Research Reports

Overall Cement dispatches declined by 3% YoY in Nov-23, on the back of a 16% YoY fall in local dispatches. The decline was in spite of a 4.5x YoY increase in exports. The resetting of external economic equilibrium has rendered cement exports to be relatively more competitive in the international market contributing to the massive 2.0x YoY increase in exports during 5MYFY24. Meanwhile, local dispatches showed a slight 2% YoY recovery for 5MFY24. Consequently, overall dispatches in 5MFY24 experienced a noteworthy double-digit increase of 11% compared to the SPLY.

As per the latest data released by PBS, headline inflation for Nov-23 registered an uptick to 29.2% YoY in Nov-23 from 26.8% YoY last month. The 5MFY24 average amounted to 28.6% as compared to a 25.1% in the same period of FY-23.

As per estimates by the newly established quarterly GDP dataset, Real GDP growth accelerated by 2.1 % YoY in 1QFY24 as compared to a 0.96% YoY in the same quarter last year. Elevating GDP growth was on account of a (i) 5.1% YoY growth in Agriculture, (ii) a 2.5% YoY recovery in Industry and (iii) a 0.8% YoY growth in services. The uptick was supported by a favorable base effect, even more so, as revised estimates for FY23 indicated a contracting economy with a -0.2% YoY growth.

IMF and Pakistan have reached a staff level agreement on the first review under the Stand-By Agreement (SBA) of USD 3bn. This agreement is subject to approval of the IMF’s Executive Board. After approval, Pakistan will receive SDR 528mn (USD 700mn), bringing the total disbursement under the program to USD 1.9bn.

KOHC announced its 1QFY24 results today wherein the company posted an EPS of PKR 11.38 compared to an EPS of PKR 8.88 in 1QFY24, up 25% YoY.

The board of Kohat Cement is scheduled to meet on 28^th October, 2023 to discuss 1QFY24 financial results, where we expect the company to report an EPS of PKR 9.35 for 1QFY24 compared to an EPS of PKR 8.9 in 1QFY23, up 5% YoY.

MLCF announced its financial result today, wherein the company reported consolidated EPS of PKR 1.51 for 1QFY24 compared to an EPS of PKR 1.28 in 1QFY23, up 18% YoY.

MLCF is scheduled to announce its 1QFY24 financial result tomorrow, where we expect the company to report an EPS of PKR 1.41 compared to an EPS of PKR 1.28 in 1QFY23, up 10% YoY.

HUBC’s board meeting is scheduled on 25^th October, 2023 to consider 1QFY24 financial results. We expect the company to post an EPS of PKR 13.47, up 92% YoY for the 1QFY24.

NPL announced its 1QFY24 financial results today, wherein the company posted an EPS of PKR 4.12, up 55% YoY compared to an EPS of PKR 2.66 in SPLY. The result came in higher than our expectation owing to company’s higher O&M savings.

FCCL is scheduled to announce its 1QFY24 financial result on 24th October 2023, where we expect the company to report an EPS of PKR 0.92, down 3% YoY, compared to an EPS of PKR 0.94 in 1QFY23.

BAFL announced its 3QCY23 financial result today, wherein the bank posted an unconsolidated EPS of PKR 5.47, up 60% YoY. This took the 9MCY23 EPS to PKR 17.28, up 93% YoY.

BAHL announced its 3QCY23 financial result today. Wherein, the bank reported an unconsolidated EPS of PKR 10.07, up 110% YoY. This took the cumulative 9MCY23 EPS to PKR 26.35, up 96% YoY. Along with the result, bank announced an interim cash dividend of PKR 4.50/share. This took 9MCY23 payout to PKR 9.00/share.

FFC announced its 3QCY23 financial results today, wherein the company reported an unconsolidated EPS of PKR 7.18, up 74% YoY. This took the cumulative 9MCY23 EPS to PKR 17.46, up 50% YoY. Along with the result, company announced an interim cash dividend of PKR 3.98/share taking 9MCY23 payout to PKR 11.39/share.

For 3QCY23, HBL announced a consolidated EPS of PKR 11.34, up 44% YoY. This took the 9MCY23 EPS to PKR 29.20, up 83% YoY. Along with the result, bank announced an interim cash dividend of PKR 2.25/share, taking the cumulative 9MCY23 payout to 5.75/share.

MCB announced an unconsolidated EPS of PKR 14.73 for 3QCY23, up 100% YoY. This took the cumulative 9MCY23 EPS to PKR 37.27, up 123% YoY. Along with the result, the bank announced an interim cash dividend of PKR 8.00/share for the quarter. This took the 9MCY23 cumulative payout to PKR 21.00/share.

UBL announced its 3QCY23 financial result today, wherein the bank reported an unconsolidated EPS of PKR 11.88, up 111% YoY. This took the 9MCY23 unconsolidated EPS to PKR 33.88, up 118% YoY. Along with the result, the bank announced an interim cash dividend of PKR 11.00/share for the quarter taking 9MCY23 dividend to PKR 33.00/share.

BAFL is scheduled to announce its 3QCY23 financial result on 26^th October, 2023. We expect the bank to post unconsolidated EPS of PKR 6.62, up 94% YoY. This will take the 9MCY23 EPS to PKR 18.43, up 106% YoY.

MCB is scheduled to announce its 3QCY23 financial result on October 25, 2023. Wherein, we expect the bank to post an unconsolidated EPS of PKR 15.25, up 107% YoY. This will take the cumulative 9MCY23 EPS to PKR 37.79, up 126% YoY. Along with the result, we expect the bank to announce an interim cash dividend of PKR 8.00/share for the quarter. This will take the 9MCY23 cumulative payout to PKR 21.00/share.

FFBL announced its 3QCY23 financial result today. Wherein, the company reported an unconsolidated EPS of PKR 4.11, compared to the LPS of PKR 1.31 in 3QCY22. This took the 9MCY23 EPS to PKR 0.27 against an EPS of PKR 1.33 during 9MCY22.

CHCC’s board meeting is scheduled on 23^rd October 2023 to consider its 1QFY24 financial results. The company is expected to report an EPS of PKR 5.67 in 1QFY24 compared to an EPS of PKR 7.63 in 1QFY23, down 26% YoY.

NPL is scheduled to announce its 1QFY24 financial results on 23^nd October 2023, where we expect the IPP to post an EPS of PKR 2.99, up 12% YoY. Along with the result the IPP is expected to post an interim dividend of PKR 2.00/share.

HBL is scheduled to announce its 3QCY23 financial results on 25^th October, 2023. We expect the bank to post consolidated EPS of PKR 11.29 during 3QCY23, up 44% YoY. This would take 9MCY23 EPS to PKR 29.15, up 83% YoY. Along with the result, we expect the bank to announce an interim cash dividend of PKR 2.00/share, taking cumulative 9MCY23 payout to 5.50/share.

FFC is scheduled to announce its 3QCY23 financial results on 25^th Oct, 2023. We expect the company to report unconsolidated EPS of PKR 8.06, up 95% YoY. This would take the cumulative 9MCY23 EPS to PKR 18.34, up 57% YoY. Along with the result, we expect the company to announce an interim cash dividend of PKR 5.50/share taking 9MCY23 payout to PKR 12.91/share.

FFBL is scheduled to announce its 3QCY23 results on 24^th October, 2023. Wherein, we expect the company to record an unconsolidated EPS of PKR 3.15, compared to the LPS of PKR 1.31 in 3QCY22. This will take the 9MCY23 LPS to PKR 0.68 against an EPS of PKR 1.33 during 9MCY22.

BAHL’s BoD meeting is scheduled on October 25, 2023 to consider the financial accounts for 3QCY23. We expect the bank to announce an unconsolidated EPS of PKR 8.03, up 67% YoY. This would take the cumulative 9MCY23 EPS to PKR 24.30, up 80% YoY.

MEBL announced its financial result today, wherein the bank posted unconsolidated EPS of PKR 14.21, up 2.2x YoY. This took the 9MCY23 EPS to PKR 32.40, up 103% YoY. Along with the result, bank announced an interim cash dividend of PKR 5.00/share, taking 9MCY23 cumulative payout to PKR 12.00/share.

UBL is scheduled to announce its 3QCY23 financial result on 25^th October, 2023. Wherein we expect the bank to report an unconsolidated EPS PKR 11.07, up 96% YoY. This would take the 9MCY23 unconsolidated EPS to PKR 32.57, up 112% YoY. Along with the result, we expect the bank to announce an interim cash dividend of PKR 8.00/share for the quarter taking 9MCY23 dividend to PKR 30.00/share.

MEBL’s BoD meeting is scheduled on October 19, 2023 to consider the financial result for 3QCY23. We expect the bank to post unconsolidated EPS of PKR 11.14, up 74% YoY. This will take the 9MCY23 EPS to PKR 29.33, up 84% YoY. Along with the result, we expect the bank to announce an interim cash dividend of PKR 4.00/share, taking 9MCY23 cumulative payout to PKR 11.00/share.

EFERT announced its 3QCY23 financial result today, wherein the company reported a consolidated EPS of PKR 7.17 for 3QCY23 against a consolidated EPS of PKR 3.13 during 3QCY22. This took cumulative 9MCY23 EPS to PKR 11.27, up 57% YoY. Along with the result, company announced an interim cash dividend of PKR 6.00/share for the quarter, taking 9MCY23 payout to PKR 12.50/share.

EFERT’s is scheduled to announce its 3QCY23 financial result on 12^th October, 2023. Wherein, we expect the company to report a consolidated EPS of PKR 5.40 for 3QCY23 against a consolidated EPS of PKR 3.13 during 3QCY22. This would take the cumulative EPS for 9MCY23 to PKR 9.50, up 32% YoY. Along with the result, we expect the company to announce an interim cash dividend of PKR 5.50/share for the quarter, taking 9MCY23 payout to PKR 12.00/share.

As per the data released by NFDC, July-23 Urea offtake increased by 36% YoY to 629k tons, while DAP offtake increased to 113k tons up 68% YoY. For 7MCY23, Urea offtake remained flat with meagre increase of 1% YoY to 3.7mn tons, while DAP offtake decreased by 3% YoY to 632k tons.

INDU is scheduled to announce its 4QFY23 financial results on 25^th August, 2023. Wherein we expect the company to post an unconsolidated PAT of PKR 2.5bn (EPS PKR 32.03) vs PAT of PKR 3.8bn (EPS 6.48) in SPLY, depicting an increase of 3.9x YoY. This would take the FY23 earnings to PKR 106.38/share, down 47% YoY. Along with the result, INDU is expected to announce final cash dividend of PKR 16.0/share, taking cumulative FY23 dividend to PKR 58.80/share.

BAHL announced its 2QCY23 financial result today, wherein the bank reported an unconsolidated EPS of PKR 6.79, up 62% YoY. This took the cumulative 1HCY23 EPS to PKR 16.27, up 88% YoY. Along with the result, the bank announced an interim cash dividend of PKR 4.50/share for 1HCY23.

BAHL’s BoD meeting is scheduled on August 23, 2023 to consider the financial accounts for 2QCY23. We expect the bank to announce an unconsolidated EPS of PKR 6.12, up 46% YoY. This would take the cumulative 1HCY23 EPS to PKR 15.60, up 80% YoY.

MEBL announced its 2QCY23 financial result today, wherein the bank reported an unconsolidated EPS of PKR 9.58, up 117% YoY. Cumulative 1HCY23 EPS came at PKR 18.20, up 90% YoY. Along with the result, the bank announced an interim cash dividend of PKR 4.00/share, taking 1HCY23 payout to PKR 7.00/share.

BAFL announced its 2QCY23 financial result today, wherein the bank reported an unconsolidated EPS of PKR 5.00, up 114% YoY. This took the 1HCY23 unconsolidated EPS to PKR 11.81, up 114% YoY. Along with the result, the bank announced an interim cash dividend of PKR 3.00 for 1HCY23.

MARI Petroleum announced FY23 financial results today, wherein the company reported an EPS of PKR 420.7/share, up 70% YoY. The result is in line with our expectations. The earnings growth is primarily driven by growth in hydrocarbon production and 28% YoY PKR devaluation. Along with the result, the company also announced a final cash dividend of PKR 58/share, taking the cumulative payout to PKR 147/share during FY23.

MEBL’s BoD meeting is scheduled on August 10, 2023 to consider the accounts for 2QCY23. We expect the bank to post unconsolidated EPS of PKR 9.75, up 1.2x YoY. This will take the 1HCY23 EPS to PKR 18.36, up 92% YoY. Along with the result, we expect the bank to announce an interim cash dividend of PKR 3.5/share, taking 1HCY23 cumulative payout to PKR 6.50/share.

BAFL is scheduled to announce its 2QCY23 financial result on 10^th August, 2023. We expect the bank to post unconsolidated EPS of PKR 4.72, up 102% YoY. This will take the 1HCY23 EPS to PKR 11.53, up 109% YoY. Along with the result, we expect the bank to announce an interim cash dividend of PKR 4.50 for 2QCY23.

We have revised up our estimates on FFBL and recommend ‘BUY’ with June-24 Price Target (PT) of PKR 27/sh, offering an upside of 84%. Fertilizer business contributes PKR 17.7 or 67% to our PT, whereas investment portfolio contributes PKR 8.9 or 33% to our PT.

EFERT announced its 2QCY23 result today, wherein the company announced a consolidated EPS of PKR 0.79 against a consolidated LPS of PKR 0.07 SPLY. Cumulative EPS for 1HCY23, came at PKR 4.09, up 1% YoY. Along with the result, EFERT announced an interim cash dividend of PKR 3.00/share for the quarter, taking 1HCY23 dividend to PKR 6.50/share.

