Weekly Report Jan 30, 2015 - Habib Metropolitan Financial Services
Transcription
Weekly Report Jan 30, 2015 - Habib Metropolitan Financial Services
Weekend Review HABIBMETRO Financial Services Big Bang With The Boom Market Roundup Jan 30, 2015 Over the weekend announcement of discount rate cut by 100bps fueled the bull with end‐ less energy. The energetic bull pushed the benchmark on the onset of the day on Monday while closing the day after adding 440 points. Investors seem full of energy and delight while looking towards the sky as their aim. The result season was kicked‐off on a pessimis‐ tic note where E&P companies declared lower earnings on account of crude oil prices. PPL, POL and OGDC felt the heat of lower earnings as stock fell down by 3% ‐ 4% followed by ATRL. Post DR cut the banking sector witnessed a lackluster interest where investors feel the banking spreads may dent the earnings. ...(on page 02) KSE ‐ 100 Index 400 34,700 34,600 300 34,500 200 34,400 Vol (mn) 30‐Jan‐15 29‐Jan‐15 28‐Jan‐15 27‐Jan‐15 The Analyst briefing of Engro Foods Ltd (EFOODS) was held on January 27, 2015 to discuss the company’s financial performance. EFOODS reported a PAT of PKR889mn (EPS: PKR1.16) in CY14 which marks a substantive improvement of 4.21x Y/Y (EPS: 0.28 in CY13). The sharp accretion in earnings is chiefly due to 1) Improving top‐line that regis‐ tered an uptick of 14% Y/Y, 2) A one time tax credit that emanates from losses booked in Al‐Safa and Mabrook brands and 3) Improved gross margins in the 4QCY14. ...(on page 03) 100 26‐Jan‐15 34,300 EFOODS ‐ Analyst Briefing Takeaways ‐ CY14 Index Source: HMFS Research Urea Market Registers Steady Growth (↑8% Y/Y) ‐ CY14 The official fertilizer statistics released by NFDC for the month of Dec’14 depict a contrac‐ tion of 3% Y/Y in Urea sales. The cumulative offtake for CY14 registered an increment of 8% Y/Y with 5.6MT of urea sold. DAP was the standout performer during CY14 posting an offtake of 1.65MT which marks a growth of 15% Y/Y. It is pertinent to note that most of the DAP demand was filled with private imports that took a handsome 53% share of the overall market. ...(on page 04) Weekly News ...(on page 06) Index Performance 36,000 700 30,000 600 500 24,000 400 18,000 300 12,000 200 6,000 100 0 Vol (mn) Jan‐15 Jul‐14 Jan‐14 Jul‐13 Jan‐13 Jul‐12 Jan‐12 Jul‐11 Jan‐11 Jul‐10 Jan‐10 Jul‐09 Jan‐09 Jul‐08 Jan‐08 ‐ Index Source : HMFS Research Note: Please refer to the last page for Analyst Certification and other important disclosures. HABIBMETRO Financial Services Weekend Review Market Roundup S.No 1 2 3 4 5 6 7 8 9 10 S.No 1 Major Gainers M/M Symbol % Gain KTML 51.47% DAWH 37.85% ENGRO 34.25% AHCL 30.80% JSCL 27.37% PKGP 27.19% MARI 26.81% EFOODS 26.21% SHFA 25.81% CHCC 24.42% Major Losers M/M Symbol % Loss JDWS ‐10.16% Big Bang With The Boom Over the weekend announcement of discount rate cut by 100bps fueled the bull with endless energy. The energetic bull pushed the benchmark on the onset of the day on Monday while closing the day after adding 440 points. Investors seem full of energy and delight while looking towards the sky as their aim. The result season was kicked‐off on a pessimistic note where E&P companies declared lower earnings on account of crude oil prices. PPL, POL and OGDC felt the heat of lower earnings as stock fell down by 3% ‐ 4% followed by ATRL. Post DR cut the banking sector witnessed a lackluster interest where investors feel the banking spreads may dent the earnings. Nevertheless the banks ac‐ quired greater long term bonds and lock‐in their returns for a longer period. The big ques‐ tion for investors and analyst would be the pickup of credit by private sector at lower lending rate would be crucial for the banking space. TimeLine Open High Low Close Avg Vol (mn) % Gain/Loss Jan to Date 32,131 34,627 32,131 34,444 304 7.2% 4QCY14 29,726 32,316 29,640 32,131 226 8.1% 3QCY14 29,653 30,640 27,354 29,726 133 0.2% 2QCY14 27,160 29,939 27,200 29,653 218 9.2% 52 WK Performance 26,608 34,627 34,383 34,444 209 29.5% 2 KEL ‐5.64% 3 ARM ‐5.54% 4 COLG ‐5.00% 5 PAKT ‐4.12% CY14 25,261 32,316 25,273 32,131 209 27.2% 6 GATM ‐3.75% CY13 16,905 25,711 16,036 25,261 222 49.4% 7 POL ‐3.51% 8 PPL ‐3.42% 9 BAFL ‐3.24% 10 MUREB ‐2.97% Source: HMFS Research Rest of the stocks including FFC, FFBL, MLCF and HCAR results were in line with analyst anticipation. Cement stocks were in a rock & roll mood with CHCC, MLCF, PIOC and KOHC Source: HMFS Research posting greater return on the back of lower cost of fund and fuel prices to push the over‐ all profitability in the upcoming quarters. With the start of the new month, PBS is sched‐ uled to declare the inflation numbers which are likely to be lower in the range of 3.94% ‐ Bilal AsifAC 3.98% taking YTD inflation lower to 5.7%‐5.78%. Furthermore oil prices are likely to be [email protected] reduced from the onset of the month which may dampen the inflation expectation going forward. The investors are up for a ride backed by discount rate cut and lower cost of fuel and energy. Monthly Review ‐ Staggering Return – Discount Rate cut “Rocks” The eventful month of January’15 ended on a Joyful note with benchmark rocketing to 34.5k posting a return of 7.2%. Lower crude oil prices are always helpful for a country like ours where energy supply is scarce. Continued reduction in inflation to 6.1% on YTD and Y/Y to 4.3% has pushed the monetary authorities to slash the discount rate by 100bps to 8.5%. It is pertinent to note in preceding two MPS, SBP slashed the discount rate by 150bps taking the discount rate to its lowest level since April 10, 2005. Furthermore the crude oil prices moved lower by 27% on M/M suggest further cut in oil price may depress the inflation numbers. With lack of investment opportunities in debt market, investors are likely to be heading towards equities, real estate and possibly towards industrial ex‐ pansion. Calendar year results may not be as good as investors are anticipating; conse‐ quently the declaration of results may depress the share prices for some time. HABIBMETRO Financial Services 2 Weekend Review Food Producers EFOODS ‐ Analyst Briefing Takeaways ‐ CY14 The Analyst briefing of Engro Foods Ltd (EFOODS) was held on January 27, 2015 to dis‐ cuss the company’s financial performance. EFOODS reported a PAT of PKR889mn (EPS: PKR1.16) in CY14 which marks a substantive improvement of 4.21x Y/Y (EPS: 0.28 in CY13). The sharp accretion in earnings is chiefly due to 1) Improving top‐line that regis‐ tered an uptick of 14% Y/Y, 2) A one time tax credit that emanates from losses booked in Al‐Safa and Mabrook brands and 3) Improved gross margins in the 4QCY14. Lower International Powder Milk Prices Boost Diary Margins The price of whole powder milk has witnessed a freefall plummeting to USD2,400/ton from a peak of USD5,000/ton in Feb’14. This phenomenon has rendered many smaller powder plants in the country non‐viable forcing closure, which has increased the supply of raw milk from farmers pushing the prices lower by 3%‐5%. The company has adopted a passive pricing strategy in order to enhance its market footprint which stands at 56% in the UHT diary segment. The combination of these events helped in inching gross margins to 20% in the 4QCY14 and this trend is likely to continue in the 1QCY15. Future Outlook: CY15 May Paint A Prettier Picture • The company expects diary margins will stay in the range of 20% for CY15 as there are no intentions to pass on the impact of cost savings in the near term • EFOODS is on a consolidation path with a focus strategy on the UHT diary segment as reflected by closure of its Al‐Safa operations in Canada and scrapping of the Mabrook brand • Product innovation will continue with new variations being introduced in existing brands and a likely drive to tap into the high margin Olpers cream segment • The company is actively pursuing to settle the legal process with the Punjab food authority to re‐introduce the Omung brand in the province. Currently the product mix is tilted towards Tarang having a 50%‐55% share, while Olpers possessing close to 40% of the mix Muhammad Sultan AC [email protected] • Relative Performance 40% 30% 20% 10% 0% ‐10% Source: HMFS Research EFOODS Jan‐15 Dec‐14 Oct‐14 Jul‐14 KSE‐100 Sep‐14 Jun‐14 