reports
- Syed Atif Zafar
Pakistan Strategy: Foreign selling at PSX; Will this trend continue in...
The continuous foreign corporate selling has been affecting share prices and stock market sentiments in Pakistan. During the past six years, total net foreign selling has been recorded at US$2.1bn, which is 15% of the market’s free float capitalization. In 2020 alone, net foreign corporate selling has clocked in at US$529mn till Dec 18, 2020 (total net foreign selling: US$504mn). This follows foreign buying that came in on two major accounts in 2014/15 and 2017: Secondary Public Offerings ...
- Syed Atif Zafar
Pakistan Strategy: Pakistan Outlook 2021 based on Topline Poll
Topline Securities conducted a poll during the first week of Dec-2020 of over 50 top funds managers and corporates, asking range of questions on their expectations of the economy and the equity market for the upcoming year. Around 65% of the survey were fund managers, where the remaining participants belonged to the Pakistan corporate sector from sectors like Banks, Oil and Gas, Cements, Steel, Autos etc. The excerpts of the survey were published in our detailed report titled ‘Pak Strategy: ...
- Shankar Talreja
Pakistan Automobiles: Car sales (including KIA) up ~63% YoY in Nov-202...
Car sales, as reported by PAMA, increased by 48% YoY in Nov-2020 to 14,454 units. The same, including Lucky Motor Corporation (KIA, non-member of PAMA), is up by 63% YoY. Indus Motor (INDU), Honda Car (HCAR) and Pak Suzuki Motor Company (PSMC) registered sales increases of 87% YoY, 72% YoY and 16% YoY respectively. This is the first YoY increase in FY21 for PSMC as some of the production issues have been resolved. Car sales also increased by 3% MoM in Nov-2020. The increase was driven by PSM...
- Shankar Talreja
Pakistan Market Outlook 2021: A year of economic stabilization; Index ...
We have set an KSE-100 index target of 52,500 by Dec-2021, which is an upside of 25% (USD-based: 18%) from here. In 2020, KSE-100 index is up just 4% (YTD), in spite of a sharp 55% recovery from its bottom in Mar-2020. Generally speaking, the upside in KSE-100, is largely due to P/E re-rating, with the rest because of earnings growth and dividends (as KSE-100 is a Total Return Index). We like cyclicals (Cements and Autos) on the back of expected economic uptick, while valuations on Banks and ...
- Shankar Talreja
Pakistan Oil & Gas Exploration: E&Ps earnings revised up 1-42%; Overwe...
We revise up our earnings forecasts of our E&Ps universe by 1-42% over FY21-FY23 after (1) revising up our Arab Light oil price assumption by 9-19% from US$38/46 per barrel in FY21/22 to US$45.3/50.1 per barrel following upward revision in the said estimates by Energy Information Administration (EIA) in its Dec-2020 report and (2) incorporating recently announced discoveries and financial results by E&Ps. Oil prices have recently recovered to over US$40 per barrel after hitting a bottom of US...
- Fawad Basir
Topline Flash Note: Adamjee Insurance Company (AICL): Corporate Briefi...
AICL has a total market share of 18% in Pakistan and 11% market share within Takaful operations. Equity and Asset base of the company over 5 years have registered a CAGR of 10% and 11%, respectively. Net Premium Revenues have grown at a CAGR of 19% over the last 5 years, while Gross Premium written have increased at a CAGR of 13%. COIVD-19 work culture (working from home) has reduced the traffic on road which has led to a decline in claims, However, Gross and Net premiums have also decreased ...
- Fawad Basir
Pakistan Oil Marketing: Oil sales likely to grow by 18% YoY and 2% MoM...
Pak Oil sales are likely to increase by 18% YoY in Nov-2020 driven by High Speed Diesel (HSD) demand which is expected to improve by 29% YoY. The pickup in HSD volumes is largely attributable to (1) continued restrictions on the border due to COVID-19 which is restricting inflow of smuggled product and (2) overall pick-up in economic activity following improvements in COVID-19 situation. Motor Spirit (MS) and Furnace Oil (FO) sales are also likely to increase by 20% YoY and 18% YoY, respecti...
- Sunny Kummar
Pakistan Fertilizer: Urea sales to increase by 35% YoY in Nov-2020
Pakistan Urea sales in Nov-2020 are expected to increase by 35% YoY to clock in at 513k tons amid low base of last year. However, sales are also expected to register an increase of 24% MoM. To highlight in Nov-2019, Urea sales were down by 23% YoY as farmers/dealers had held back their purchases amidst hike in Urea prices and on anticipation of removal of Gas Infrastructure Development Cess (GIDC). Urea sales during 11M2020 are expected to clock in at 5,139k tons, up 5% YoY. Fauji Fertilize...
- Sunny Kummar
Pakistan Fertilizer: Earnings revised up; Market-weight maintained
We are revising up our earnings forecasts for Pak Fertilizers by 5-61% (excluding FFBL) over 2020-2022 on the back of (1) higher-than-expected Urea offtake during 10M2020, (2) impact of Gas Infrastructure Development Cess (GIDC) review petition and (3) review of Sept-2020 detailed accounts. Urea offtake beating expectations: We revisit our Urea offtake for 2020, wherein we now expect Urea offtake to clock in at 5.8mn tons, in line with last five years average offtake vs. our earlier estimate ...
- Fawad Basir
Topline Flash Note: Habib Bank Limited (HBL): Corporate Briefing Takea...
The bank has made major inroads this year in key segments such as consumer lending (up 19% YTD), trade (market share up to 10.8% from 9.4% last year) and home remittances (29% YoY jump with market share up to 8.2%). The bank is aiming to increase share in the remittances segment to double digits in 2021. Channel migration towards digital solutions has reduced OTC transactions by 30%, which has become a key performance metric in order to increase efficiency. Going forward, target for transacti...
