Pakistan Budget FY20 Analysis - Stabilization and Fiscal Discipline
- We think that this tax heavy Budget (targeting over 35% growth in FBR Revenue) is aimed at providing the much needed stabilization and to fulfill IMF conditions (prior action).
- One of the major step taken by the government in the Budget FY20 is to force people to file tax returns, as Pakistan has one of the lowest tax return filers of 1% of population.
- Another major attempt to end rent seeking attitude in the Budget FY20 is real estate reforms.
- We believe, Budget FY20 tax measures are broadly in line with market expectations or are less severe than what was anticipated.
- Going forward the major factor to restore investors confidence will be Pakistan loan approval by IMF board and details of benchmarks and economic targets set with IMF.
- We continue our liking for select Banks, E&Ps, cash rich and circular debt beneficiaries companies which will gain from current macro environment like higher interest rates, and weak PKR.
- Based on PE range of 7-8x seen during low growth period and post IMF program our Index target range is 39,000-44,000.
Following will be the likely budgetary impact on major sectors.
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§ Fertilizer Neutral |
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§ Exploration & Production Neutral |
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§ OMCs Neutral |
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§ IPPs Neutral |
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§ Gas Distribution Neutral |
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§ Pharma Neutral |
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§ Consumers Negative |
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§ Textile Negative |
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§ Banks Negative |
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§ Tobacco Negative |
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§ Cement Negative |
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§ Auto & Parts Negative |
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§ Steel Negative |
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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