HBL is scheduled to announce its 2QCY23 financial results on 26^th July, 2023. We expect the bank to post consolidated EPS of PKR 8.2 during 2QCY23, up 2.5x YoY. This will take the 1HCY23 EPS to PKR 17.2, up 1.1x YoY. Along with the result, we expect the bank to announce an interim cash dividend of PKR 1.5/share, taking cumulative 1H payout to 3.0/share.

HCAR is scheduled to announce its 1QMY24 financial results on 25^th July 2023. We expect the company to post an EPS of PKR 0.88, down by 81%

FFBL announced its 2QCY23 results today, wherein the company reported an unconsolidated EPS of PKR 0.43, down 76% YoY. This took the 1HCY23 LPS to PKR 3.83 against an EPS of PKR 2.64 during 1HCY22.

UBL announced its 2QCY23 financial results today, wherein the bank posted an unconsolidated EPS PKR 10.1, up 4.3x YoY. This took 1HCY23 unconsolidated EPS to PKR 21.5, up 1.2x YoY. Along with the result, the bank announced an interim cash dividend of PKR 11.0/share for the quarter, taking cumulative 1HCY23 dividend to PKR 22.0/share.

FFC is scheduled to announce its 2QCY23 financial results on 25^th July, 2023. We expect the company to report unconsolidated EPS of PKR 4.90, up 85% YoY. This would take the cumulative 1HCY23 EPS to PKR 10.97, up 45% YoY. Along with the result, we expect the company to announce an interim cash dividend of PKR 3.50/share taking 1HCY23 payout to PKR 7.76/share.

EFERT’s BoD meeting is scheduled on 26^th July, 2023 to consider the financial accounts for 2QCY23. We expect the company to report a consolidated EPS of PKR 2.75 for 2QCY23 against a consolidated LPS of PKR 0.07 SPLY. Cumulative EPS for 1HCY23 is likely to clock in at PKR 6.05, up 49% YoY. Along with the result, EFERT is expected to announce an interim dividend of PKR 3.00/share for the quarter, taking 1HCY23 dividend to PKR 6.50/share.

FFBL is scheduled to announce its 2QCY23 results on 21^st July, 2023. Wherein, we expect the company to record an unconsolidated EPS of PKR 0.47, down 66% YoY. This will take the 1HCY23 LPS to PKR 3.73 against an EPS of PKR 2.64 during 1HCY22.

UBL’s BoD meeting is scheduled on 19^th July, 2023 to consider the financial results for 2QCY23. We expect the bank to post an unconsolidated EPS PKR 8.4, up 4.4x YoY. This would take the 1HCY23 unconsolidated EPS to PKR 19.7, up 2.03x. Along with the result, we expect the bank to announce an interim cash dividend of PKR 6.0/share for 2Q taking 1HCY23 dividend to PKR 17.0/share.

The Federal Budget FY24 demonstrates a concerning lack of accountability, as it presents a range of unrealistic revenue objectives and substantial rises in expenditures, particularly in government salaries and pensions. The fiscal deficit is likely to witness a significant slippage from the already high budgeted figure of 6.5% and we believe the budget substantially falls short of likely IMF’s mandated fiscal discipline. Over the past five years, a recurring pattern has emerged in the government's budget presentations, where significant deviations from the previous year's targets are observed in subsequent budgets. Given the recurring trend of significant disparities between budgeted and actual figures in the past, and this budget having gone a step ahead, conducting a thorough analytical review of the Federal Budget FY24, is an exercise in vain.

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• As per the data released by NFDC, Jan-23 Urea offtake increased by 6% YoY to 631k tons, while DAP offtake took a dip of 15% YoY to 96k tons.

• UBL held its 4QCY22 Analyst Briefing on February 28, 2023 to discuss the financial results and future outlook of the bank. To recall, the bank posted an unconsolidated EPS of PKR 10.9, up 64% YoY during 4Q, which took the cumulative CY22 EPS to PKR 26.2, down 4% YoY. Along with the result, the bank announced a final cash dividend of PKR 9.0/share, taking cumulative CY22 DPS to PKR 22.0.

• HUBC held its analyst briefing today, wherein the management discussed its 1HFY23 financial results and status of the ongoing projects. Main points discussed during the call are presented below.

• ACPL announced its 2QFY23 financial result today, wherein the company posted a consolidated EPS of PKR 4.2, up 87% YoY, compared to an EPS of PKR 2.3 in 2QFY22. This takes cumulative earnings in 1HFY23 to PKR 5.8/share, up 23% YoY.

• POL announced its 2QFY23 financial results today, where the company reported an EPS of PKR 20.9, up 5% YoY compared to an EPS of PKR 19.9 in SPLY. The result came in lower than our expectation owing to higher operating expenses and lower other income. This takes 1HFY23 earnings to PKR 50.6/share........

• HUBC announced its 2QFY23 financial results today, where the company reported consolidated EPS of PKR 10.25, up 177% YoY, as compared to an EPS of PKR 3.7 in corresponding period last year. This takes 1HFY23 EPS to PKR 17.3, up 83% YoY. Along with the result, the company announced an interim DPS of PKR 5.75, taking the cumulative payout to PKR 21.25 in 1HFY23.

• APL announced its 2QFY23 financial results today, where the company posted an EPS of PKR 10.0, down 70% YoY, primarily due to inventory loss booked during 2QFY23 as against inventory gains in SPLY. The result came in higher than our expectation owing to lower-than-expected inventory loss and operating expenses. Along with the result, company announced an interim cash dividend of PKR 12.5/share.

• PPL announced its 2QFY23 financial results today, wherein the company reported consolidated EPS of PKR 8.15, up 55% YoY. The increase in earnings is attributable to 10% YoY higher crude oil price and 22% YoY PKR devaluation. The result came in lower than our expectation primarily due to higher exploration cost and lower other income. This takes 1HFY23 consolidated earnings to PKR 17.8/share, up 56% YoY. Along with the result, company announced an interim cash dividend of PKR 1.0/share.

• ASL announced its 2QFY23 financial results today, wherein the company reported a net loss of PKR 0.7/share, as against an LPS of PKR 0.3 in the SPLY. This takes 1HFY23 LPS to PKR 2.1/share vs an EPS of 0.5 in 1HFY22.

• HTL announced its 2QFY23 financial results today, wherein the company reported consolidated LPS of PKR 0.6, as compared to an EPS of PKR 2.1 in corresponding period last year. This decline is mainly attributable to gross margin contraction and elevated finance cost. This will take 1HFY23 LPS to PKR 2.7, against an EPS of PKR 2.8 in SPLY.

• HBL announced its 4QCY22 financial results today, wherein the bank reported a consolidated EPS of PKR 7.3 in 4QCY22, up 28% YoY, compared to an EPS of PKR 5.7 in 4QCY21. The cumulative CY22 EPS clocked in at PKR 23.2 vs PKR 23.8 in CY21. Along with the result, the bank announced a final cash dividend of PKR 1.50/share, taking cumulative CY22 payout to PKR 6.75/share.

• HTL’s board meeting is scheduled today to consider 2QFY23 financial results. We expect the company to post consolidated EPS of PKR 0.7, down 69% YoY as compared to EPS of PKR 2.1 in corresponding period last year. This decline in earnings comes from gross margin.....

• FCCL held its analyst briefing today, wherein the management discussed its 2QFY23 financial results and status on the ongoing projects. Main points discussed during the call are presented below.

• ASL’s board meeting is scheduled on February 24, 2023 to consider 2QFY23 financial results. We expect the company to post net loss of PKR 0.7/share, as against an LPS of PKR 0.3 in the SPLY. This will take 1HFY23 LPS to PKR 2.1/share vs an EPS of 0.5 in 1HFY22.

• PIOC announced its 2QFY23 financial result today, wherein the company posted an EPS of PKR 5.2, up 77% YoY, compared to an EPS of PKR 2.9 in 2QFY22. This takes cumulative earnings in 1HFY23 to PKR 7.8/share, up 54% YoY. The result came in higher than our expectation due to improved gross margins.

• HBL is scheduled to announce its 4QCY22 financial results on 24^th February 2023. We expect the bank to post consolidated EPS of PKR 7.9 in 4QCY22 up 39% YoY, compared to an EPS of PKR 5.7 in 4QCY21. This would take CY22 EPS to PKR 23.8 vs PKR 23.9 in CY21. Along with the result, we expect the bank to announce final cash dividend of PKR 2.25/share, taking cumulative CY22 payout to PKR 7.50/share.

• APL’s board meeting is scheduled on February 27, 2022 to consider 2QFY23 financial results. We expect the company to post an LPS of PKR 5.2, compared to an EPS of 33.9 in SPLY, primarily due to inventory losses and turnover tax during the quarter. Along with the result, we expect the company to announce an interim cash dividend of PKR 10/share.

• OGDC conducted its conference call today following the 1HFY23 financial results announcement, wherein the management discussed its half yearly performance and status of ongoing .............

• DGKC announced its 2QFY23 financial result today, wherein the company posted an unconsolidated EPS of PKR 1.2, down 57% YoY, compared to an EPS of PKR 2.9 in 2QFY22. This takes cumulative earnings in 1HFY23 to PKR 2.1/share, down 57% YoY. The result came in lower than our expectation possibly due to lower than anticipated increase in retention prices.

• UBL announced its 4QCY22 financial results today, wherein the bank posted an unconsolidated PAT of PKR 13.3bn (EPS PKR 10.9) up 64% YoY. This took the cumulative CY22 EPS to PKR 26.2, down 4% YoY. Along with the result, the bank announced a final cash dividend of PKR 9.0/share, taking cumulative CY22 DPS to PKR 22.0.

• OGDC announced its 2QFY23 financial results today, wherein the company reported an EPS of PKR 9.7, up 18% YoY compared to an EPS of PKR 8.2 in SPLY. This earnings growth is primarily due to higher crude oil price (+10% YoY) and PKR devaluation against USD (-22% YoY). This takes 1HFY23 earnings to PKR 22.1/share, up 38% YoY. Along with the result, OGDC announced an interim cash dividend of PKR 2.25/share taking the cumulative payout to 4.0/share in 1HFY23.

• PPL’s board meeting is scheduled on February 27, 2023 to consider 2QFY23 financial results, wherein we expect the company to post an EPS of PKR 10.0, up 90% YoY. The increase in earnings can mainly be attributed to 10% YoY higher crude oil prices (averaging at USD 88/bbl) and 22% YoY PKR devaluation (PKR 228/USD). This takes 1HFY23 earnings to PKR 19.6/share, up 72% YoY. Along with the result, company is likely to announce an interim cash dividend of PKR 1.5/share.

• MLCF announced its 2QFY23 financial result today, wherein the company posted a consolidated EPS of PKR 2.7, up 53% YoY, compared to an EPS of PKR 1.8 in 2QFY22. This takes cumulative earnings in 1HFY23 to PKR 4.0/share, up 56% YoY. The result came in higher than our expectation mainly due to higher gross margins.

• POL’s board meeting is scheduled on February 27, 2023, to consider 2QFY23 financial results. We expect the company to post an EPS of PKR 26.5, up 33% YoY compared to an EPS of PKR 19.9 in SPLY. This increase in earnings mainly emanates from 10% YoY higher crude oil prices (averaging at USD 88/bbl) and 22% YoY PKR devaluation (PKR 223/USD). This takes 1HFY23 earnings to PKR 56.2/share, up 46% YoY. Along with the result, POL is expected to announce an interim cash dividend of PKR 35/share.

• UBL is scheduled to announce its 4QCY22 financial results on 22^nd February, 2023. We expect the bank to post an unconsolidated PAT of PKR 9.5bn (EPS PKR 7.8) up 17% YoY. This would take the CY22 EPS to PKR 23.1 down 9% YoY. Along with the result, we expect the bank to announce a final cash dividend of PKR 6.0/share, taking cumulative DPS to PKR 19.0 for CY22.

• OGDC’s board meeting is scheduled on February 22, 2023 to consider 2QFY23 financial results. We expect the company to post an EPS of PKR 10.5, up 28% YoY compared to an EPS of PKR 8.2 in SPLY. This earnings growth is primarily due to higher crude oil price (+10% YoY) and PKR devaluation against USD (-22% YoY). This will take 1HFY23 earnings to PKR 22.9/share, up 43% YoY. Along with the result, OGDC is expected to announce an interim cash dividend of PKR 2.0/share.

• PSO announced its 2QFY23 financial results today, wherein the company posted LPS of PKR 9.7 compared to an EPS of 43.0 in corresponding period last year. This massive decline in earnings can mainly be attributed to inventory losses and elevated finance cost.

• KOHC announced its financial result today, wherein the company reported and EPS of PKR 9.7 during 2QFY23, up 23% YoY, compared to PKR 7.9 in 2QFY22. This takes cumulative earnings in 1HFY23 to PKR 18.6/share, up 25% YoY.

• MEBL announced its 4QCY22 financial results today. During the 4Q, the bank has posted unconsolidated PAT of PKR 16.4bn (EPS PKR 9.2), up 87% YoY. This took the CY22 cumulative EPS to PKR 25.1, up 59% YoY. Along with the result, the bank announced a final cash dividend of PKR 3.0/share, taking CY22 cumulative payout to PKR 8.2/share.

• BAHL announced its 4QCY22 financial results today, wherein the bank reported an unconsolidated EPS of PKR 1.4, down 66% YoY. This took cumulative CY22 EPS to PKR 14.9, down 11% YoY. Along with the result, the bank announced a cash dividend of PKR 7.0/share.

• HUBC’s board meeting is scheduled on 16^th February, 2023 to consider 2QFY23 financial results. We expect the company to post an EPS of PKR 9.4, up 153% YoY vs EPS of PKR 3.7 in SPLY. This will take 1HFY23 earnings to PKR 16.4/share, up 74% YoY. Along with the result, we anticipate a dividend of PKR 2.0/share, taking cumulative payout to PKR 18.5/share in 1HFY23.