Apr‐14 Mar‐14 Jan‐14 ‐20% International milk prices are likely to remain somewhat subdued till May’15, gain‐ ing traction from there onwards as the global demand gathers pace • One‐time tax credit seen in the 4QCY14 may extend into the 1QCY15 as PKR50mn of the tax credit remains un‐utilized • The Ice‐cream segment is likely to remain under pressure on account of depressed demand in the lean periods (1Q & 4Q) and persistent load shedding in the peak summer months Earnings Summary: (PKR mn) CY14 CY13 Revenue 42,027 37,891 COGS 34,926 29,748 Gross Profit 7,101 8,143 Operating Profit 2,127 2,039 EBIT 2,328 2,174 Finance Cost 1,237 785 PBT 494 508 PAT 889 211 EPS 1.16 0.28 Source: Company Accounts & HMFS Research YoY 11% 17% ‐13% 4% 7% 58% ‐3% 321% ‐ 4QCY14 11,356 9,939 1,417 856 994 298 330 637 0.83 4QCY13 9,867 8,631 1,236 ‐361 ‐155 199 ‐1,235 ‐1,030 (1.34) YoY 15% 15% 15% ‐337% ‐741% 50% ‐127% ‐162% ‐ HABIBMETRO Financial Services 3 Weekend Review Urea Market Registers Steady Growth (↑8% Y/Y) ‐ CY14 Fertilizer Sector The official fertilizer statistics released by NFDC for the month of Dec’14 depict a con‐ traction of 3% Y/Y in Urea sales. The cumulative offtake for CY14 registered an incre‐ ment of 8% Y/Y with 5.6MT of urea sold. DAP was the standout performer during CY14 posting an offtake of 1.65MT which marks a growth of 15% Y/Y. It is pertinent to note that most of the DAP demand was filled with private imports that took a handsome 53% share of the overall market. Urea Market Share ‐ CY14 30% 32% Urea Industry Volumetric Position Urea 2% 7% 28% FFC Engro Imports/Others FFBL Fatima Dec‐14 Dec‐13 ∆ Nov‐14 ∆ Opening Inventory 182 314 ‐42% 214 ‐15% Production 428 420 2% 435 ‐2% Imports 259 251 3% ‐ ‐ Offtake 656 674 ‐3% 467 40% Closing inventory 211 311 ‐32% 182 16% Source: NFDC & HMFS Research Source: NFDC Industry Analysis ‐ Local Urea Producers Stand Tall FFC witnessed urea offtake of 210KT in Dec’14 taking its cumulative urea sales for CY14 at 2.37MT, thereby giving it a sizeable 42% share of the market. The company managed to produce 2.42MT of urea in CY14 which is largely stable compared to last year. Rising demand for Phosphates in the country prompted DAP imports as the company sold 123KT in CY14. ENGRO persisted its stout trend in sales as it registered an offtake of 1.82MT in CY14 depicting 17% Y/Y growth, catering to 32% of the urea market. The company made the AC most of rising demand for DAP as it sold 402KT of the commodity in CY14 tapping al‐ Muhammad Sultan most a fourth of the DAP market. Consistent supply of gas from Mari allowed the com‐ [email protected] pany to produce 1.86MT of urea in the year which shows an improvement of 19% Y/Y. FATIMA Urea offtake came in at 371KT in the year which is lower by 7.2% Y/Y. CAN sales dialed in at 414KT reflecting a decline of 5% Y/Y, while NP sales were steady at 343KT being largely steady with a growth of 4% Y/Y. KSE 100 Index Vs Fertilizer Sector 40% Dec‐14 Dec‐13 YoY Nov‐14 MoM Urea 656 674 ‐3% 467 40% DAP 221 173 28% 380 ‐42% Offtake (kt) 30% 20% 10% Retail price (PKR/bag) 0% KSE‐100 Fert Sector Jan‐15 Dec‐14 Oct‐14 Sep‐14 Jul‐14 Jun‐14 Apr‐14 Mar‐14 Jan‐14 ‐10% Urea 1,933 1,857 4% 1,894 2% DAP 3,807 3,600 6% 3,709 3% Source: NFDC & HMFS Research Source: HMFS Research HABIBMETRO Financial Services 4 Weekend Review Fertilizer Sector CY14 CY13 Y/Y Urea 5,631 5,221 8% DAP 1,657 1,446 15% 1,778 5% DAP 3,585 3,832 Source: NFDC & HMFS Research ‐6% Offtake (kt) Retail price/bag Urea 1,875 FFBL The outgoing year was a challenging one for the company as it sold 709KT regis‐ tering a downtick of 8% Y/Y whereby its market share shrunk 5pps to hover at 43%. The company faced stiff competition from ENGRO that matched rising demand for phos‐ phates through timely imports. Industry Outlook ‐ Gas Price Revision Will Be Bothersome The fertilizer industry will be in for a stress test as the expected increase in gas prices from early CY15 will pose a challenge for gross margins for all local producers. We ex‐ pect increase in feed and fuel gas prices to be fully passed on, however any interven‐ tion from the GoP may strain the gross