UBL: Profitability outperformance to unlock valuation upside
​We reiterate our Buy stance on UBL with an updated Dec’17 TP of PkR235/sh (vs. previous PkR213/sh). Revised CY16F/17F EPS estimates of PkR22.54/23.55 (up 5%/7% from previous) tracks the impressive earnings growth posted by the bank during 9MCY16 despite reinvestment concerns and lackluster fee income performance.
UBL posted consolidated NPAT of PkR7.07bn (EPS: PkR5.77) in 3QCY16, taking 9MCY16 profit to PkR21.53bn (EPS: PkR17.59). 9%YoY earnings growth in 9M was attributed to loan provisioning reversals and improved cost efficiencies; we flag possible extension of this momentum in upcoming quarters.
UBL has gained 33%CYTD, deservedly outperforming peer banks after being penalized for initial asset quality concerns in ME and Yemen (recent growth in ME loan book indicates growing confidence). With (i) the negatives already priced in, (ii) earnings growth momentum set to extend, and (iii) MSCI rerating potential element intact, valuation upside is set to unlock, in our view.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.