• CHCC announced its 2QFY23 financial results today, wherein the company posted an EPS of PKR 8.0, up 32% YoY, compared to an of EPS 6.1 in 2QFY22. This takes cumulative 1HFY23 EPS to PKR 15.6 vs an EPS of PKR 12.2 in SPLY, up 28% YoY.

• MEBL is scheduled to announce its 4QCY22 financial results on 16^th February, 2023. We expect the bank to post unconsolidated PAT of PKR 11.4bn (EPS PKR 6.3), up 29% YoY during 4QCY22. This would take the CY22 cumulative EPS to PKR 22.3, up 41% YoY. Along with the result, we expect the bank to announce a final cash dividend of PKR 2.0/share, taking cumulative payout to PKR 7.2/share in CY22.

• PSO’s board meeting is scheduled on February 17, 2023 to consider 2QFY23 financial results. We expect the company to report an EPS of PKR 5.5, down 87% YoY compared to EPS of 43.0 in SPLY. This massive decline in earnings can mainly be attributed to inventory losses.

• FCCL announced its 2QFY23 financial results today, wherein the company reported an EPS of PKR 1.1, up 64% YoY compared to an EPS of PKR 0.7 in SPLY. This takes 1HFY23 earnings to PKR 2.1/share, up 34% YoY.  The result came in higher than our expectation largely due to lower effective tax rate.

• BAHL is scheduled to announce its 4QCY22 financial results on 15^th February, 2023. We expect the bank to report unconsolidated PAT of PKR 5.2bn (EPS PKR 4.7), up 9.3% YoY. This would take cumulative EPS for CY22 to PKR 18.2, up 7.9% YoY. Along with the result, we expect the bank to announce a final cash dividend of PKR 6.0/share.

• NPL announced its 2QFY23 financial results today, wherein the company posted an EPS of PKR 3.1, up 48% YoY compared to an EPS of PKR 2.1 in SPLY. This takes 1HFY23 earnings to PKR 5.8/share, up 23% YoY. The result came in higher than our expectation owing to company’s higher OM efficiency. Along with the result, NPL announced interim cash dividend of PKR 2.0/share, taking cumulative payout to 4.0/share in 1HFY23.

• INDU announced its 2QFY23 financial results today, wherein the company posted an unconsolidated PAT of PKR 1.3bn (EPS PKR 16.9) vs PAT of PKR 4.7bn (EPS 60.4) in SPLY, depicting a 71% YoY decline in profitability. This takes 1HFY23 earnings to PKR 33.4/share, down 74% YoY. Along with the result, INDU announced interim cash dividend of PKR 10.2/share. This takes cumulative 1HFY23 dividend to PKR 18.4/share.

• NPL’s board meeting is scheduled on February 13, 2023 to consider 2QFY23 financial results. We expect the IPP to post an EPS of PKR 2.6, up 25% YoY compared to EPS of PKR 2.1 in corresponding period last year. This will take 1HFY23 EPS to PKR 5.3, up 13% YoY vs PKR 4.69 during SPLY. Along with the result, we expect the company to announce an interim cash dividend of PKR 1.0/share

• EFERT announced its 4QCY22 financial results today, wherein the company reported consolidated EPS of PKR 4.80 up 4% YoY. This takes CY22 earnings to PKR 11.98/share, down 24.1% YoY. Along with the result, EFERT announced a final cash dividend of PKR 5.0/share, taking the cumulative dividend to PKR 13.5/share during CY22.

• INDU’s board meeting is scheduled on February 10, 2023 to consider 2QFY23 financial result. We expect the company to announce an EPS of PKR 20.5, down 66% YoY. This will take 1HFY23 earnings to PKR 37.0/share, down 71% YoY. Along with the result, company is expected to announce an interim cash dividend of PKR 10.0/share in addition to PKR 8.2/share already announced in 1QFY23.

• FFBL conducted its CY22 analyst briefing yesterday, wherein the management discussed company’s financial results and future outlook. To recall, FFBL reported unconsolidated EPS of PKR 0.48, up 155% YoY during 4QCY22, while the cumulative EPS for CY22 clocked in at PKR 1.80, down 64% YoY.

• MCB announced its 4QCY22 financial result today, wherein the bank posted an unconsolidated EPS of PKR 10.88, up 56% YoY. This took cumulative CY22 EPS to PKR 27.63, up 6% YoY. Along with the result, the bank announced a final cash dividend of PKR 6.0/share, taking the total payout to PKR 20.0/share for CY22.

• MCB is scheduled to announce its 4QCY22 result tomorrow. We anticipate, the bank to post an unconsolidated EPS of PKR 8.49, up 22% YoY. This would take CY22 EPS to PKR 25.24, down 3% YoY. Along with the result, we expect the bank to announce final cash dividend of PKR 6.0/share, taking cumulative payout to PKR 20.0/share for CY22.

• FFC conducted its analyst briefing session today to discuss 4QCY22 financial results and future outlook of the company. Earlier, the company had reported an EPS of PKR 4.09, down 13% YoY in 4Q. Cumulative EPS for CY22 declined by 8% YoY to PKR 15.76. During CY22, company’s cumulative dividend payout came in at PKR 12.13 vs PKR 14.50 in CY21.

• BAFL announced its financial result today, wherein the bank reported an EPS PKR 2.3 in 4QCY22 against an EPS PKR 2.1 in 4QCY21. This takes CY22 EPS to PKR 10.2, up 28% YoY. Along with the result, BAFL announced final cash dividend of PKR 2.5/share, taking cumulative DPS to PKR 5.0 in CY22.

• BAFL is scheduled to announce its CY22 financial result on February 2, 2023. We expect the bank to post unconsolidated profit after tax of PKR 5.5bn (EPS PKR 3.1) in 4Q vs profit after tax of PKR 3.7bn (EPS PKR 2.1) in SPLY. This will take CY22 EPS to PKR 11.0, up 38% YoY. Along with the result, we expect the bank to announce final cash dividend of PKR 3.0/share.

• LUCK held its analyst briefing today to discuss its 1HFY23 financial results. The company reported consolidated earnings of PKR 49.32/share, up 21% YoY during the 1HFY23 (PKR 32.51/share in 2Q). The result is higher than our expectation mainly due to higher share of profit from associates as well as lower effective tax rate and lower distribution cost

• FFC announced its 4Q financial results today, wherein the company reported profit after tax of PKR 5.2bn (EPS PKR 4.09), down 13% YoY. This takes cumulative CY22 EPS to PKR 15.76, down 8% YoY. Along with the result, company announced final dividend of PKR 3.15/share, taking CY22 cumulative DPS to PKR 12.13.

• FFBL announced its 4Q financial results today wherein the company reported unconsolidated EPS of PKR 0.48, up 155% YoY against an EPS of PKR 0.19 in SPLY. This takes cumulative CY22 EPS to PKR 1.80, down 64% YoY. The result was below our expectation primarily due to lower than anticipated gross margins and impairment on equity investments booked by the company.

• With result season around the corner, we present result previews of Akseer cement universe. We expect profitability of our sample companies to increase by 15% YoY to PKR 12.5bn during 2QFY22.

• As per the data released by NFDC, Dec-22 Urea offtake increased by 39% YoY to 833k tons, while DAP offtake rebound to 158k tons up 35% YoY. For CY22, Urea offtake increased by 4% YoY to 6.6mn tons, while DAP offtake declined by 36% YoY to 1.2mn tons.

• ISL announced its 2QFY23 financial results today where the company reported net loss of PKR 388mn (LPS PKR 0.89) as against PKR 1.6bn in the SPLY. The result is significantly lower than our expectation owing to more than estimated contraction in gross margins. This takes 1HFY23 EPS to PKR 0.14, down 99% YoY.

• With the onset of result season, we present result preview of Akseer Fertilizer universe. We expect profitability of our sample companies to increase by 40% YoY to PKR 23.6bn during 4QCY22.

• ISL’s board meeting is scheduled on January 27, 2023 to consider 2QFY23 financial results. We expect the company to post net earnings of PKR 1.1/share, down 68% YoY as against an EPS of PKR 3.6 in the SPLY. This decline in earnings can mainly be attributed to lower volumetric sales, gross margin contraction amid higher production cost and increase in finance cost. This will take 1HFY23 earnings to PKR 2.2/share, down 78% YoY. Along with the result, we expect ISL to announce an interim dividend of PKR 1.0/share.

• MARI’s board meeting is scheduled on January 26, 2023, to consider 2QFY23 financial results. We expect the company to post an EPS of PKR 92.3, up 65% YoY. This earnings growth is primarily due to 10% YoY higher oil prices (averaging at USD 88/bbl) and 22% YoY PKR devaluation (averaging at PKR 223). This will take 1HFY23 EPS to PKR 187.6, up 51% YoY. Along with the result, we expect MARI to announce an interim dividend of PKR 102/share.

• ACPL conducted its corporate briefing today, wherein the management discussed its 1QFY23 performance and outlook of the cement sector. Earlier the company reported a net profit of PKR 1.1bn for FY22 and 0.3bn for 1QFY23.

• DGKC conducted its corporate briefing today, wherein the management discussed its financial performance during FY22 and 1QFY23 and future outlook of the cement sector. Key takeaways are presented below.

• MLCF held its corporate briefing yesterday to discuss its FY22 and 1QFY23 financial results and future outlook on the cement sector. Company’s profitability grew by 19% YoY to PKR 4.6bn in FY22 and 64% YoY to PKR 1.4bn in 1QFY23.

• As per the data released by NFDC, Urea offtake declined by 16% YoY to 430k tons in Oct-22, while DAP offtake took a decline of 79% YoY 71k tons. For 10MCY22, Urea offtake increased by 1% YoY to 5.2mn tons, while DAP offtake remained lower by 48% YoY to 676K tons.

• PIOC conducted its corporate briefing today, wherein the management discussed its 1QFY23 performance and outlook of the cement sector. Earlier the company reported a net profit of PKR 1.0bn for FY22 and 0.6bn for 1QFY23.

1. Kohat Cement conducted its corporate briefing today to discuss its financial results and outlook of the cement industry. Earlier, the company reported a net profit of PKR 5.0bn in FY22 and PKR 1.9bn in 1QFY23.

• FFC conducted an analyst briefing session today to discuss its 3QCY22 financial results and future outlook of the company and industry as well. Earlier, the company had reported an EPS of PKR 4.12, down 19% YoY in 3QCY22. Cumulative EPS for 9MCY22 declined by 7% YoY to PKR 11.67. During 9MCY22, company’s cumulative payout came in at PKR 8.98 vs PKR 9.85 in 9MCY21.

• PPL conducted its corporate briefing today following FY22 financial results announcement, wherein the management discussed its annual performance and status of ongoing projects. Main points discussed during the call are presented below.

• Bank Alfalah Limited (BAFL) held a conference call today to discuss its 3QCY22 financial performance and future outlook. Earlier, the bank had reported strong earnings growth of 52% YoY to PKR 3.03/share in 3QCY22. Higher profitability was on the back of increase in interest earning assets and margin expansion. Higher forex income and fee & commission income also supported the bottomline.

• PIOC announced its 1QFY23 results today wherein the company posted an EPS of PKR 2.58 compared to an EPS of PKR 2.12 in 1QFY22.

• Lucky Cement held its analyst briefing today to discuss its 1QFY23 financial results. Earlier the company had recorded a consolidated EPS of PKR 16.85 in 1QFY23 compared to an EPS of PKR 20.57 in SPLY, down 21.8% YoY. Decline in earnings was due to lower contribution from its power plant as the plant was not available for 15-20 days during 1QFY23.

• HTL announced its 1QFY23 financial results today, wherein the company reported consolidated LPS of PKR 2.01 as compared to EPS of PKR 0.7 in corresponding period last year. This is mainly on account of lower volumetric sales and inventory losses resulting in gross margin contraction.

• PSO announced its 1QFY23 financial results today wherein the company reported an EPS of PKR 2.55, down 90% YoY, primarily due to lower volumetric sales and absence of inventory gains.

• KOHC announced its 1QFY23 results today wherein the company posted an EPS of PKR 8.89 compared to an EPS of PKR 6.96 in 1QFY22, up 28% YoY.

• Pioneer Cement is scheduled to announce its 1QFY23 financial result on 28^th September, 2022, where we expect the company to report an EPS of PKR 2.29 for 1QFY23 compared to an EPS of PKR 2.12 in 1QFY22, up 8% YoY.

• BAHL announced unconsolidated EPS of PKR 4.80, up 9% YoY during 3QCY22. This took cumulative EPS for 9MCY22 to PKR 13.47, up 7% YoY. The result came in lower than our expectation mainly due to higher than expected provisioning expense and operating expenses.

• HTL’s board meeting is scheduled on October 28, 2022 to consider 1QFY23 financial results, where we expect the company to post consolidated EPS of PKR 2.1, up 1.8x YoY as compared to EPS of PKR 0.7 in corresponding period last year. This increase in earnings could mainly be attributed to higher product prices and increased contribution from petroleum segment.

• HUBC announced its 1QFY23 financial results today, where the company’s EPS came in at PKR 7.01, up 23% YoY. The improvement in earnings is primarily driven by higher contribution from CPHGL.

• ASL announced its 1QFY23 financial results today wherein the company reported an LPS of PKR 1.55, as compared to EPS of PKR 0.8 in SPLY. This decline in earnings is mainly due to steep decline in volumetric sales and margin contraction.

• PPL announced its 1QFY23 financial results today wherein the company reported an EPS of PKR 9.68, up 56% YoY. The result is in line with our expectation. This earnings growth mainly emanates from 43% YoY higher crude oil prices and 27% YoY PKR devaluation.