margins of local producers, whereby we expect FFBL will be in the most precarious situation due to its limited pricing power. Urea prices in international markets are likely to stay north of the USD300/ton mark while DAP will be hovering close to USD480‐500/ton. Demand for DAP is likely to sub‐ side in the coming months as the Rabi season matures while strong offtake is expected for urea, we foresee local production will be augmented by imports to cover demand for the remaining portion of Rabi. HABIBMETRO Financial Services 5 Weekend Review Weekly News Long‐term LNG contract with Qatar likely: Pakistan is likely to strike a long‐term LNG supply contract with Qatar at an esti‐ mated price based on current commodity rates in international market in the range of USD8 to USD10/mmbtu. MoP, who has just returned from a visit to Qatar has summoned a high‐level meeting of relevant stakeholders of the LNG project on January 26 to discuss the terms and conditions of the final agreement with Qatar. Moody’s.“Other than seeking to increase oil supplies and sus‐ pending 4‐senior officials in the MoO&G, the PM GoP has yet to offer policy solutions to the mounting fuel crisis,” Moody’s. Housing shortage reaches 9mn units: SBP: The country is facing shortage of over 9mn housing units as formal financial sector caters only up to 2% of all housing transactions, the lowest ratio in region. SBP Quarterly Housing Finance Review stated that there was shortage of around 8mn housing units in 2009, which has been accumulating by 0.34mn units every year (World Bank, 2009). The report the informal lending caters up to 10‐12% of transactions for housing. KEL to add 700MW coal power by 2018: KEL signed an agree‐ ment with Chinese companies to set up 700MW of coal‐fired power plants by 2018, a move that will minimize the utility’s reliance on the electricity supply from the national grid. The company, CDTO and CMEC entered into a joint development agreement to develop two 350MW of coal‐based power plant with a cost of 1bn dollars at Port Qasim. He added that KEL will inject 30% equity into the project, while the Chinese partners will contribute the remaining share. Genco seeks tariff for 1320MW coal‐fired plant: The Jamshoro Power Company Limited – Genco‐I – has approached the NEPRA, seeking tariff determination for its USD1.64bn coal‐fired power plant of 1,320MW to be set up in Jamshoro, a statement on. The project will be sponsored and executed by GHCL, whereas the Export of surplus wheat: PKR 6bn subsidy approved by ECC: implementing agency Jamshoro Power Company Limited would ECC of the Cabinet has approved a subsidy of PKR6bn for the also be responsible for operations and maintenance of the pro‐ export of 1.2mn tons of surplus wheat available with Punjab and ject. Sindh governments. A participant of the meeting, who re‐ Pakistan Steel to break even by April: With half of the quested anonymity, MoF and Research had proposed the export PKR18.5bn bailout package consumed in salaries, the PSM has of 3mn tons but the ECC meeting chaired by FM decided to al‐ sought another PKR4.5bn to pay gratuity to its retired employ‐ low export of 1.2mn tons. ees. This is the crux what PSM MD retired the sub‐committee of PKR10mn imposed: KEL barred from collecting meter rent: the Public Accounts Committee which interestingly endorsed the NEPRA barred KEL from collecting meter rent with immediate spending on salaries of the employees. He conceded that the effect, saying that PKR7.50 rent/ month from each consumer is capacity utilization of PSM stood at 30% against 77% committed illegal. KEL, which is fighting for extension in PPA for 650MW to avail Rs18.5bn bailout package last year. He claimed that the electricity from national grid, has been directed to pay the col‐ PSM would reach the breakeven by April as its production is ex‐ lected meter rent money back to 2.2mn consumers and submit a pected to reach 77% of its production capacity. compliance report to the Authority within 30 days. PSO to get PKR40bn to open LC: GoP is to release PKR40bn to Petrol supplies boosted to avoid crisis repeat: Amid reports of PSO for opening