reports
ASTL_Demand recovery, but with caveats, (AKD Daily, Dec 11, 2020)
AKD Daily ASTL: Demand recovery, but with caveats We raise our near term earnings estimates for ASTL, incorporating a swifter than expected recovery in demand and consequent better pricing dynamics leading to swifter margin recovery as well. At its core, we revise our earnings estimate for FY21/FY22F to PkR2.74/3.70 per sh (vs. PkR1.57/3.2 per sh previously). Consequently, our rolled over Dec’21 TP comes to PkR58 per sh (vs. 56 per sh previously). Although the company now enjoys consider...
MPS_IMF program resumption the key takeaway, (AKD Daily, Nov 24, 2020)
Monetary Policy Committee (MPC) of the SBP, in its meeting yesterday, expectedly decided to keep the policy rate unchanged at 7.0%. The status quo reflected the largely unchanged inflation outlook and risks to the nascent economic recovery from the recent surge in C19 caseload both domestically and globally. In a subsequent analyst briefing, SBP Governor alluded towards a resumption of the program in the next few weeks, with the authorities closing the gap on the contentious issues. According...
Pakistan Economy_Volatile food & energy prices cool off for soft Nov’2...
Preliminary price trends for the month of Nov’20 signal relative ease in inflationary pressures, with headline inflation expected to decline to 7.88%YoY in Nov’20 vs. 8.91%YoY last month and 12.67%YoY in Nov’19. Sequentially, the index is likely to marginally move up by 0.39%MoM vs. 1.70%MoM in Oct’20 and 1.35%MoM in Nov’19. The expected decline in inflation is mostly on account of i) price normalization in certain food items (i.e. wheat, pulses, & rice), ii) lower energy prices (i.e. both g...
Pakistan Strategy_US elections – More things change, more they stay th...
AKD Daily Pakistan Strategy: US elections – More things change, more they stay the same In arguably one of the most analyzed events occurring at regular intervals (every four years) globally, we find clarity emerging in the impasse for the US Presidential election vote count, where it seems highly likely (multiple paths to electoral majority) that we will find a 46th occupant of the White House in Former Vice President Joe Biden. In this rare event of a US president losing reelection, we op...
NML_1QFY21 Result review - Above expectations,(AKD, Off the Analyst's ...
NML - 1QFY21 Result review - Above expectations In its 1QFY21 result, NML reported net profit of PkR946mn (EPS: PKR2.69), marginally up 2.5%YoY and 34% ahead of our estimate. The earnings beat came on the back of higher than expected other income (we await clarity from the management on this). While core earnings were broadly in line with our expectations, slightly higher than expected topline and lower than expected S&A offset the impact of weaker gross margin. Key hig...
Pakistan Strategy: Blacklisting in the rearview mirror, (AKD Daily, Oc...
AKD Daily Pakistan Strategy: Blacklisting in the rearview mirror In its latest three-day plenary review, the Financial Action Task Force (FATF) has expectedly retained Pakistan in ‘grey list’ – officially known as ‘Jurisdictions under Increased Monitoring’, while acknowledging the notable progress made by the country since Feb’20, in a noticeably tamed statement. Pakistan is now largely compliant on 21 out of 27 items of the action plan (vs. 14 in Feb’20 and mere 5 in Oct’19), with complian...
Pakistan Strategy_FATF – Knockin’ on heaven’s doors, (AKD Daily, Oct 2...
AKD Daily Pakistan Strategy: FATF – Knockin’ on heaven’s doors The 39 (37+2) member organization is holding the closing session of its tri-annual plenary meeting today (conducted virtually due to COVID-19 pandemic), where Pakistan’s status as one of 18 “jurisdictions with strategic deficiency” or “grey list” is to be assessed, prompting heightened perceptions of event risk we have grown accustomed to since the latest round of reviews were initiated in June’18. With the GoP prioritizing meas...
Pakistan Steel: AGHA steel IPO - All that glitters is not gold,(AKD Da...
AKD Daily Pakistan Steel: AGHA steel IPO - All that glitters is not gold Agha Steel Industries Limited (AGHA) is in process of listing on the Pakistan Stock Exchange through Initial Public Offering (IPO), with the book building scheduled to commence on 6th Oct’20. The company intends to raise fresh capital of PkR3.6bn or US$21.8mn (at a floor price of PkR30 per share and new issue of 120mn shares) via IPO for a 20.83% stake in the company. The principal purpose of the issue is to partially f...
Pakistan Economy: MPS - Prioritizing growth, (AKD Daily, Sep 22, 2020)
AKD Daily Pakistan Economy: MPS - Prioritizing growth In a monetary policy announcement yesterday, the MPC of the SBP has decided to keep the policy rate unchanged at 7.0%, striking a balance between the need to support the nascent economic recovery and to keep the inflation expectations anchored. The committee now expects average inflation in FY21 to be marginally higher than previously, however, it remains within the previously announced range of 7.0-9.0%. MPC’s accommodative bias further...
Pakistan Economy: For upcoming MPC, keep calm and carry on, (AKD Daily...
AKD Daily Pakistan Economy: For upcoming MPC, keep calm and carry on The MPC of the SBP is slated to announce its monetary policy on Sep 21’20 (Monday), where consistent improvement in keep account coupled with a need to support domestic economic activity should keep the MPC to maintain its accommodative bias. We expect the committee to keep its policy rate on hold at 7.0%. Inflation outlook remains uncertain due to low visibility on the timing and scale of potential utility rate adjustment...
