Report
EUR 8.14 For Business Accounts Only

Pakistan Strategy : US to reenact sanctions on Iran; headwinds for Pakistan’s BoP

  • The latest decision of US administration to pull out of Iran’s nuclear deal has drawn mixed reactions in both diplomatic circles, capital and commodity markets.
  • The oil market’s impact is contingent on (i) clarity on future US action and its impact given all allies are not on one page, (ii) oil market dynamics have changed to be more compliant of production quotas, and (iii) higher oil prices increases viability of unconventional sources.
  • The recent rally in oil prices has opened up upside risk to our oil price assumption of USD57/bbl for FY19 though our FY18 assumption of USD59/bbl faces nominal risk. 
  • On domestic macro scale, any sharp uptick in oil price will only add to FX reserves woes (drawdown of USD0.8bn/month expected for FY19), owing to additional USD1.0bn import burden, in our view.
  • For E&Ps, every USD5/bbl change from our base case estimate moves our earnings estimates for POL, OGDC, PPL, and Mari by 9/7/6/4%. We reiterate our liking for PPL and Mari with TP of PKR240/sh and 1840/sh, respectively.
Provider
BMA Capital Management Limited
BMA Capital Management Limited

​BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.

Analysts
Fawad Khan

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