Reducing Target Price to PKR 183.5
We have reduced our June 2019 target price on United Bank Limited (UBL) to PKR 183.50 from our earlier TP of PKR 223.00. Our new target price implies a 40% upside from UBL’s last closing price, hence we are maintaining a positive stance on the stock. The major reason why we have reduced our target price is that we have revised our earnings estimates downwards. UBL had missed our earnings expectations for the last quarter due to a contraction in net interest margin, which surprised us. We now expect NIMs to contract even further in 4QCY18, and for them to start expanding in CY19. We have also increased our estimate of provisions for international non-performing loans based on management’s guidance, which has further reduced our earnings estimate for CY19.
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.
Ismail Iqbal Securities (Private) Limited (IISPL) is a TREC holder of the Pakistan Stock Exchange, as well as an SECP registered Underwriter and Book Runner. IISPL provides comprehensive financial services including Equity Sales, Research on Equities and the Macro-Economy, Investment Advisory, Portfolio Management, Corporate Finance, and extensive services for Private Equity investors. IISPL services a diversified client base, from Institutional to Retail Investors including High Net worth Individuals.
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