- Sunny Kummar
Topline Flash Note: D.G. Khan Cement (DGKC): Corporate Briefing Notes
The management is expecting around 10-12% YoY growth in domestic cement demand in FY21 due to the construction package announced by the government. Retention prices in North are hovering around Rs6,300-6,400/ton. In South, retention prices are at around Rs6,500-6,600/ton. Anti Dumping duties imposed by South Africa on Pakistan Cement will expire on Dec 15, 2020. If these duties are not renewed, then players will start exporting cement to this big market instead of clinker. Clinker export ...
- Sunny Kummar
Topline Flash Note: Nishat Mills Limited (NML): Conference Call takeaw...
Nishat Mills Limited (NML) has 242,832 Spindles, 3,000 Roters and 790 looms in Spinning and Weaving segments. In dyeing, the company has 3 thermosol machines and in garments 1,661 stitching machines. Currently towel manufacturing capacity is 10 tons/day. Eventually, this capacity will go up to 30 tons/day by Jul-2021. Orders are being diverted to countries like India, Pakistan and Bangladesh due to US China trade war. Order book of the company is full till Mar-2021. Management expects 10-20...
- Shankar Talreja
Topline Flash Note: Kohat Cement Company Limited (KOHC): Corporate Bri...
The company expects around 13.7% YoY growth in cement dispatches in the North region during FY21. The management is looking to set up a Greenfield plant of 7,000-9,000 TPD in Punjab with an estimated CAPEX of Rs30-32bn. The equity portion is likely to be around 40%. As per the management, industry expansions are likely to come online in FY25. Retention prices in 1QFY21 improved to Rs5,757/tons from Rs4,835/ ton during 4QFY20. Optimization of pyro process of Line III will reduce Fuel and Po...
- Sunny Kummar
Topline Flash Note: The Searle Company (SEARL): Corporate Briefing Not...
The Searle Company (SEARL) is the second largest pharmaceutical company in Pakistan. It is No.1 in Cardiovascular, Pain Management, Gynae and Obs and Cough Suppressant segments. The company has 4 over Rs1bn and 7 over Rs500mn brands in its portfolio. There are over 650,000 prescriptions with SEARL products prescribed by doctors every day. The company is ranked second in terms of volume with a market share of 7.04% and fourth in terms of value with a market share of 5.79%. The company has 11%...
- Fawad Basir
Topline Flash Note: Bank Al Habib Limited (BAHL): Analyst Briefing Tak...
The bank has posted a YTD growth in deposits of 21% while a YoY growth of 26%. In terms of mix, this has been driven by a 25% YoY growth in Current Accounts, which constitute 38% of total deposits as of Sep-2020. The capital expansion for the bank has been the key in achieving these numbers with 86 branches added up until Sep-2020. The management informed that the current number of branches added stands at 90 with a further 5 branches due to be opened in Dec-2020. Going forward, the growth s...
- Shankar Talreja
Topline Flash Note: Maple Leaf Cement Factory (MLCF): Corporate Briefi...
As per the management, new expansion announcements may begin from Mar-2021 as cement demand in FY21 is likely to grow by 16% YoY. Management estimates, at 10-15% growth per annum, utilization in the North region (only local) will be at 82-89% in FY22 and each year growth will generate an absolute demand of ~4-5mn tons. That suggests, industry will need/require two plants to come online every year. Earlier company was selling 2,000 TPD (out of 18,000 TPD) of cement in South market, which is n...
- Fawad Basir
Topline Flash Note: Kohinoor Textile Mills Limited (KTML): Corporate B...
The company largely operates in Bedsheet, Lenin and Home Textile segments. A large portion of company’s sales are coming from the local market, which helps it to perform better than peers. This year, Maple Leaf Cement (MLCF) may pay dividends, which will enhance payout capacity of KTML. Overall energy requirement of the company is 12MW, of which 5MW is met through the grid. To bridge this gap, company has installed a 5MW solar and also have gas and Furnace Oil based generators/plants. The...
- Fawad Basir
Topline Flash Note: Pakistan Petroleum Limited (PPL): Corporate Briefi...
PPL has a take or pay agreement with GENCOs on 72.5% of the 200mmcfd (or 145mmcfd) gas flows from Kandhkot field. Currently there is no offtake from Kandkhot field since the last 20 days and the company can not sell gas from this field to any other party. The take or pay agreement is also not being implemented. The management is trying to revise the terms of the contract so that the unsold gas can be sold to other parties. The overdue receivables of the company have increased to Rs305bn as of...
- Fawad Basir
Pakistan Autos: Earnings revised up; Over-Weight Maintained
We are revising up our earnings forecasts of Pakistan Automobiles Universe for the next two years by up to 53%, incorporating (1) higher-than-expected unit sales during 4MFY21 and (2) revision in margin assumptions. We are raising our FY21 and FY22 auto (cars + LCVs) sales assumptions by 19% (to 201K units) and 5% (to 228K units), respectively. We expect auto industry sales to grow by 60% YoY in FY21, which means total auto sales of 201K units. This includes new entrants like Lucky Motor Cor...
- Shankar Talreja
Pakistan Cement: Winters to weigh in on cement sales in Nov-2020; Loca...
The onset of the winter season is likely to weigh in on cement sales in Nov-2020 as local dispatches are likely to fall by 23-27% MoM. The North region is expected to witness a contraction of ~25-29% MoM, while sales in the South are likely to fall by ~11-15% MoM. The sequential decline is likely to be higher than the past two years’ average decline of 15% MoM during the month of November. We believe this is the case because of restricted development work in the North region due to (1) earl...
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