• The board of Kohat Cement is scheduled to meet on 27^th October, 2022 to discuss 1QFY23 financial results, where we expect the company to report an EPS of PKR 8.21 for 1QFY23 compared to an EPS of PKR 6.96 in 1QFY22, up 18% YoY.

• Lucky Cement board meeting is scheduled on 27th October 2022 to consider 1QFY23 financial result. We expect the company to report consolidated EPS of PKR 22.38 in 1QFY23, up 9% YoY, compared to an EPS of 20.57 in 1QFY22.

• MCB posted unconsolidated EPS of PKR 7.36 in 3QCY22, up 12% YoY. This took 9MCY22 EPS to PKR 16.8, down 12% YoY. Along with the result, the bank also announced an interim cash dividend of PKR 5.0/share, taking cumulative payout to PKR 14.0/share for 9MCY22.

• HBL announced consolidated profit after tax of PKR 11.5bn (EPS PKR 7.85) for 3QCY22 compared to profit after tax of PKR 9.0bn (EPS PKR 6.17) in 3QCY21. This takes cumulative EPS for 9MCY22 to PKR 15.95 vs PKR 18.21 in 9MCY21. Along with the result, the bank announced an interim DPS of PKR 1.50 taking cumulative DPS for 9MCY22 to PKR 5.25.

• FATIMA announced its 3QCY22 financial result today, wherein unconsolidated EPS of the company clocked in at PKR 1.93, down 15% YoY. This takes cumulative EPS for 9MCY22 to PKR 4.71, down 30% YoY.

• CHCC announced its 1QFY23 results today wherein the company reported net profit of PKR 1.48bn (EPS PKR 7.63), up 24% YoY, compared to net profit of PKR 1.19bn (EPS 6.14) in 1QFY22.

• FFC announced its 3QCY22 financial results today, wherein the company posted an unconsolidated profit after tax of PKR 5.2bn (EPS PKR 4.12), down 19% YoY. This takes cumulative 9MCY22 EPS to PKR 11.67, down 7% YoY. Along with the result, company announced an interim cash dividend of PKR 3.18/share for 3QCY22, taking 9MCY22 cumulative payout to PKR 8.98.

• ASL’s board meeting is scheduled on October 27, 2022 to consider 1QFY23 financial results. We expect the company to post an EPS of PKR 0.1, down 81% YoY as compared to PKR 0.7 in SPLY. This decline in earnings mainly emanates from lower volumetric sales and margin contraction.

• ACPL announced its financial result today, wherein the company posted consolidated EPS of PKR 1.54 during 1QFY23, down 36% YoY. The decline in EPS is largely due to the higher finance cost.

• PSO’s board meeting is scheduled on October 27, 2022 to consider 1QFY23 financial results. We expect the company to report an EPS of PKR 13.8, down 46% YoY, primarily due to lower volumetric sales.

• CHCC’s board meeting is scheduled on 26^th October 2022 to consider 1QFY23 financial results. The company is expected to report an EPS of PKR 6.97 in 1QFY23 compared to an EPS of PKR 6.14 in 1QFY22, up 14% YoY.

• POL announced its 1QFY23 financial results today where the company reported an EPS of PKR 29.6, up 60% YoY. This increase in earnings mainly emanates from 43% YoY higher crude oil prices, 27% YoY PKR devaluation and elevated other income.

• FFBL has reported an unconsolidated LPS of PKR 1.31 in 3QCY22 against an EPS of PKR 1.76 in 3QCY21. This takes cumulative 9MCY22 unconsolidated EPS to PKR 1.33, down 72% YoY. The result was below than our expectation primarily due to lower than anticipated margins and higher than expected exchange loss.

• OGDC announced its 1QFY23 financial results today where the company reported an EPS of PKR 12.4, compared to an EPS of PKR 7.8 in SPLY, depicting a growth of 58% YoY. The result is in line with our expectation. This earnings growth is primarily due to higher crude oil price and PKR devaluation. Along with the result, OGDC announced an interim cash dividend of PKR 1.75/share.

• APL announced its 1QFY23 financial results today where the company reported an EPS of PKR 34.5, up 80% YoY. The result came in higher than our expectation owing to more than expected inventory gains during the quarter.

• HUBC’s board meeting is scheduled on October 27, 2022 to consider 1QFY23 financial results. We expect the company to post an EPS of PKR 7.46, up 30% YoY on the back of higher contribution form CPHGL.

• DGKC’s board meeting is scheduled on 25th September 2022 to consider 1QFY23 financial result. The company is expected to report an EPS of PKR 2.22, up 7% YoY compared to an EPS of PKR 2.07 in 1QFY22.

• PPL’s board meeting is scheduled on October 27, 2022 to consider 1QFY23 financial results where we expect the company to post an EPS of PKR 9.6, up 54% YoY. The increase in earnings can mainly be attributed to 43% YoY higher crude oil prices (averaging at USD 105/bbl) and 27% YoY PKR devaluation (PKR 225/USD).

• FCCL announced its 1QFY23 results today wherein the company reported an EPS of PKR 1.06 compared to an EPS of PKR 0.97. The result came in higher than our expectation largely due to higher net sales and lower finance cost.

• ISL announced its 1QFY23 financial results today, where the company reported net earnings of PKR 1.03/share, down 83% YoY as against an EPS of PKR 6.1 in the SPLY. This decline in earnings mainly came from lower volumetric sales, gross margin contraction amid absence of inventory gains and higher production cost.

• APL’s board meeting is scheduled on October 25, 2022 to consider 1QFY23 financial results. We expect the company to post an EPS of PKR 17.1, down 11% YoY primarily due to lower inventory gains.

• Bank AL Habib Limited (BAHL) is scheduled to announce its 3QCY22 financial results on 27^th October, 2022. We expect the bank to report unconsolidated EPS of PKR 5.70, up 30% YoY during 3QCY22. This would take cumulative EPS for 9MCY22 to PKR 14.37, up 15% YoY.

• FCCL is scheduled to announce its 1QFY23 financial result on 24th October 2022, where we expect the company to report an EPS of PKR 0.65, up 4% YoY compared to an EPS of PKR 0.62 in 1QFY22.

• MCB’s board meeting is scheduled on 26^th October 2022 to consider 3QCY22 results. We anticipate, the bank to post unconsolidated EPS of PKR 6.90, up 5% YoY. This would take 9MCY22 EPS to PKR 16.3, down 14% YoY. The bank is also expected to announce an interim cash dividend of PKR 5.0/share, taking cumulative payout to PKR 14.0/share for 9MCY22.

• MARI announced its 1QFY23 financial results today where the company reported an EPS of PKR 95.3, up 40% YoY. This earnings growth is primarily due to 43% YoY higher oil prices and 27% YoY PKR devaluation. The result is broadly in line with our expectation.

• OGDC’s board meeting is scheduled on October 25, 2022 to consider 1QFY23 financial results. We expect the company to post an EPS of PKR 12.2, compared to an EPS of PKR 7.8 in SPLY, depicting a growth of 56% YoY. This growth in earnings is primarily due to higher crude oil price (+43% YoY) and PKR devaluation (-27% YoY). Along with the result, OGDC is expected to announce an interim cash dividend of PKR 2.0/share.

• HBL is scheduled to announce its 3QCY22 financial results on 26^th October 2022. We expect the bank to post consolidated profit after tax of PKR 10.2bn (EPS PKR 6.95) in 3QCY22 compared to profit after tax of PKR 9.0bn (EPS PKR 6.17) in 3QCY21. This will take 9MCY22 EPS to PKR 15.05 vs PKR 18.21 in 9MCY21. The bank is also ikely to announce an interim DPS of PKR 2.25 along with the result, taking cumulative DPS for 9MCY22 to PKR 6.00.

• POL’s board meeting is scheduled on October 25, 2022, to consider 1QFY23 financial results, where we expect the company to post an EPS of PKR 31.7, up 72% YoY. This increase in earnings mainly emanates from 43% YoY higher crude oil prices (averaging at USD 105/bbl) and 27% YoY PKR devaluation (PKR 225/USD).

• ISL’s board meeting is scheduled on October 24, 2022 to consider 1QFY23 financial results. We expect the company to post net earnings of PKR 1.9/share, down 68% YoY as against an EPS of PKR 6.1 in the SPLY. This decline in earnings can mainly be attributed to lower volumetric sales, gross margin contraction amid absence of inventory gains and higher production cost.

• UBL announced its 3QCY22 financial result today, where in the bank posted unconsolidated PAT of PKR 6.9bn (EPS PKR 5.6), down 11% YoY. Cumulative EPS for 9MCY22 stands at PKR 15.3, down 18% YoY. Along with the result, UBL announced an interim DPS of PKR 4.0, taking cumulative DPS for 9MCY22 to PKR 13.0.

• MARI’s board meeting is scheduled on October 21, 2022, to consider 1QFY23 financial results. We expect the company to post an EPS of PKR 91.5, up 34% YoY. This earnings growth is primarily due to 43% YoY higher oil prices (averaging at USD 105/bbl) and 27% YoY PKR devaluation (averaging at PKR 225).

• Meezan Bank Limited (MEBL) announced its 3QCY22 financial results today, wherein the bank posted unconsolidated PAT of PKR 11.5bn (EPS PKR 6.4), up 65% YoY during 3QCY22. This took 9MCY22 EPS to PKR 16.0, up 46% YoY. Along with the result, the bank announced an interim cash dividend of PKR 2.0/share taking 9MCY22 DPS to PKR 5.5.

• FCCL held its analyst briefing today where the company discussed its FY22 financial results. Earlier, the company recorded an EPS of PKR 3.26/share during FY22 compared to an EPS of PKR 2.52/share in SPLY.

• Meezan Bank Limited (MEBL) is scheduled to announce its 3QCY22 financial results on 19^th October, 2022. We expect the bank to post unconsolidated PAT of PKR 11.5bn (EPS PKR 6.5), up 66% YoY during 3QCY22. This would take 9MCY22 EPS to PKR 16.0, up 47% YoY. Along with the result, the bank is expected to announce an interim cash dividend of PKR 2.0/share, which will take 9MCY22 DPS to PKR 5.5.

• MLCF announced its 1QFY23 financial results today wherein the company posted a consolidated EPS of PKR 1.28 compared to an EPS of PKR 0.78 in SPLY, up 64% YoY. This increase in earnings is mainly due to higher retention prices coupled with increased consumption of local coal.

• UBL is scheduled to announce its 3QCY22 financial results on 19^th October, 2022. We expect the bank to post unconsolidated PAT of PKR 8.1bn (EPS PKR 6.6) up 4% YoY during 3QCY22. This would take 9MCY22 EPS to PKR 16.3 down 12% YoY. Along with the result we expect the bank to announce an interim DPS of PKR 5.0, taking cumulative DPS to PKR 14.0 for 9MCY22.

• BAFL announced its 3QCY22 financial result today, wherein the bank posted an unconsolidated EPS of PKR 3.0 vs PKR 2.0 in 3QCY21. This takes 9MCY22 EPS to PKR 7.9, up 34% YoY.

• MLCF is scheduled to announce its 1QFY23 financial result on 18^th October, 2022, where we expect the company to report an EPS of PKR 1.23 compared to an EPS of PKR 0.76 in 1QFY22, up 58% YoY. Increase in earnings can be attributable to improved retention prices and higher reliance on local coal

• BAFL is scheduled to announce its financial result on 17^th October, 2022. We expect the bank to post unconsolidated profit after tax of PKR 6.1bn (EPS PKR 3.4) in 3QCY22 vs profit after tax of PKR 3.5bn (EPS PKR 2.0) in 3QCY21. This will take 9MCY22E EPS to PKR 8.3, up 41% YoY.

• EFERT announced its 3QCY22 financial results today, wherein the company reported consolidated EPS of PKR 3.13 down 5.2% YoY. This takes cumulative EPS for 9MCY22 to PKR 7.19, down 35.7% YoY. Along with the result, the company has announced dividend of PKR 3.0/share taking cumulative 9MCY22 dividend to PKR 8.5/share.

• ASL announced its FY22 financial results today where the company reported an EPS of PKR 1.16, down 82% YoY as compared to PKR 6.6 in SPLY. This decline in earnings mainly emanates from higher production cost and absence of inventory gains booked in the corresponding period last year.

• ASL’s board meeting is scheduled on September 27, 2022 to consider FY22 financial results. We expect the company to post an EPS of PKR 0.9, down 87% YoY as compared to PKR 6.6 in SPLY. This decline in earnings mainly emanates from higher production cost, absence of inventory gains booked in the corresponding period last year and higher tax expense.

• HTL announced its FY22 financial results today, where the company reported an EPS of PKR 4.4, down 10% YoY as compared to EPS of PKR 4.9 in corresponding period last year. The result came in lower than our expectation owing to higher than expected tax expense. Along with the result, HTL announced a final cash dividend of PKR 2.0/share, taking the cumulative dividend payout to PKR 3.8/share in FY22.

• KOHC announced its 4QFY22 results today wherein the company posted an EPS of PKR 1.96 compared to an EPS of PKR 4.81 in 4QFY21, down 59% YoY. This takes FY22 EPS to PKR 25.01 vs PKR 17.41 in FY21, up 44% YoY.

• As per the data released by NFDC, Urea offtake declined by 15% YoY to 552k tons in Aug-22, while DAP offtake took a steep decline of 86% YoY 26k tons. For 8MCY22, Urea offtake increased by 2% YoY to 4.2mn tons, while DAP offtake remained lower by 31% YoY to 676K tons.

• KOHC is scheduled to announce its 4QFY22 financial result on 24^th September, 2022, where we expect the company to report an EPS of PKR 3.25 for 4QFY22 compared to an EPS of PKR 4.81 in 4QFY21, down 32% YoY. This will take cumulative EPS for FY22 to PKR 26.31, compared to PKR 17.41 in FY21, up 51% YoY. Along the result we expect a final dividend of PKR 2.00/share.

