EPS:15.96) vs. NPAT of PkR3.40bn (EPS: 43.34) for 2QFY19. Along with the result, we expect a cash dividend of PkR6.25/sh translating into a ~40% payout ratio which is hindered from the burdens imposed through ongoing CAPEX outlays.

UBL: CY19 Result Preview

UBL CY19 earnings to register 35.5%YoY growth: UBL is scheduled to announce its CY19 results tomorrow (Feb 19th, 2020) where we expect the bank to register an NPAT of PkR20.4bn (EPS: PkR16.7) vs. PkR15.0bn (EPS: PkR12.6) in the same period last year. Along with the result, the bank is expected to announce a final dividend of PkR3.5/sh in addition to c. interim dividends of PkR8/sh. For 4QCY20, the bank’s earnings are likely to clock in at PkR5.0/sh, +22.1%QoQ/11.1%YoY (as 4QCY18 earnings included one-off of WWF reversal of PkR2.6bn). The bank’s sequential earnings growth is driven, i) 14.3%QoQ increase in NII as NIMs jump to 4.3% (annualized) vs. 3.8% in the previous quarter, and ii) NFI surging 13.8%QoQ on potential capital gains and stronger fee income. Provisioning costs are expected to be contained with possible higher credit costs negated by possible impairment reversals. That said, surprises cannot be ruled out given, i) completion of windup of Tanzanian operations resulting in realization of ‘cumulated FX balance’ and potential gains, and ii) WWF reversals pertaining to Punjab as seen in peer bank results.

Provider
AKD Securities Limited
AKD Securities Limited

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.

Analysts
Hamza Kamal

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