a LC to import FO and other petroleum prod‐ further decline in petrol prices, the oil industry is trying to maxi‐ ucts, MoP that within next 1‐week four ships carrying FO will mize supply in the coming week to avoid a repeat of recent fuel dock at Karachi Port. MoF has directed NBP to facilitate PSO in crisis. “We are also making efforts to ensure and maintain im‐ opening LCs with international fuel suppliers. GoP is likely to proved supply of petrol in the first week of February based on reduce prices of major petroleum products in the range of PKRR8.5/litre to PKR14/litre, effective from February 1, 2015. market situation CEO of OCAC. Country to get USD1bn under CSF, GoP: USA has assured Paki‐ stan of releasing 1bn dollars under the CSF in the current FY, besides giving used defense equipments to meet its security challenges, sources revealed. SSC on Defense that met with Mushahid Hussain Syed in the chair was given an in‐camera briefing by Secretary Defence on the recently‐held Pak‐US Stra‐ tegic Dialogue and the visit of the CoAS to the US. GoP blamed for ailing drugs industry: The Pharma Bureau, a representative body of multinational pharmaceutical companies operating in Pakistan, has blamed the GoP for the comparatively weaker performance of drugs industry. Pakistan’s medicine ex‐ ports are just USD190mn as against India’s USD15.5bn while projected export of India would reach USD25bn in FY15. Fuel crisis credit negative for Pakistan: Moody’s: Moody´s In‐ vestors Service warned Pakistan its credit rating could fall due to ongoing fuel crisis that has aggravated power breakdowns and weakened the country’s prospects to meet reform targets under the IMF bailout program.“Although the government will increase fuel imports, increased imports are unlikely to solve the deepen‐ ing fuel crisis and will further strain Pakistan’s (Caa1 stable) budget and balance of payments, a credit negative,” SBP warns Islamic banks to be more equitable: Pakistan’s cen‐ tral bank governor has urged the country´s Islamic banks to de‐ velop ways to reward their customers in line with a surge in the sector´s profitability, or face regulatory action. Islamic finance is experiencing a revival in Pakistan, the world´s second most populous Muslim country, aided by an ambitious 5‐year plan that Regulators hope will double the industry´s share of the banking sector to 20% by 2020. HABIBMETRO Financial Services 6 Weekend Review Major Economic Indicators Timeline Banking Indicators Jan‐14 Feb‐14 Mar‐14 Apr‐14 May‐14 June‐14 July‐14 Aug‐14 Sep‐14 Oct‐14 Nov‐14 Dec‐14 Return on Outstanding Loans 11.20% 11.22% 11.13% 11.15% 11.20% 11.20% 11.11% 10.97% 11.04% 10.98% 10.99% 10.95% Return on Deposits 5.17% 2.15% 5.04% 5.03% 5.04% 4.75% 5.10% 5.16% 5.10% 5.11% 5.11% 4.92% Interest rate Spread Total Deposits (PKR bn) 6.03% 7,566 6.10% 7,599 6.09% 7,571 6.12% 7,586 6.16% 7,803 6.45% 8,082 6.01% 7,960 5.81% 8,132 5.94% 5.87% 8,037 8,020 5.88% 6.03% 8,150 8,342 MoM Growth (%) Advances (PKR bn) 0.49% 4,127 0.44% 4,109 ‐0.37% 4,100 0.19% 4,088 2.87% 4,256 3.58% 4,286 ‐1.27% 4,240 1.91% 4,247 ‐1.18% ‐0.21% 4,282 4,317 1.63% 2.35% 4,399 4,458 Growth (%) 1.38% ‐0.45% ‐0.22% ‐0.30% 4.12% 0.70% ‐1.07% 0.17% 0.83% 0.80% 1.89% 1.35% Investments (PKR bn) Growth (%) 4,217 3.62% 4,443 5.35% 4,467 4,221 ‐0.81% ‐5.50% 4,361 3.30% 4,406 1.05% 4,375 ‐0.70% 4,468 4,493 2.14% 0.53% 4,832 5,108 7.75% 5.71% ADR Kibor (Ask Side) 3‐Month 54.55% 54.07% 54.15% 53.89% 54.54% 53.03% 53.13% 10.09% 10.11% 10.09% 10.18% 10.17% 10.17% 10.17% 52.23% 53.29% 53.77% 53.97% 53.44% 10.17% 10.18% 10.19% 9.83% 9.64% 6‐Month 9‐Month 10.14% 10.15% 10.11% 10.18% 10.17% 10.17% 10.17% 10.41% 10.41% 10.38% 10.44% 10.43% 10.42% 10.43% 10.17% 10.18% 10.19% 9.86% 9.65% 10.43% 10.45% 10.45% 10.13% 9.91% 1‐Year 10.45% 10.45% 10.41% 10.46% 10.44% 10.45% 10.45% 10.45% 10.50% 10.50% 10.14% 9.95% 2‐Year 3‐Year 11.29% 11.25% 11.05% 11.14% 11.22% 11.84% 12.14% 12.10% 12.24% 12.03% 12.17% 12.21% 12.36% 12.42% 12.14% 12.28% 11.96% 11.91% 10.49% 12.42% 12.77% 12.48% 11.14% 10.72% 4,503 1.36% 97.67 98.72 98.58 98.79 98.79 PKR Vs Other Currencies USD 105.48 105.12 100.00 Euro