• HTL’s board meeting is scheduled on September 23, 2022 to consider FY22 financial results, where we expect the company to post an EPS of PKR 5.3, up 13% YoY as compared to EPS of PKR 4.7 in corresponding period last year. Along with the result, HTL is expected to announce a final cash dividend of PKR 1.2/share, taking the cumulative dividend payout to PKR 3.0/share in FY22.

• OGDC announced its FY22 financial results today where the company reported an EPS of PKR 31.1, up 46% YoY. This earnings growth is attributed to higher crude oil price (+71% YoY), currency devaluation (+10% YoY) and, increase in other income (+1.9x YoY). Along with the result, OGDC announced a final cash dividend of PKR 2.5/share, taking the cumulative dividend to PKR 7.25/share in FY22.

• PIOC announced its 4QFY22 results today wherein the company posted a LPS of PKR 2.55 compared to an EPS of PKR 3.00 in 4QFY21. This takes FY22 EPS to PKR 4.62 vs PKR 8.69 in FY21, down 47% YoY. The result was lower than our expectation mainly due to higher than anticipated tax charges.

• APL conducted its corporate briefing today following FY22 financial results, wherein the management discussed its annual performance and provided guidance on the latest updates regarding the OMC sector. Main points discussed during the call are presented below.
• Regarding the dividend pay-out during FY22, the management of the company informed that, despite the unprecedented earnings, APL significantly increased its inventory during the year utilizing the own generated cashflows which resulted in lower pay-out. Going forward, company’s cashflow position is likely to improve and so is the dividend pay-out, provided the product prices remain at current level. On the flip side, if product prices decline, company expects to book inventory losses. As per the management, more than 50% of the profitability is attributed to inventory gains during FY22.
• Providing the timeline related to deregulation, the management apprised that government is planning to deregulate the oil marketing sector in phased manner. The 1^st phase, planned to be implemented by November 1^st, will include deregulating the Ex-refinery prices and OMC margins. In the 2^nd phase, date yet to be determined, IFEM will be deregulated. Dealer margins will be phased in in deregulation.
• APL de-commissioned 37 non performing outlets during FY22 and added 30 new outlets taking the total number to 731.
• Two storage facilities are under construction in KPK where the company was lacking earlier. One in Tarrujabba and another in Mouza Korai, KPK having total capacity of 50,000 tons. Currently, company’s storage capacity stands at ~192,000 tons.
• MS imports during FY22 remained 366k tons or 50% of the total MS volume. Similarly, HSD imports remained 200k tons or 27%. Normally, MS imports are 30% whereas company procures HSD locally instead of imports.
• The company expects uptick in bitumen demand with the resumption of construction activity post floods.
• Currently, expansion in company’s EV charging stations across the Motorways and major cities is underway and in couple of months, 8 to 10 charging stations will be operational.
• The company plans to open 50 to 60 new retail outlets in FY23 where the major focus will be in South. Company targets ~25 or 50% of the retail outlets in Sindh.

• POL conducted its corporate briefing today following FY22 financial results, wherein the management discussed its annual performance and status of ongoing projects. Main points discussed during the call are presented below.
• Regarding the Jhnadial field in Ikhlas block, where POL has 80% stake, management apprised that production is low from Jhnadial 1, whereas Jhnadial 2 was unsuccessful. Currently, Jhnadial 3D seismic data processing in progress and on the basis of interpretation, well location of Jhnadial 3 will be decided. The management further informed that the reserves of Jhnadial could be revised if need be.
• Production from Tolanj West 2 in TAL block is expected to come online in couple of months. Just to recall, MOL, TAL block operator, discovered 10.6mmcfd of gas and 34 bpd of oil in the said well recently. POL has 21% stake in TAL block.
• Mamikhel South discovery has not come online as yet due to dispute over pricing as per 2012 policy. Management is continuously in discussion with operator and regulator regarding this issue. Management further informed that, the work although not at stand still, has slowed down in TAL block. Just to recall, there is a dispute between MOL along with JV partners and the government over windfall levy on gas. In 2018, the JV partners filed a case in Islamabad High Court over this and its still pending. In last update, Honourable Court suggested the Federal government to place the matter before council of common interest for the resolution.
• In DG Khan block where POL is the operator with 70% stake, an exploratory well has been drilled which is in testing phase after reaching its target depth of 5,142 meters.

• PIOC is scheduled to announce its 4QFY22 financial result on 22^nd September, 2022, where we expect the company to report an EPS of PKR 1.40 for 4QFY22 compared to an EPS of PKR 3.00 in 4QFY21, down 53% YoY. This will take FY22 EPS to PKR 8.57 vs PKR 8.69 in FY21, down 1% YoY. We do not expect any dividend alongside the results.

• OGDC’s board meeting is scheduled on September 22, 2022 to consider FY22 financial results where we expect the company to post an EPS of PKR 33.6, up 58% YoY. This unprecedented growth in earnings is primarily due to higher crude oil price (+71% YoY), PKR devaluation (+10% YoY) and, increase in other income (+1.9x YoY). Along with the result, OGDC is expected to announce a final cash dividend of PKR 3.25/share, taking the cumulative dividend to PKR 8.0/share in FY22.
• Net sales are likely to clock in at PKR 348.4bn, up 46% YoY mainly on account of higher oil price and PKR devaluation. However, this expected revenue growth overshadows the fact that company’s oil and gas production has declined by 9% YoY and 4% YoY, respectively during FY22.
• Oil production decline came from 1) TAL block, down 12% YoY, 2) Nashpa field, down 16% YoY and, 3) Adhi field, down 21% YoY due to some production issues. Similarly, major decline in gas production came from 1) Qadirpur field down 14% YoY and, 2) TAL block, down 9% YoY due to gas leakage in SNGP transmission line.
• Exploration expenditure is expected to go down by 16% YoY to PKR 14.7bn, as against PKR 17.4bn in SPLY, mainly due to lower cost of dry wells booked during the period. Just to recall, OGDC encountered 4 dry wells during FY22.
• Other income is likely to see an increase of 1.9x YoY to PKR 41.5bn owing to higher exchange gains booked during the quarter.
• Effective tax rate is expected to reach 39.7% during FY22 as against 29.0% in SPLY, on account of 10% super tax, thus increasing the tax expense and restricting the bottomline growth.
• On a quarterly basis, OGDC’s earnings are likely to grow by 30% YoY to PKR 7.6/share, on the back of 113% YoY higher oil price (in PKR terms). However, this earnings growth will be limited owing to 13% decline in oil production and enormous tax expense booked during the quarter.
• We have a ‘BUY’ stance on OGDC. Our Jun-23 price target (PT) of PKR 179/share provides an upside of 136% along with a dividend yield of 18%.

• FCCL announced its 4QFY22 results today wherein the company reported amalgamated EPS of PKR 1.40. This takes cumulative EPS for FY22 to PKR 3.26. Along with the result, the management of the company has announced bonus shares in proportion of 12.5 share for every 100 shares held (12.5%).

• PPL announced its FY22 financial results today where the company posted an EPS of PKR 19.98, up 4% YoY. Despite 71% YoY higher crude oil prices and 10% YoY PKR devaluation, huge exploration expense wiped out the bottomline growth during the year. Along with the result, PPL announced a final cash dividend of PKR 0.5/share, taking the cumulative dividend for FY22 to PKR 2.0/share.

• FCCL is scheduled to announce its 4QFY22 financial result on 20th September 2022, where we expect the company to report an EPS of PKR 0.60, down 4% YoY compared to an EPS of PKR 0.62 in 4QFY21. This will take full year EPS to PKR 3.54/share, up 41% YoY in FY22.

• PPL’s board meeting is scheduled on September 20, 2022 to consider FY22 financial results where we expect the company to post an EPS of PKR 25.4, up 32% YoY. The increase in earnings can mainly be attributed to 71% YoY higher international crude oil prices (averaging at USD 92/bbl) and 10% YoY PKR devaluation (averaging at PKR 178/USD). Along with the result, PPL is likely to announce a final cash dividend of PKR 3.5/share, taking the cumulative dividend for FY22 to PKR 5.0/share.
• Net sales are likely to clock in at PKR 197.8bn, up 33% YoY. Despite significant increase in oil price and PKR devaluation, revenue growth will remain restricted owing to 12% YoY and 7% YoY decline in PPL’s oil and gas production, respectively.
• Oil production decline came from 1) TAL block, down 12% YoY, 2) Adhi field, down 21% YoY due to some production issues and, 3) Nashpa field, down 16% YoY. Similarly, major decline in gas production came from 1) Sui field, down 7% YoY due to natural decline, 2) TAL block, down 9% YoY due to gas leakage in SNGP transmission line, 3) Qadirpur field down 14% YoY and, 4) Kandhkot field, down 12% YoY on account of low offtake from Guddu Thermal Power Station.
• Exploration expenditure is expected to go up by 18% YoY to PKR 12.5bn, as against PKR 10.6bn in SPLY, mainly due to higher cost of dry wells booked during the period. Just to recall, PPL encountered 2 dry wells during FY22.
• Other income is likely to see an increase of 2.7x YoY to PKR 15.0bn owing to higher income on treasury bills and exchange gains on foreign currency booked during the year.
• Effective tax rate is expected at 37.6% during FY22 as against 23.6% in SPLY. This increase in tax expense is due to recently imposed super tax at 10%, hence PPL’s profitability growth will remain restricted. Had there been no super tax, PPL’s earnings would have grown by 54% YoY during FY22.
• On a quarterly basis, PPL’s earnings are likely to grow by 25% YoY to PKR 6.5/share, on the back of 113% YoY higher oil price (in PKR terms). PPL’s overall production is likely to plummet in 4Q with major decline in oil production, down 12% YoY. Similarly, PPL is expected to book an enormous tax expense in 4Q owing to super tax. Resultantly, earnings growth will remain limited.
• We have a ‘BUY’ stance on PPL. Our Jun-23 price target (PT) of PKR 154/share provides an upside of 135% along with a dividend yield of 19.1%.

• In August, auto sales fell for the second consecutive month, with passenger car sales plunging 50% YoY (-13% MoM). This is primarily due to supply chain issues that the entire industry is experiencing due to the inability to import CKD kits, with many OEMs experiencing NPDs (non-production days). Additionally, high car prices, restrictions on auto financing, and high interest rates have dented the demand.
• NML has seen the greatest increase in sales of any OEM, up 171% YoY. Tucson and Elantra sales increased by 4.13x and 1.25x YoY, respectively, owing to the low base effect.
• PSMC experienced the greatest drop in sales, with 'Alto' and 'Cultus' dropping by 54% and 86%, YoY. Because of the supply chain issue, PSMC was forced to have 7 NPDs in August 2022, resulting in reduced deliveries.
• HCAR sales also decreased by 44% YoY, with combined sale of Civic and City down 47% and BR-V sales down 26%. HCAR did not observe any NPDs in August, but there were fewer deliveries during the month due to part shortage.
• INDU's sales also fell 31% YoY, with 'Corolla & Yaris' down 27% and 'Fortuner & Hilux' down 42%. INDU has seen the highest NPDs among OEMs, with production suspended for two weeks in August.
• Overall tractor sales went up by 20% YoY during August, where MTL’s sales recorded 27% YoY increase. This increase came as a result of pre-buying before the sowing season. Nonetheless, MTL is currently observing NPDs (August 31st to Sep 16th 2022) and the sowing season has also been extended to November (due to floods) which will dent sales in 2nd quarter.

• DGKC announced its 4QFY22 results today wherein the company reported net loss of PKR 0.65bn (LPS PKR 1.48), compared to a net profit of PKR 0.87bn (EPS 1.99) in 4QFY21. This decline in earnings is primarily due to higher effective tax rate as company booked super tax in 4QFY22. This takes FY22 EPS to PKR 6.78, down 20% YoY. The result is also accompanied with a final cash dividend of PKR 1.0/share.

• DGKC is scheduled to announce its 4QFY22 financial result on 13th September 2022, where we expect the company to report an EPS of PKR 0.93, down 53% YoY compared to an EPS of PKR 1.99 in 4QFY21. This will take full year EPS to PKR 9.19/share, up 8% YoY in FY22. Along with the result, we expect the company to announce a final cash dividend of PKR 1.0/share.

• MLCF announced its 4QFY22 results today wherein the company posted a consolidated EPS of PKR 0.22 compared to an EPS of PKR 0.91 in 4QFY21, down 76% YoY. This takes FY22 EPS to PKR 4.15 vs PKR 3.49 in FY21, up 19% YoY. The result was lower than our expectation mainly due to higher-than-expected higher effective tax rate.

• MLCF is scheduled to announce its 4QFY22 financial result on 2^nd September, 2022, where we expect the company to report an EPS of PKR 0.72 for 4QFY22 compared to an EPS of PKR 0.91 in 4QFY21, down 22% YoY. This will take FY22 EPS to PKR 4.64 vs PKR 3.49 in FY21, up 33% YoY

• INDU reported its FY22 financial results today, with an EPS of PKR 201.0, up 23% YoY. The result falls short of our expectations, owing to lower-than-expected gross margins and higher administrative and distribution costs. Along with the result, the company declared a final cash dividend of PKR 3.25/share, bringing the total dividend to PKR 93.75/share in FY22.
• During FY22, net sales increased by 54% YoY to PKR 275.5bn, owing to a 30% YoY increase in volumetric sales (Corolla and Yaris up 30%, Fortuner and Hilux up 70%) along with multiple price increases during the year.
• The gross margin in FY22 clocked in at 6.7%, compared to 9.3% in SPLY, this was due to higher raw material costs as a result of PKR depreciation against USD and higher freight expenses.
• Distribution expenses surged 31% YoY during FY22 to PKR 2.1bn, driven by higher sales volume. Similarly, Admin expenses also increased 51% YoY to PKR 2.2bn.
• Effective tax rate during FY22 clocked in at 38% as compared 29.5% last year, this increase is attributed to the 10% additional tax imposed in federal budget FY23.
• On quarterly basis, INDU posted an EPS of PKR 6.5, down 88% YoY. This is primarily due to contraction in gross margin, higher distribution and admin expenses and elevated tax expense owing to super tax.
• We have a “BUY” recommendation on INDU. Our Dec-22 PT of PKR 1,279/share provides an upside of 23% along with a dividend yield of 9%.

