UBL: Estimates revised up; maintain Neutral stance
- We slightly raise our Dec’17 TP for UBL to PkR265/sh (from previous PkR260/sh), which offers a total return of 14% (Neutral). In light of management’s latest guidance, we elevate our CY17/18F EPS estimates by 2%/4% to PkR24.01/26.04, supported by higher loan growth and lower loan provision assumptions.
- UBL posted consolidated NPAT of PkR27.78bn (EPS: PkR22.70) in CY16, up 6%YoY, backed by improved asset quality and cost efficiencies, balance sheet growth, and higher capital gains. Loan growth considerably picked up (11%YoY in CY16), with momentum set to extend into CY17 according to management.
- UBL currently trades at a CY17F P/B of 1.7x and P/E of 10.2x, where we believe the market has majorly priced in the positives. We would turn more bullish in case of earlier-than-expected interest rate pickup and/or higher-than-expected loan growth in the upcoming quarters.
United Bank is engaged in commercial banking and related services. Co. operates five business segments: Corporate Finance, Trading and Sales, Retail Banking, Commercial Banking and Asset Management. As of Dec 31 2016, Co. operates 1,341 branches inside Pakistan including 47 Islamic Banking branches and 2 branches in Export Processing Zones, and 18 branches outside Pakistan.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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