JPY 143.67 143.64 138.23 134.94 135.64 134.00 133.95 1.0140 1.0298 0.9773 0.9526 0.9702 0.9660 0.9722 133.95 132.41 130.53 127.07 124.39 0.9722 0.9565 0.9229 0.8755 0.8345 GBP 173.79 174.15 166.24 163.57 166.33 166.66 168.89 168.89 163.90 165.41 160.12 157.84 Inflation 102.55 102.91 101.92 100.91 8.75% 8.00% 8.65% 7.80% 8.53% 7.60% 8.69% 8.50% 8.66% 8.70% 8.62% 8.70% 7.88% 8.30% 7.44% 7.90% Other Economic Variables CPI NFNE 7.52% 7.09% 8.10% 7.80% 6.45% 6.08% 6.90% 6.70% USD Forex Reserves (bn) 7.99 8.74 10.07 12.18 13.47 14.14 14.30 13.61 13.21 13.44 12.99 14.94 Remittances (USD mn) 1,246 1,210 1,337 1,312 1,438 1,166 1,649 1,329 1,717 1,383 1,321 1,583 Arab light (Crude oil) Oil Bill USD mn 107.90 107.54 105.86 106.33 107.39 109.64 108.35 1,246 1,152 1,081 973 1,267 1,196 1,642 103.82 1,410 98.18 1,424 86.68 1,257 75.68 957 61.31 898 Trade Figures (FY USD mn) Total Imports Total Exports Trade Balance Current Account Balance Tax Collection (PKR bn) 4,137 3,600 3,630 4,067 3,675 4,338 3,364 4,718 4,561 4,266 3,630 (3,859) 2,061 2,167 2,239 1,915 2,117 2,027 1,930 1,911 2,181 1,957 1,966 (2,156) (2,076) (1,433) (1,391) (2,152) (1,558) (2,311) (1,434) (427) 167 (90) (111) (57) (135) (773) 169 163 214 170 207 311 124 (2,807) (599) 179 2,380 (2,309) (1,664) (1,703) (79) (223) (568) 76 235 191 180 255 HABIBMETRO Financial Services 7 Weekend Review Monetary Indicators Date Interest Rate Discount Rate 10‐Y PIB 6‐M Kibor Oct‐13 9.5% Nov‐13 9.8% Dec‐13 10.00% Jan‐14 10.00% Feb‐14 10.00% 10.00% Mar‐14 Apr‐14 10.00% May‐14 10.00% June‐14 10.00% July‐14 10.00% 10.00% Aug‐14 Sep‐14 10.00% Oct‐14 10.00% Nov‐14 9.50% Dec‐14 9.50% Source: SBP, PBS 12.8% 12.9% 12.9% 12.6% 12.8% 12.7% 12.8% 12.8% 12.9% 13.1% 13.3% 13.4% 13.1% 11.8% 11.4% 9.5% 9.8% 10.1% 10.1% 10.2% 10.1% 10.2% 10.2% 10.2% 10.2% 10.2% 10.2% 10.2% 9.9% 9.7% Real Interest Inflation Rate NFNE Trimmed Core CPI 8.32% 8.84% 8.89% 8.75% 8.65% 8.64% 8.69% 8.66% 8.62% 7.88% 7.44% 7.52% 7.09% 6.45% 6.09% 8.4% 8.5% 8.2% 8.0% 7.8% 7.6% 8.5% 8.7% 8.7% 8.3% 7.9% 8.1% 7.8% 6.9% 6.7% Yield Curve 9.0% 9.2% 8.7% 8.2% 8.1% 8.1% 9.0% 8.3% 7.9% 7.6% 7.1% 7.1% 6.0% 5.3% 5.2% M2 Growth 1.2% 0.9% 1.2% 1.4% 1.5% 1.5% 1.5% 1.5% 1.6% 2.3% 2.7% 2.7% 3.1% 3.4% 3.6% ‐1.2% ‐0.9% ‐1.1% ‐1.3% ‐1.4% ‐1.4% ‐1.3% ‐1.3% ‐1.4% ‐2.1% ‐2.6% ‐2.5% ‐2.9% ‐3.1% ‐3.4% Inflation vs Interest Rate (6‐M Kibor) 13.0% 12% 12.3% 10% 8% 11.6% 6% 10.9% 6‐M Kibor Jun‐14 Source: SBP Dec‐14 CPI NFNE Dec‐14 Nov‐14 Oct‐14 Sep‐14 Aug‐14 Jul‐14 Jun‐14 May‐14 Apr‐14 Mar‐14 Jan‐14 3‐Y 2 ‐ Y 12 ‐ M 9 ‐ M 6 ‐ M 3 ‐ M 0% 1 ‐ M 9.5% 2 ‐W 2% 1 ‐W 10.2% Feb‐14 4% Trimed Core Sep‐14 Source: SBP & FBS The week saw excitement as the DR was slashed by 100bps in the MPS whereby the SBP cited lower inflation and a stable outlook on the external account as the core reasons behind slashing the benchmark rates. Anticipation of inflationary pressures being sup‐ pressed in the near term also lent support to the central bank’s stance of continued monetary easing. With Y/Y inflation for the month of Dec’14 likely to hover around 4%, market pundits have started hinting towards a further slash in interest rates. The cen‐ tral bank continues to pump in liquidity in the cash hungry banking system as the recent OMO witnessed a hefty sum of PKR610bn being pumped for a tenor of 7‐days at 8.28%. At the end of the week 6M instrument’s yield stood at 8.58% showing a dip of 49bps W/W, while 10Yr PIB returned 9.70% showing a contraction of 55bps W/W. The Rupee was seen under mild stress against the greenback as the FX reserves held at SBP came in at USD10.248bn staying largely flat W/W. Muhammad Sultan AC [email protected] HABIBMETRO Financial Services 8 Weekend Review Stock Market Performance @ a Glance Major Gainer PKR S.No Symbol Arif Habib Corp 1 Kohinoor Textile 2 Cherat Cement 3 Packages Limited 4 Kohat Cement 5 Maple Leaf Cem. 6 EFU Life Assur Ltd. 7 Pioneer Cement 8 Abbott Lab 9 10 Engro Foods Ltd Source: HMFS Research % Gain 18.95% 16.04% 14.31% 10.25% 9.88% 9.51% 8.90% 8.50% 8.48% 7.93% MoM Index Performance (index gain vs average volume) Avg vol (mn) 18% 300 14% 165 28‐Jan‐15 29‐Jan‐15 30‐Jan‐15 Decline