• As per the data released by NFDC, Urea offtake plunged 26% YoY to 463k tons in July-22, while DAP offtake recorded a decline of 65% YoY 67k tons. For 7MCY22, Urea offtake grew by 5% YoY to 3.7mn tons, while DAP offtake remained lower by 18% YoY.

• INDU’s board meeting is scheduled on 29^th August 2022, to consider FY22 financial result, where we expect the company to announce an EPS of PKR 231.1, up 42% YoY as compared to an EPS of PKR 163.21 in FY2. We expect company to announce final cash dividend of PKR 14.50/share along with financial result, which will take full year dividend to PKR 105.0/share.
• During FY22, net sales are expected to increase 52% YoY to PKR 272.3bn on the back of 30% YoY increase in volumetric sales (Corolla and Yaris up 30%, Fortuner and Hilux up 70%) and, 16% YoY increase in pricing.
• Gross margin during FY22 is expected to clock in at 8.5% as against 9.3% in SPLY, due to increase in input cost and PKR depreciation against USD.
• Other income during FY22 is likely to increase 121% YoY to PKR 12.3bn, mainly due to higher fund size on account of increase in customer advances and higher interest rates. Similarly, other expenses are also expected to increase by 130% YoY during FY22 due to higher WPPF and WWF charges.
• Effective tax rate is expected at 38.9% during FY22 as compared 29.5% last year, mainly due to 10% additional tax imposed in federal budget FY23.
• On quarterly basis, INDU is expected to report earnings of 36.6, down 35% YoY primarily due to elevated tax expense during 4Q. Effective tax rate is likely to clock in at 67% during 4Q as compared to 30.7% in SPLY.
• We have a “BUY” recommendation on INDU. Our Dec-22 PT of PKR 1,279/share provides an upside of 23% along with a dividend yield of 10%.

• PSO announced its FY22 financial results today, wherein the company reported an EPS of PKR 183.7, as compared to an EPS of PKR 62.1 during FY21. This growth is driven by higher product prices, increase in volumetric sales and massive inventory gains during the year. Along with result, company also announced a final cash dividend of PKR 10.0/share. Just to recall, PSO skipped interim dividend in FY22.

• CHCC announced its 4QFY22 results today wherein the company reported net profit of PKR 1.02bn (EPS PKR 5.25), up 4% YoY, compared to net profit of PKR 0.98bn (EPS 5.06) in 4QFY21. This accumulates FY22 EPS to PKR 22.93 compared to an EPS of PKR 16.50 in FY21, up 39% YoY. The result is also accompanied with a final cash dividend of PKR 3.00/share. The result was higher than our expectation due to lower than anticipated cost of sales.

• FATIMA announced its 2QCY22 result today, wherein unconsolidated EPS clocked in at PKR 0.07, down 97% YoY, taking cumulative EPS FOR 1HCY22 to PKR 2.78. The result was below than our expectation due to lower than anticipated cost of sales and higher effective tax rate of 99%.

• PSMC’s announced its 2QCY22 financial result today, wherein the company posted an EPS of PKR 5.3, up 6% YoY as compared to an EPS of PKR 5.1 in SPLY. The result exceeds our expectation owing to higher net sales and other income. This takes 1HCY22 LPS to PKR 0.21.
• The company's top line increased 116% YoY to PKR 64.9bn during 2Q, owing to 73% YoY increase in volumetric sales and multiple price increase during the quarter.
• Gross margin during the period contracts to 4.4%, down from 5.8% in SPLY owing to higher input costs and PKR devaluation.
• Other income during the quarter increased by 319% YoY to PKR 1.0bn from 248mn during SPLY primarily due to higher interest rates. On the other hand, other expenses during the quarter have decreased by 83% due to a reversal of provision of impairment losses in 2Q.
• Finance costs for the quarter clocked in at PKR 811mn, an increase of 18.3x YoY. As per our understanding, the mark-up on late deliveries has kept this quarter's financing costs elevated.
• The effective tax rate during the quarter was 68% (lower than our estimate of 93%).
• On a sequential basis, PSMC returned to profitability in 2Q (taking 1HCY22 loss at PKR 0.21/share), due to a 1.6pps increase in gross margin on the back of multiple price increases and a 97% QoQ increase in other income.
• We have a “SELL” recommendation on PSMC. Our Dec-22 PT of PKR 169/share provides a downside of 5%.

• HUBC announced its FY22 financial results today, wherein the company’s reported an EPS of PKR 21.9, down 15% YoY compared to PKR 25.9 during FY21. This decline in earnings is primarily driven by lower share of profit from associate and higher effective tax rate. HUBC skipped the final dividend, thus taking its total payout during FY22 to PKR 6.5/share.

• HUBC’s board meeting is scheduled on 25^th August, 2022 to consider FY22 financial results. We expect the company to post an EPS of PKR 5.14, down 24% YoY for the 4QFY22, taking FY22 EPS to PKR 21.68. Along with the result we expect the IPP to declare final cash dividend of PKR 5.25/share in addition to PKR 6.50/ share already announced during the year

• Bank AL Habib Limited (BAHL) announced its 2QCY22 financial results today wherein the bank reported unconsolidated EPS of PKR 4.20, up 5% YoY. This takes cumulative EPS for 1HCY22 to PKR 8.66, up 7% YoY.

• CHCC is scheduled to announce its 4QFY22 financial result on 25^th August 2022, where we expect the company to report an EPS of PKR 2.92 for 4QFY22 compared to an EPS of PKR 5.06 in 4QFY21, down 42% YoY. This will take FY22 EPS to PKR 20.60 vs PKR 16.50 in FY21, up 26% YoY. We expect the company to announce a final cash dividend of 1.25/share along with the FY22 result.

• PSMC’s board meeting is scheduled on 25^th August 2022, to consider its financial results for 2QCY22, where we expect the company to post an EPS of PKR 5 as compared to PKR 5.1 in 2QCY21.
• Top line during 2Q is expected at PKR 54.7bn, up 83% YoY, on the back of highest ever quarterly sales of 51K units up (73% YoY). "Alto" and "Swift" remained the main contributor in volume growth with increase 107% and 1255%, respectively. Furthermore, price increase during the quarter is also expected to contribute positively to the top line.
• Gross margin during the period is estimated to contract 1.4pps YoY to 4.4%, down from 5.8% in SPLY due to increased cost of raw materials emanating from devaluation of PKR against USD and higher freight charges.
• Other income is expected to increase by 172% YoY to clock in at 674mn from 248mn during SPLY mainly due to high cash reserves coupled with high interest rates.
• On the contrary, finance cost is expected to rise 16.6x YoY to PKR 741mn in 2Q. We anticipate that the mark up on late deliveries to keep finance cost elevated in this quarter, limiting the company's bottom-line growth.
• Effective tax rate during the quarter is expected to clock in at 93%, due to the adjustment of 10% super tax on CY21 profits.
• On sequential basis, PSMC is expected to return to profitability in 2Q (taking 1HCY22 loss at PKR 5.1/share), on the back of a 15% increase in revenue and a 1.6pps increase in gross margin due to multiple price increases in this quarter.
• We have a “SELL” recommendation on PSMC. Our Dec-22 PT of PKR 169/share provides a downside of 5%.

• PSO’s board meeting is scheduled on August 26, 2022 to consider FY22 financial results. We expect the company to report an EPS of PKR 170.2, up 174% YoY, driven by higher product prices, increase in volumetric sales and inventory gains during the year. Along with result, company is expected to announce a final cash dividend of PKR 25.0/share. Just to recall, PSO skipped interim dividend in FY22.

• MCB Bank Limited (MCB) held an analyst briefing session on August 23, 2022 to discuss its 1HCY22 result and future outlook. Earlier, the bank announced an unconsolidated EPS of PKR 1.87 for 2QCY22, down 72% YoY, taking 1HCY22 EPS to PKR 9.4, down 25% YoY. The result was also accompanied with an interim cash dividend of PKR 4.0/share, which took cumulative payout to PKR 9.0/share for 1HCY22.

• ISL announced its FY22 financial results today, where the company posted an EPS of PKR 12.4, down 28% YoY. The result came in slightly below our expectation due to lower volumetric sales. Along with the result, ISL announced a final dividend of PKR 4.5/share, in addition to an interim dividend of PKR 2.0/share, taking the cumulative pay out to PKR 6.5/share in FY22.

• MCB announced its 2QCY22 financial results today, wherein the bank reported unconsolidated EPS of PKR 1.87, down 72% YoY. This takes 1HCY22 EPS to PKR 9.4, down 25% YoY. Along with the result, the bank announced an interim cash dividend of PKR 4.0/share, taking cumulative payout to PKR 9.0/share for 1HCY22.

• POL announced its FY22 financial results today, where the company posted an EPS of PKR 91.4, up 94% YoY. This increase in earnings is mainly on account of 1) 71% YoY increase in international crude oil price, 2) 10% YoY PKR devaluation and, 3) lower tax expense. Along with the result, POL announce a final dividend of PKR 50.0/share, taking the cumulative dividend for FY22 to PKR 70.0/share.

• ACPL announced its financial result today, wherein the company posted consolidated EPS of PKR 0.3 during 4QFY22, down 87% YoY. This takes FY22 EPS to PKR 8.2 compared to 13.6 in FY21, down 40% YoY. The result came in lower than our expectation on account of lower gross margins.

• ISL’s board meeting is scheduled on August 18, 2022 to consider FY22 financial results. We expect the company to post an EPS of PKR 12.7, down 26% YoY. This decline in earnings mainly emanates from higher production cost and lack of excessive inventory gains booked in the corresponding period last year. Along with the result, ISL is expected to announce a final cash dividend of PKR 2.0/share, taking the cumulative pay out to PKR 4.0/share during FY22.

• APL’s announced its FY22 financial results today, where the company posted an EPS of PKR 186.2, up 277% YoY primarily driven by higher product prices, volumetric sales and hefty inventory gains. Along with the result, APL announced a final cash dividend of PKR 30/share, taking the cumulative payout to PKR 45/share during FY22. Moreover, company has also announced 25% bonus shares.

• ACPL is scheduled to announce its 4QFY22 results on 16^th August 2022. The company is expected to post consolidated EPS of PKR 0.9 in 4QFY22 as compared to an EPS of PKR 2.5 in 4QFY21, down 56% YoY due to the imposition of new taxes in the FY23 budget. This will take FY22 consolidated EPS to PKR 9.8, down 28% YoY. The company is also expected to announce a final cash dividend of PKR 1.50/share taking cumulative payout to PKR 3.5/share for FY22.
• We expect the company to post EPS of PKR 0.03 (down 97% YoY) on unconsolidated basis while its overseas business is likely to contribute EPS of PKR 0.88 (down 13% YoY) in 4QFY22.
• ACPL’s topline is expected to augment by 23% YoY to PKR 8.0bn in 4QFY22. We attribute increase in sales to significant increase in retention price by 79% YoY to PKR 11,800/ton. This is despite slowdown in dispatches by 30% YoY. For FY22, topline is likely to grow by 2% YoY to PKR 29.2bn.
• Gross margins for the 4QFY22 are likely to settle at 18% compared to 11% in 4QFY21. Despite rising cost of sales (+14% YoY), fuelled by surge in coal and energy prices, the improvement in gross margins is due to the ability of the company to pass on the coal prices.
• Other income is anticipated to grow by 137% YoY to PKR 217mn in 4QFY22 on the back of higher exchange gains.
• Finance cost is likely to decrease by 41% YoY in 4QFY22 due to lower short borrowings despite higher interest rates. For FY22, finance cost is likely to decline by 62% YoY, supporting the bottomline growth.
• ACPL’s effective tax expense is expected to reach 78% in 4QFY22 vs 2% in 4QFY21 owing to imposition of super tax on FY22 profits
• We have a ‘BUY’ recommendation on ACPL with a Dec-22 price target (PT) of PKR100/share, providing a potential upside of 32% along with a dividend yield of 5%.

• Passenger car sales fell by 50% YoY (56% MoM) in July-22, owing to hefty price increases by all OEMs in response to the depreciating PKR and rising costs of input. This combined with high interest rates and SBP restrictions on auto financing, have contributed negatively to auto sales.
• Only HCAR saw a 10% YoY increase in sales with 2,537 units sold in July 22. Civic & City sales went up by 42% YoY mainly due newer models available in the market. On the other hand, BR-V sales declined to 129 units (down 79% YoY).
• INDU recorded largest decline in its sales where Corolla and Yaris sales went down by 65% YoY and Fortuner & Hilux sales decreased by 62% YoY.
• NML has seen a massive 68% YoY decline in sales (-89% MoM) as the company was only able to sell units in the LCV and jeeps, whereas no units were sold in its sedan category, as a result of substantial price increases.
• PSMC's sales went down by 56% YoY (58% MoM), with only 282 and 662 units of "Wagon-R" and "Cultus" sold during the period, down 87% and 84% YoY, respectively. The company also recorded 24% YoY decline in Alto sales with 4,618 units in July 22.