OGDC & NML_ FY20 Result Previews, (AKD Daily, Sep 17, 2020)
AKD Daily OGDC & NML_ FY20 Result Previews OGDC - Slow FY20 earnings as operations stumble: OGDC is slated to report FY20 NPAT of PkR102.3bn (EPS: PkR23.79/sh) marking a decline of 14%YoY with 4QFY19 earnings of PkR18.7bn (EPS:PkR4.34/sh) slipping 44%YoY/39%QoQ. Materially lower earnings are predominantly a factor of weak crude pricing dynamics (Arab Light prices down 61%YoY/45%QoQ to avg. ~US$26/bbl for 4QFY20). Additional factors lowering profitability include: 1) significantly hampered pr...
NCL: An unexciting story with many ifs and buts, (AKD Daily, Sep 14, 2...
AKD Daily NCL: An unexciting story with many ifs and buts We revise down our earnings estimate for NCL by 13-24% over the forecast horizon (i.e. FY21-26F), incorporating a short term disruption from COVID-19, weak margin profile (lowered GMs by 100bps to accommodate earnings volatility post-US-China trade spat), revised payouts from the power subsidiary, and post COVID macro backdrop (i.e. reduction in interest rates). Consequently, our revised rolled over Jun’21 TP comes at PkR55.74 per s...
Pakistan Economy: Base effect pushes inflation down, (AKD Daily, Aug 3...
AKD Daily Pakistan Economy: Base effect pushes inflation down Headline inflation is expected to decline to 8.76%YoY vis-à-vis 9.30%YoY in the last month and 10.50%YoY in Aug’19. The soft reading is primarily on account of a favorable base effect. On an MoM basis, the CPI index is likely to move up 1.13%, largely due to hike in utility prices (+22.5%) following notification of FCA and gov’t administered fuel prices (+4.5% avg.). Food inflation that remained a key source of headline inflation...
ASTL_Improved fundamentals but valuations stretched, (AKD Daily, Aug 1...
AKD Daily ASTL: Improved fundamentals but valuations stretched We update our earnings estimates for ASTL, downward revising for FY20F (LPS: PkR3.64 vs. PkR2.63 previously) incorporating short term disruption due to COVID-19 while upward revising 16-24% over the remaining investment horizon (i.e. FY21-FY25F), accommodating sooner than expected recovery in demand following supportive policy backdrop and changes in macro assumptions (i.e. interest rate cuts). Consequently, our revised rollover ...
Pakistan Economy_Inflation surprise means nothing for monetary policy,...
AKD Daily Pakistan Economy: Inflation surprise means nothing for monetary policy Well above consensus estimate, headline inflation for Jul’20 came in at 9.30%YoY vs. 8.59%YoY in the last month and 8.40%YoY in Jul’19. The surprise came on account of higher than expected price hikes in perishables (i.e. vegetable prices) and housing rent. On a MoM basis, inflation jumped 2.50%MoM (vs. 0.82%MoM in Jun’20 and 1.89%MoM in Jul’19) - a record high monthly rate since the rollout of new inflation m...
Pakistan Economy_Usual suspects keep inflation choppy, (AKD Daily, Jul...
AKD Daily Pakistan Economy: Usual suspects keep inflation choppy Initial price data for Jul’20 indicates headline inflation to gain further momentum, with the monthly reading estimated at 8.64%YoY vs. 8.59%YoY in the preceding month and 8.4%YoY in Jul’19, where flat headline number is a consequence of higher base. On a MoM basis, however, inflation is likely to soar 1.88%MoM – the largest MoM increase since Jan’20, when inflation rose to a multi-year high. Food inflation due to an increas...
Pakistan Economy_SBP ups the ante! (AKD Daily, Jun 26, 2020)
Pakistan Economy: SBP ups the ante! In an emergent meeting yesterday, the MPC of the SBP has cut the policy rate by a further 100bps to 7%, clearly prioritizing economic growth over inflation. The latest move takes cumulative easing to 625bps over the past three months or so. The rate cut is a balancing act from the authorities, where lack of fiscal stimulus has been aptly balanced through emphatic monetary stimulus. The improved external situation post materialization of funding flows from ...
Pakistan Economy: For inflation, downward trajectory maintained , (AKD...
AKD Daily Pakistan Economy: For inflation, downward trajectory maintained Headline inflation is expected to continue its downward trajectory in Jun’20, with another round of reduction in domestic POL product prices being the core driver, pulling inflation lower. We estimate monthly reading for Jun’20 at 8.12%YoY vs. 8.23%YoY in the last month and 8.0%YoY in Jun’19. Sequentially, the index is likely to move up 0.4%MoM vs. 0.32%MoM in May’20. Despite a seasonal decline in prices of fresh veg...
Pakistan Economy_COVID-19 pushes macro-stability back to square one , ...
Pakistan Economy: COVID-19 pushes macro-stability back to square one Moving past the stabilization phase, Pakistan’s economy like every other economy across the globe was hit by COVID-19, thus making it incredibly tough for the authorities to achieve economic targets for FY20. Economic survey rolled out by the gov’t yesterday shows that the gov’t missing on all major economic targets for FY20 by a wide margin, with macro adjustments and corona induced lockdowns pushed GDP growth into negati...
NML :Headwinds are priced in, Buy! , (AKD Daily, Jun 09, 2020)
NML: Headwinds are priced in, Buy! Export-oriented sectors in general and textiles in particular face a double whammy of COVID-19, with both demand and supply disruptions making life difficult for them. Advance order book which was usually booked for 3-6 months is now reduced to a few days. New orders so far are mostly of PPE related fabric, which are both non-repetitive and low margin. In this backdrop, we revise down our FY20/FY21F earnings estimate for NML to PkR8.78/11.0 per sh (vs. PkR1...
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