Source: KSE Top 10 volume leader (volumes in mn) 40 0% 20 Pharma & Bio 2% FFBL DGKC CHCC EFOODS NBP JSCL ENGRO LOTCHEM BOP 0 KEL Technology & Eq 60 Life Insurance 4% Support Services 80 Household Goods 6% Chemicals 27‐Jan‐15 Advance 100 Const & Materials 182 162 Index % 8% General Ind ‐4.81% 105 Industrial metals 152 140 Jan‐15 Dec‐14 182 Sector Performance (based on market capitalization) Software & Comp ‐4.88% 222 26‐Jan‐15 Source: KSE Source: KSE ‐8.78% ‐7.14% ‐6.96% ‐6.95% ‐6.75% ‐6.02% ‐5.38% ‐5.21% 257 235 MLCF Avg vol (mn) Oct‐14 ‐6% Nov‐14 50 Sep‐14 ‐2% Aug‐14 100 Jul‐14 2% Jun‐14 150 May‐14 6% Apr‐14 200 Mar‐14 10% Feb‐14 250 % Loss Advance to Decline Index % 350 Jan‐14 Major Loser PKR S.No Symbol J.D.W.Sugar 1 Shezan International Ltd. 2 Attock Refinery Ltd. 3 Lotte Chemical Pakistan Ltd 4 Attock Petroleum 5 Pace (Pak) Ltd. 6 Pakistan Cables 7 Meezan Bank 8 Bata (Pak) Ltd. 9 10 K‐Electric Source: HMFS Research Source: KSE HABIBMETRO Financial Services 9 Weekend Review Commodities & Stocks @ a Glance SACRA inflows MoM (USD mn) Jan‐15 15 Dec‐14 Jan‐15 (54) 7 35 Oct‐14 (8) 52 Aug‐14 13 Jul‐14 (30) Sep‐14 49 Aug‐14 394 May‐14 110 Apr‐14 36 Jul‐14 69 Jun‐14 72 May‐14 71 74 Jun‐14 Apr‐14 86 94 Mar‐14 (19) Feb‐14 (49) Nov‐14 Sep‐14 Mar‐14 (7) Dec‐14 Nov‐14 Oct‐14 FIPI inflows (USD mn) (5) Feb‐14 (6) Jan‐14 10 Jan‐14 3 Source: SBP 32 Source: NCCPL Arab Light USD/barrel Gold (Euro vs USD) USD EURO 2,000 1,000 60 800 800 45 600 600 30 400 400 Jan‐12 Jan‐10 Jan‐09 Jan‐15 Jul‐14 Jan‐14 Jul‐13 Jan‐13 Jul‐12 Jan‐12 Jul‐11 Jan‐11 Jul‐10 Jan‐10 Jul‐09 Jan‐09 USD Source: Bloomberg 14.0x 12.0x 10.0x KSE‐100 8.0x Source: HMFS Research Jun‐14 Dec‐14 Dec‐13 Jun‐13 Dec‐12 Jun‐12 Jun‐11 Dec‐11 Jun‐10 Dec‐10 Dec‐09 Jun‐09 Dec‐08 Jun‐08 Dec‐07 Jun‐07 Jun‐06 Dec‐06 6.0x EURO Source: LBMA KSE‐100 PER band Jan‐15 1,000 Jul‐14 1,200 75 Jan‐14 1,400 1,200 Jul‐13 1,400 90 Jan‐13 1,600 105 Jul‐12 1,800 1,600 Jul‐11 1,800 Jan‐11 120 Jul‐10 2,000 Jul‐09 135 Global markets Weekly Performance S.No Country Open Close Gain % 1 2 3 4 5 Sensex S&P 500 Dow Jones FTSE 100 CAC 40 29,006 2,063 17,814 6,797 4,553 29,682 2,021 17,417 6,811 4,631 2.33% ‐2.03% ‐2.23% 0.21% 1.73% 6 7 8 9 Hang Seng KSE‐100 STRAITS TIMES NASDAQ‐100 24,523 34,027 3,370 4,750 24,596 34,444 3,419 4,683 0.30% 1.23% 1.45% ‐1.41% 10 NIKKEI 17,329 17,606 1.60% Source: Yahoo Finance (Updated as at Jan 29,2014) HABIBMETRO Financial Services 10 Weekend Review Valuation Snapshot Company Name Symbol Chemical Fauji Fertilizer Co Target Index Current Upside Price Wght(%) Price (%) June’15 FFC Fauji Fert Bin Qasim FFBL Fatima Fertilizer Co FATIMA Engro Fertilizer EFERT Engro Corp Ltd* ENGRO Electricity Hub Power Co 4.97 131.87 121.00 ‐9% 0.92 0.87 0.91 3.78 52.24 38.44 85.27 297.37 Earnings Dividend PER (x) PBR (X) D/Y (%) FY14/ FY15/ FY14/ FY15/ FY14/ FY15/ FY14/ FY15/ FY14/ FY15/ CY14 CY15 CY14 CY15 CY14 CY15 CY14 CY15 CY14 CY15 Reduce 16.23 14.05 15.50 13.80 8.13 9.39 6.55 5.75 12% 10% Rating 46.00 ‐12% Reduce 4.95 6.80 43.00 12% Accumulate 4.89 5.27 91.00 7% Accumulate 6.35 8.90 245.00 ‐18% Sell 12.50 32.50 4.60 3.00 2.50 3.00 6.57 3.50 3.50 5.00 10.55 7.86 13.43 23.79 7.68 7.29 9.58 9.15 3.04 2.26 7.55 2.41 3.03 2.07 6.30 2.11 9% 13% 8% 9% 3% 4% 1% 2% HUBC 3.93 84.14 71.00 ‐16% Sell 5.66 7.44 6.50 7.25 14.87 11.30 5.00 4.94 8% Kot Addu Power Co KAPCO 2.01 82.00 58.00 ‐29% Sell 8.78 9.78 6.50 8.75 9.34 8.39 2.69 2.55 8% 11% 9% Nishat Power Ltd 9% 10% 0.34 44.64 38.00 ‐14% Reduce 8.24 8.71 4.00 4.25 5.42 5.13 1.53 1.28 Nishat Chun Power NCPL Pakgen Power Ltd PKGP Oil & Gas 0.39 0.31 48.55 43.00 ‐12% 34.38 24.00 ‐30% Reduce Sell 7.90 10.36 6.50 7.00 6.15 4.69 2.53 2.13 13% 14% 2.54 2.52 1.50 1.50 13.51 13.66 1.17 1.16 4% 4% Oil & Gas Devp Co OGDC 7.33 210.94 282.00 33% Buy 28.81 29.71 9.25 9.00 7.32 7.10 2.29 1.88 Pakistan Oilfields POL 2.13 366.03 448.00 22% Buy 54.51 52.54 52.50 50.60 6.72 6.97 2.46 2.46 14% 14% Pakistan Petroleum PPL 4.41 170.48 221.00 30% Buy 26.08 24.94 12.50 14.50 6.54 6.84 1.85 1.63 7% 9% Pakistan State Oil Attock Petroleum Commercial Banks PSO APL 2.56 0.48 375.62 U/R 537.88 612.00 14% Accumulate 52.15 56.05 47.50 48.00 10.31 