• APL’s board meeting is scheduled on August 16, 2022 to consider FY22 financial results. We expect the company to post an EPS of PKR 142.4, up 1.9x YoY primarily driven by higher product prices, volumetric sales and hefty inventory gains. Along with the result, APL is expected to announce a final cash dividend of PKR 25/share, taking the cumulative pay out to PKR 40/share during FY22.
• Net sales are expected to grow by 95% YoY to PKR 367.2bn owing to higher product prices and volumetric sales. APL’s HSD sales grew by 34% YoY, whereas MS sales went up by 20% YoY during the year. The company also managed to regain its market share in retail (MS and HSD) fuels. MS mkt. share went up by 0.8% to 8.2% in FY22 Vs 7.4% last year. Similarly, HSD share increased by 1.4% to 8.6% in FY22 Vs 7.2% in FY21.
• We expect company’s gross margin to clock in at 8.5% during FY22, compared to 5.3% in SPLY owing to hefty inventory gains booked during the year.
• Operating expenses are likely to increase by 94% to PKR 8.1bn in line with increase in top line. Similarly, finance cost is also expected to go up by 20% to PKR 1.7bn owing to higher interest rates during FY22.
• APL’s effective tax rate during FY22 is expected at 39%, compared to 29% in FY21. Significant increase in tax expense is due to 10% super tax imposed on FY22 earnings which will restrict the earnings growth.
• On quarterly basis, APL’s earnings are expected at PKR 29.4, up 1.3x YoY owing to high product prices, increased volumetric sales and inventory gains. However, higher effective tax rate at 61% (due to super tax) is likely to limit the earnings growth in 4Q.
• We have a ‘BUY, stance on APL. Our Dec-22 PT of PKR 409/share provides an upside of 11% along with a dividend yield of 11%.

• POL’s board meeting is scheduled on August 16, 2022, to consider FY22 financial results, where we expect the company to post an EPS of PKR 75.7, up 61% YoY. This increase in earnings is mainly on account of 71% YoY increase in international crude oil price (averaging at USD 92/bbl) and 10% YoY PKR devaluation (averaging at PKR 178). Along with the result, POL is likely to announce a final dividend of PKR 35/share, taking the cumulative dividend for FY22 to PKR 55/share.
• Net sales are likely to clock in at PKR 51.8bn, up 44% YoY. Despite significant increase in oil price and PKR devaluation, revenue growth will remain restricted owing to 14% YoY and 10% YoY decline in POL’s oil and gas production, respectively. Major decline is expected from TAL block, Adhi and Jhandial field.
• Exploration cost is expected to go up by 72% YoY to PKR 848mn due to higher geological and geophysical cost during the year.
• Other income is likely to clock in at PKR 9.7bn, up 5.3x as compared to PKR 1.5bn during SPLY, owing to exchange gains on financial assets booked during the year. On the contrary, finance cost is also expected to increase by 15.2x to PKR 4.2bn on account of exchange losses.
• POL’s effective tax rate during FY22 is expected at 43%, compared to 35% during SPLY. This is due to 10% super tax imposed on FY22 earnings in budget FY23.
• On a quarterly basis, POL is expected to post EPS of PKR 14.1, up 5% YoY. This limited earnings growth, despite 113% YoY higher oil prices in PKR terms, is mainly due to higher tax expense (ETR 66% in 4QFY22 Vs 35% in SPLY, on account of super tax). Had there been a normalised tax expense, POL’s 4Q EPS growth would have been 99% YoY.
• We have a ‘BUY’ stance on POL. Our Dec-22 price target (PT) of PKR 528/share provides an upside of 27% along with a dividend yield of 13.2%.

• Meezan Bank Limited (MEBL) announced its 2QCY22 financial results today, wherein, the bank posted EPS of PKR 4.86, up 22% YoY taking cumulative EPS for 1HCY22 to PKR 10.5. Along with the result, bank announced interim cash dividend of PKR 1.75/share, which took cumulative payout to PKR 3.5/share for 1HCY22. MEBL also announced a 10% bonus share.

• Lucky Cement Limited (LUCK) held its analyst briefing on 05th August 2022 to discuss its FY22 financial performance. Earlier the company had reported 4QFY22 consolidated EPS of PKR 27.2, up 90% YoY. The earnings were higher than expectations owing to lower coal inventory. This takes FY22 EPS to PKR 91.2, up 29% YoY.

• Luck’s board meeting is scheduled today to consider FY22 financial results. We expect the company to post an EPS of PKR 36.5, down 16% YoY compared to 43.5 in SPLY. This decline is mainly attributable higher effective tax rate.
• Topline of the company is anticipated to grow by 34% YoY to PKR 84.0bn in FY22. This is on the back of 43% YoY higher cement retention prices despite 6% YoY decline in cement dispatches.
• Gross margins are likely to contract by 6.3% and settle at 23.8% in FY22, compared to 30.1% in SPLY. This is mainly on account of abrupt rise in coal price by 121% YoY along with non-availability of cheaper gas.
• Other income is expected to grow by 19% YoY to PKR 6.9bn during the year owing to PKR 1.5bn technical services fee charged to JV in Congo. Just to recall, PKR 792mn included in other income is non recurring.
• Despite a growth of 10% in pre-tax profit, company’s net profit is expected to decline by 7% YoY during FY22 on the back of 10% super tax imposed on FY22 earnings.
• On quarterly basis, LUCK’s EPS is likely to clock in at PKR 1.52, down 79% YoY. This decline is mainly due to higher tax expense booked in 4Q owing to super tax. Topline of the company is anticipated to grow by 59% YoY to PKR 25.2bn due to 66% YoY higher retention prices. However, gross margins are expected to shrink 3pp to 24% owing to 120% YoY higher coal price and gas availability issue.
• We have a “BUY’ recommendation on LUCK with SOTP based Price Target of PKR 923/share, providing an upside of 104%.

• MARI announced its FY22 financial results today where the company posted an EPS of PKR 247.8, up 5.1% YoY. Along with the result, MARI announced a final cash dividend of PKR 62.0/share, taking the cumulative dividend for FY22 to PKR 124.0/share.
• Net sales increased by 30% YoY to PKR 95.1bn during FY22, compared to PKR 73.0bn in FY21. This is mainly on account of 71% YoY higher oil prices and 10% YoY PKR devaluation. Furthermore, MARI’s gas production also increased by 5.0% YoY during FY22.
• Exploration cost went up by 141% YoY to PKR 10.9bn due to higher cost of dry wells booked during the year. Just to recall, MARI encountered a total of 4 dry wells during FY22 as compared to 2 dry wells in FY21.
• MARI’s effective tax rate during FY22 remained 36.6% compared to 28.4% in SPLY, which restricted the bottom-line growth. Higher tax expense is due to 10% super tax charged during FY22.
• On a quarterly basis, MARI posted an EPS of PKR 42.0, down 31% YoY. This decline in earnings is mainly attributed to 10.3x higher exploration cost and charging super tax expense at once in 4Q.
• We have a ‘BUY’ stance on MARI. Our Dec-22 price target (PT) of PKR 2,281/share provides an upside of 34% along with a dividend yield of 7.3%.

• MARI’s board meeting is scheduled on Aug 4, 2022, to consider FY22 financial results. We expect the company to post an EPS of PKR 252.6, up 7% YoY. Despite 71% YoY higher oil prices (averaging at USD 92/bbl) and 10% YoY PKR devaluation (averaging at PKR 178), earnings growth is likely to remain limited owing to 1) PKR 2.4bn loss pertaining to associate booked during the year and 2) higher tax expense owing to super tax. Along with the result, MARI is expected to announce a final cash dividend of PKR 65/share, taking the cumulative dividend for FY22 to PKR 127/share.
• Net sales are likely to clock in at PKR 97.7bn compared to PKR 73.0bn in SPLY, up 34% YoY. Oil production is expected to decline by 4.5% YoY, whereas gas production is likely to increase by 2% YoY on the back of enhanced flows from Mari field.
• Exploration cost is expected to go up by 29% YoY to PKR 5.8bn due to higher cost of dry wells booked during the year. Just to recall, MARI encountered a total of 4 dry wells during FY22 as compared to 2 dry wells in FY21.
• MARI’s effective tax rate during FY22 is expected at 42% which will erode the bottom-line growth. This significant increase in tax expense is on the back of 10% super tax imposed on FY22 earnings.
• On a quarterly basis, MARI is expected to post an EPS of PKR 46.7, down 23% YoY. This decline in earnings is mainly attributed to higher exploration cost and imposition of super tax which will be charged in 4Q.
• We have a ‘BUY’ stance on MARI. Our Dec-22 price target (PT) of PKR 2,281/share provides an upside of 35% along with a dividend yield of 7.5%.

• Honda Atlas Cars held its corporate briefing today to discuss 1QMY23 financial results and future outlook. Earlier, the company reported an EPS of PKR 4.61 down 29% YoY. The lower EPS was due to gross margin contraction and higher other expense.
• As per the management, automobile industry is likely to witness 20%-30% decline in sales during FY23 due to increase in prices, higher interest rates and change in auto financing terms.
• The company has announced that it will be launching the CKD variant of HR-V in Pakistan, details of which will be announced in the coming months.
• Concerning the massive price increase of its products, the management has stated that only currency depreciation has been passed on to customers, while increases in raw material prices have been absorbed by the company, resulting in margins shrinkage.
• HCAR’s current pricing has been done at a USD of PKR 235. The company has also stated that if the USD remains at the current level of 238 - 240, without a price increase, the company's margins will decline to 3.0%/3.5%.
• In terms of currency depreciation, the management apprised that PKR/USD depreciation accounts for 70% of the company's exchange exposure, while PKR/JPY contributes 10%.
• With respect to CKD kit imports, the management informed that SBP has provided a quota for the import of CKD kits, under which 50% of the average of last 4-month imports was allowed in July, with the quota percentage increasing to 60% in August and 70% in September.
• The company has observed only two non-production days (NPD) up till now, with no plans for future NPDs.
• According to the management, auto financing accounted for more than 40% of the company's sales prior to the SBP’s regulation; however, currently it has decreased to 30%-35%.
• The company currently has no plans to export automobiles. However, it is considering exporting some auto parts to certain markets to see how they perform.
• The updated localization levels for City, Civic, and BR-V in terms of parts are 70%, 60%, and 50%, respectively.
• The management also stated that the super tax adjustment will be done in MY23.

• New taxes introduced in the Federal Budget FY23 would eat up almost the entire CY22 pretax expected earnings growth of the Akseer’s banking universe.
• Despite 57% YoY pretax profit growth in CY22E, PAT growth of Akseer’s banking universe would now be limited to 10% YoY vs pre budget growth 57% YoY.
• Consequently, due to low CY22E base effect, earnings would now grow by 31% in CY23E, compared to pre budget estimated growth of 8% YoY.
• We have reduced CY22E/23E EPS of our banking universe by 30/15% and target prices by 4-20%.
• These measures will have negative repercussions on the Capital Adequacy Ratios (CAR) leading to a decline in dividend payout. CAR of our banking universe is expected to fall by an average 82bps in CY22.

• FFBL conducted its analyst briefing session today to discuss 2QCY22 financial results. Earlier the company had posted an EPS of PKR 1.38, down 32% YoY as against an EPS of PKR 2.02 in 2QCY21.
• During 1HCY22, Urea and DAP production clock in at 262K tons and 449K tons on the back of continuous gas supply to the company from SSGC. The management informed that it has postponed the plant turnaround till January CY23.

• BAFL is scheduled to announce its financial result on 29^th July 2022.We expect the bank to post unconsolidated profit after tax of PKR 2.9bn (EPS PKR 1.6) in 2QCY22 vs profit after tax of PKR 3.5bn (EPS PKR 1.9) in 2QCY21. This will take 1HCY22E EPS to PKR 4.5, up 15% YoY.Along with the result, the bank is likely to announce an interim cas dividend of PKR 1.5/share. We have revised downward CY22/23E EPS of BAFL by 13.5%/6.2% and the target price by 3.9%. We have a ‘BUY’ rating on the scrip with a Dec-22 target price of PKR 45/share, offering a decent capital upside of 44.0% along with a dividend yield of 18.4%.

• EFERT announced its 2QCY22 financial results today, wherein the company reported consolidated LPS of PKR 0.07/share. This takes cumulative EPS for 1HCY22 to PKR 4.05, down 48.5% YoY. The result was below than our expectation due to higher than expected tax. Contrary to our expectations, the company has not announced dividend along with the result.

• FFC announced its 2QCY22 financial results today, wherein the company posted unconsolidated profit after tax of PKR 3.3bn (EPS PKR 2.64), down 7% YoY. This takes cumulative EPS to PKR 7.55, up 2% YoY for 1HCY22. Along with the result, company announced an interim DPS of PKR 2.10 for 2QCY22 taking 1HCY22 cumulative payout to PKR 5.80.
• Topline of the company increased by 27% YoY to PKR 28.4bn on the back of higher Urea offtake (+15.8% YoY) and prices (+8% YoY) in 2QCY22.

• HCAR announced its financial result for 1QMY23 today, where the company posted an EPS of PKR 4.61, down 29% The result came in higher than our expectation owing to higher gross margins and lower taxation.
• Topline surged 39% YoY to PKR 30.2bn during 1Q. on the back of 24% YoY growth in volumetric sales and multiple price increases.
• Gross margins recorded at 6.3% during 1QMY23 vs 7.3% in the SPLY. This is due to exorbitant rise in raw material costs emanating from PKR devaluation. Despite multiple price increases, HCAR was unable to pass on the full impact of cost pressures.
• Other expenses clocked in at PKR 753mn, up 293% YoY in 1Q. This could be due to higher exchange losses resulting from PKR devaluation against the US dollar.
• The company's effective tax rate in 1Q clocked in at 40%, which is significantly lower than our expectation of 64%, resulting in a substantial increase in net income. We believe, the company has not booked additional super tax imposed in the federal budget 2022.
• On quarterly basis, HCAR earnings grew 2.35x owing to higher gross margins and reduction in distribution expense.
• We have a “HOLD” stance on the stock with our Dec-22 price target (PT) of PKR 173/share, which provides an upside of 8% along with a dividend yield of 4.4%.