9.60 3.23 3.09 9% 9% NPL 4% 4% Allied Bank Ltd* ABL 1.06 114.37 177.00 55% Buy 13.21 12.39 6.00 6.50 8.66 9.23 2.34 2.06 5% 6% Habib Bank Ltd HBL 1.66 210.47 262.00 25% Buy 20.43 24.10 9.50 11.00 10.30 8.73 1.98 1.69 5% 5% MCB Bank Ltd MCB 8.03 334.82 295.00 ‐12% Reduce 23.04 28.29 15.00 17.00 14.53 11.83 3.45 3.07 4% 5% National Bank NBP 1.91 70.07 53.00 ‐25% Sell 6.77 8.06 4.00 5.00 10.36 8.69 1.31 1.20 6% 7% United Bank Ltd UBL 4.75 179.99 194.00 8% Accumulate 18.98 22.13 10.50 12.00 9.48 8.13 1.92 1.67 6% 7% Bank Al‐Falah* Cement BAFL 1.30 33.75 39.00 16% 3.99 5.35 2.00 2.50 8.45 6.31 1.45 1.25 6% 7% Lucky Cement * LUCK 3.62 519.52 552.00 6% Accumulate 35.08 39.83 9.00 10.00 14.81 13.04 3.37 2.80 2% 2% DG Khan Cement DGKC 1.70 131.31 U/R Attock Cement ACPL 0.26 214.59 U/R Cherat Cement CHCC 0.53 85.45 73.00 ‐15% 4% 4% 0.67 52.61 58.00 0% 4% Maple Leaf Ce‐ MLCF ment* Automobile & Parts Buy HCAR 0.00 Indus Motor Pak Suzuki Millat Tractors Ltd INDU PSMC MTL 1.09 1029.65 1023.00 ‐1% 0.50 429.27 495.00 15% 0.61 637.23 626.00 ‐2% Rating Definition Recommendation BUY ACCUMULATE NEUTRAL REDUCE SELL 63.03 Reduce 7.45 7.61 3.50 3.50 11.47 11.23 3.10 1.98 11% Honda Atlas Cars Average Universe *Target Price Dec’15 Buy 5.36 6.90 0.00 2.00 9.81 7.62 2.85 2.40 179.25 204.00 14% Accumulate 6.35 17.23 3.00 4.50 28.24 10.40 10.26 11.98 2% Neutral Buy Neutral 42.14 82.56 23.18 40.97 24.43 12.47 4.22 3.71 24.01 62.39 3.00 3.00 17.88 6.88 1.83 1.51 32.91 43.50 26.33 34.80 19.36 14.65 5.54 5.15 2% 1% 4% 3% 4% 1% 5% 10.99 8.95 2.89 2.56 10% 11% Expected Return > 15.0% > 5.0% to < 15.0% > ‐5.0% to < 5.0% > ‐15.0% to < ‐5.0% < ‐15.0% HABIBMETRO Financial Services 11 HABIBMETRO Financial Services CEO Manzar Mushtaq (92‐21) 3514 8170 [email protected] Research Team Fax (92‐21) 3536 4682 Bilal Asif (92‐21) 3582 2208 [email protected] Muhammad Sultan Mahmood (92‐21) 3536 4665 ‐ 7 (Ext 117) [email protected] Kumail Chevelwalla (92‐21) 3536 4665 ‐ 7 (Ext 118) [email protected] Saba Mahmood (92‐21) 3536 4665 ‐ 7 (Ext 119) [email protected] Waheed Khan (92‐21) 3536 4665 ‐ 7 (Ext 119) [email protected] Sales Team Fax (92‐21) 3536 4682 Syed Ahsan Ali (92‐21) 3582 2274 [email protected] Gohar Altaf (92‐21) 3582 2277 [email protected] Urooj Sohail (92‐21) 3582 2217 [email protected] Raza Iqbal (92‐21) 3582 2217 [email protected] Analyst Certificate The research analyst denoted AC on the cover of the report on with the name of analyst who has written the report. The analysis and views express in this report exclusively reflect his/her personal views about the subject, company or security. Furthermore his/her compensation was, is or will not be directly related to the recommendation or views articulated in this report. The information pro‐ vided in this report is based on information available to the analyst and in accordance with best of his/her knowledge. Disclaimer This report has been prepared and circulated by Habib Metropolitan Financial Services Limited ("HMFSL") for information only, and is not intended to provide investment advice and does not take into account the specific investment objectives, financial situation and the particular needs of the recipients. It may be noted that information presented and opinions expressed in this report do not consti‐ tute a proposition for or solicitation of any offer to buy or sell any securities or futures. While information collected for the report has been through sources believed to be accurate and reliable at the time of publication, HMFSL nonetheless makes no representation or warranty as to its accurateness and/or completeness. Investors should always seek financial advice and make their own judgment regarding the appropriateness of investing in any securities or other investments and should understand that statements regarding future prospects of investments or investment strategies may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested and HMFS accepts no responsibility or liability whatsoever for any type of sub‐ sequent and significant loss arising from any use of this report or its contents. 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