• FFBL announced its 2QCY22 result wherein the company posted an EPS of PKR 1.38, down 32% YoY as against an EPS of PKR 2.02 in 2QCY21. The result was better than our expectation primarily due to higher than expected dividend from Moroccan JV, Pakistan Maroc Phosphore.
• Net sales of the company clocked in at PKR 46.1bn (up 173% YoY) during 2Q, mainly driven by higher DAP offtake (+73% YoY) along with improved retention prices (80% YoY).
• Gross margins declined to 19.0% in 2Q, compared to 20.7% in SPLY, due to increase in phos-acid and coal prices up 89.1% YoY and 135% YoY along with a steep reduction in PKR value against the dollar.

• HCAR is scheduled to announce its 1QMY23 financial results on 26^th July 2022. We expect the company to post an EPS of PKR 3.73, down by 43%
• Topline is likely to grow by 37% YoY to PKR 29.9bn during 1Q. This is mainly on account of 24% YoY growth in volumetric sales and multiple price increases. To highlight, sales volume ‘City & Civic’ have posted a growth of 30% YoY whereas, demand of BR-V has slowed down with a decline of 5% YoY during
• Gross margins are expected to contract by 2pps YoY to 5.3% despite recent price hike in May 2022, due to cost pressures.
• Other income for 1QMY23 is estimated to increase by 145% YoY to PKR 822mn, principally due to a higher interest rate (6M KIBOR averaging 14.5%) during the period. On the contrary, other expenses are expected to increase by 73% YoY during 1QMY23 due to higher exchange losses resulting from a 20% YoY PKR devaluation against the US dollar.
• It is pertinent to note here that, recently imposed super tax is likely to increase the effective tax rate of the company to 64% in 1Q, thus pushing earnings down by 46%. Had there been no super tax, the earnings growth would have been 3% YoY.
• On quarterly basis, HCAR is expected to post earnings growth of 1.7x mainly on account of higher gross margins coupled with reduction in distribution expense.
• We have a “HOLD” stance on the stock with our Dec-22 price target (PT) of PKR 173/share, which provides an upside of 8% along with a dividend yield of 4.4%.

• During the month Jun-22, auto industry volumes excluding two & three wheelers grew 91% YoY to reach 37k. Two & three wheelers segment declined 4% during the month. Overall volume clocked in at 179k, up 2%.
• During FY22 auto industry volumes excluding two & three wheelers grew 46% to reach 345k. Two & three wheelers segment declined 4% during the year. Overall volume clocked in at 2.16mn, up 1%.
• Passenger car sales grew by 21% YoY in Jun-22, with PSMC volumes recording an increase of 214%. In FY22 Passenger car sales reached 234K (up 55%), with PSMC and INDU posting highest ever yearly sales of 150k and 74.5k, respectively.
• PSMC saw highest number of monthly sales units in Jun -22 up (2x YoY) mainly due to a 5x and 3x increase in sales of “Alto” and “Ravi & Bolan”. In FY22, PSMC also posted highest ever yearly sales of 150k on the back of growth in “Alto” and “Cultus” up (89% and 83% YoY) respectively.
• Hyundai also recorded its highest number of sales unit in June of 1,871 units, This was due to record sales of “Tucson” (up 2.88x YoY).
• INDU sales climbed 39% YoY, with “Corolla & Yaris” sales growing 39% YoY and “Fortuner & Hilux” 133% YoY, overall during FY22, INDU posted highest ever annual sales number of 74k units, up 30%.
• HCAR sales increased by 18% YoY in June, with combined City and Civic sales increasing by 21% YoY.

• PSO conducted its analyst briefing session today to discuss 9MFY22 financial results and future outlook. The company booked net profit of PKR 64.8bn, compared to PKR 18.2bn during 9MFY21, up 2.6x YoY. The turnaround came from higher volumetric sales and hefty inventory gains during the period under review.
• The company’s overall liquid fuels grew by 22% YoY, outperforming the industry growth of 13.6%. PSO’s white oil market share increased by 3.3% to 48.3% during 9MFY22, mainly on account of increase in MS and HSD market share to 43.5% and 50.4%, respectively. The company also led the black oil market with market share reaching 56.5% during the 9MFY22. Black oil volumes witnessed 31% YoY growth due to higher FO demand from the power sector.
• Overdue receivables of the company stood at PKR 291.5bn as of March 31, 2022, registering an increase of PKR 112.6bn during the 9 months. This is mainly due to receivables from SNGP that continued to surge and reached historic high of PKR 207.9bn. The management of the company is pursuing the matter and is in constant dialogue with the concerned ministry for the timely recovery of this amount.
• Regarding the volumetric growth, the management expects it to be limited in FY23 owing to higher POL product prices. FO demand in FY23 will remain intact owing to higher LNG prices in international market, unless there are other sources to procure LNG.
• On upgradation of PRL, the management informed that currently field study has commenced that usually takes 8-10 months. After the study, the upgradation plan could be finalised. As per the management, despite higher margins PRL will still require capital injection to upgrade and PSO is willing to support the refinery in every which way.
• Regarding the PDC, management apprised that government has completely settled PDC with PSO and no amount is outstanding.

• As per the data released by NFDC, Urea offtake shrunk 17% YoY to 418k tons in May-22, while DAP offtake stood at 94k tons, down by 46% YoY. For 5MCY22, Urea offtake grew by 14% YoY to 2.5mn tons, while DAP offtake plunged to 437k tons, declining by 18% YoY.
• Within the urea segment, FFBL posted highest decline of 35% YoY followed by Fatima group (-35% YoY) and EFERT (-24% YoY) during May-22. While FFC’s urea offtake declined by meagre 2% YoY in May-22. Only Agritech Limited (AGL) reported a growth of 35% YoY.
• During May-22, domestic urea prices averaged at PKR 2,046/bag, up ~20% YoY. Similarly, DAP prices also continued their upward trend and increased to PKR 9,703/bag, up ~77% YoY.
• We expect urea offtake to remain elevated at ~6.3mn tons during CY22 due to improving agroeconomics, low water availability and probable cross-border movement due to higher delta between international and domestic prices. DAP offtake is expected to remain dull in CY22 due to higher price.

• MARI conducted its corporate briefing today, wherein the management discussed its performance during the 9MFY22 and status of ongoing projects. Main points discussed during the call are presented below.
• Regarding the recent discovery in Bannu West, the management apprised that the SNGP is expected to lay a pipeline in Bannu area in next 12 months after which the production can commence. Initially, 25mmcfd of gas will flow from the field. Furthermore, reserve size of the discovery will be confirmed after the appraisal wells.
• As per the management, phase 1 of the Sachal Gas Processing Complex (SGPC) has been commissioned, resulting in 20mmcfd gas injection to SNGP system. Moreover, the management informed that a total of 150mmcfd gas will be added to the system through this project, comprising of 40mmcfd from HRL, 20mmcfd from Tipu and 90mmcfd from Goru B.
• About the Abu Dhabi block, MARI’s management informed that the 1^st appraisal well is expected in 2023. Just to recall, Pakistan International Oil Limited which is a consortium of local companies is expected to drill 7 exploratory and 5 appraisal wells in offshore block 5 in Abu Dhabi during the next 9 years.
• Management informed that Bolan South, an exploratory/appraisal well, is under testing phase and the results will be communicated after its completion.
• MARI planned 9 wells in current fiscal year including 4 exploratory and 5 development wells. As of May, the company has spudded 3 exploratory and 2 appraisals well.
• We have a “BUY” stance on the stock with our Dec-22 price target (PT) of PKR 2,328/share, which provides an upside of 35% along with a dividend yield of 8.6%

• As per the latest filing, OGDC has encountered hydrocarbons at its exploratory well NIM East -1 located in District Tando Allah Yar, Sindh. OGDC is the operator of the block with 95% pre-commerciality stake whereas GHPL holds remaining 5% stake. It is pertinent to note here that OGDC’s post commerciality/discovery stake in the said block is 77.5%.
• The well was spudded in March 2022 and reached the depth of 2,573 meters before encountering the hydrocarbons. As per the notice, Company’s DST-1 in the Basal Sand formation tested for 1,400 BPD of crude oil and 5.02mmscfd of gas.
• Our working suggests that the annualized earnings impact of this discovery is PKR 0.7/share. We have assumed exchange rate at PKR 200 and crude oil price at USD 110/bbl. We have not incorporated any inflows from the well in our base case earnings for OGDC.
• Similarly, as per another filling today, OGDC has discovered gas from Kaleri Shum-01 exploratory well in Kachlas block, Punjab. Cumulatively, the company encountered 1.59mmcfd of gas from 3 different formations. OGDC is the operator of the block with 50% stake while MARI holds the remaining 50% stake in the block. The impact of this discovery is not significant (PKR 0.02/share)

• As per the data released by PAMA,  Auto industry volumes remained depressed for the 2nd consecutive month during May’ 22  by 2% MoM. This decline is mainly due to lower sales witnessed in 2 wheeler segment. Excluding 2 wheeler category, Auto industry sales grew 2% MoM during May’ 22.
• Passenger car sales increased by 4% MoM, with NML leading with an increase of 33% due to significant demand for their sedan category cars (Elantra and Sonata up 148% & 37%, respectively).
• HCAR sales increased by 11% MoM where combined Civic & City sales grew 18%. On the contrary, BR-V sales went down by 37%.
• INDU sales grew 2% MoM, where Corolla & Yaris went up by 4% and its SUV & Pickup category declined 2% MoM.
• PSMC sales declined by 3% MoM, dragged by 'Cultus’ & ‘Swift’ sales (down 27% and 23% respective). 'Alto' and 'Wagon-R’ witnessed growth in sales by 9% & 24%, respectively.
• Trucks and Buses sales grew moderately by 2% MoM, whereas tractors’ sales recorded an uptick of 1% MoM. We expect tractors’ sales to post impressive growth going forward owing to 5% GST abolishment in recent budget

• Urban middleclass gets lower taxes on salaries: Contrary to expectations of a sharp increase in taxes for the salaried class, Federal Budget FY23 entailed small reduction in taxes for salaried individuals with incomes up to PKR18.0mn a month, with an increase in taxation for higher slabs.
• Rural population continues to remain untaxed: The government has increased GST on fertilizer, partly offset by reduction in GST for tractors. BISP allocation has also been increased.
• Business & industry get some incentives: Initial depreciation allowance on plant and machinery has been increased to 100% for taxation purposes. Custom duty has been rationalized on several raw materials. But an additional poverty alleviation tax of 2.0% has been imposed on entities earning more than PKR 300mn a year. The government has substantially increased taxes for the banking sector.
• Traders get an alternate tax regime linked with electricity consumption: The government has introduced a new tax regime for retailers and whole sellers based on electricity consumption, involving no interaction with taxmen.
• Stock market to rejoice: Though stock market may open gap down due to knee jerk reaction as a result of substantial increase in taxation of the banking sector, we believe the medium-term impact of Federal budget FY23 on the stock market will be highly positive. The government has fulfilled the long-standing demand of rationalizing the taxation regime of Stock Markets with that of the Real Estate sector by some reduction in taxes for the former and substantial increase in taxes for the latter. Capital Gains Taxes (CGT) on stocks are now equal to that of open plots, while constructed houses and flats attract a lower CGT rate. The government has also introduced a 20% tax on deemed rental income to discourage investment in unproductive Real Estate. These positives will more than offset the negatives – scrapping of tax credits for investment in IPOs, mutual funds, and pension funds, an additional 2.0% income tax on large corporates and significant increase in taxation of banks.
• Sector impact: Budget FY23 is positive for Textile, Tractors, Chemical, Paper & Board. The budget is neutral to positive for Fertilizer, Technology, Pharma and Tobacco sector and neutral for Oil & Gas. Commercial Banks, Cements, Autos and Steel sector will be negatively impacted.

• First Impressions: While we continue to go over the details, Federal Budget FY23 does not seem to have the bite of an IMF mandated budget. However, there are certain measures that may have significant consequences for the stock market, with the balance substantially tilted to the positive side. Though the government has done away with several exemptions and concessions, tax incidence for salaried class has been reduced (IMF demanded otherwise). There is an additional 2% tax on individuals, AOPs and companies earning more than PKR 300mn and 3% additional tax on banks.
• Real estate’s loss is stock market’s gain: Government has imposed a 1% annual tax on fair market value of Real Estate (worth PKR 2.5mn and above) in the form of 20% tax on deemed rental income (assumed at 5% of fair market value of property). However, one property for one's own residence will be exempt. Additionally, gains from property will be subject to CGT up to 6 years with 15% in year 1 and 2.5% in year 6 (a decline of 2.5% annually). Advance tax on property purchase is also up from 1.0% to 2.0% (for filers) & 5.0% (for non filers).
• Key negative for stock market: Through abolition of section 62, 62A and 63, the government has ended the tax credit on Investment in Shares (IPOs, Mutual Funds), Health Insurance, Life Insurance and Contribution to Approved Pension Funds
• The budget in numbers: Total outlay of the federal budget FY23 stands at PKR 9.5 trillion (+13% YoY). FBR tax collection target is set at PKR 7.0tn, up from revised PKR 6.0tn while overall tax revenue is targeted at 8.9% of GDP. Overall budget deficit is expected at 4.9% of the GDP versus 8.6% in FY22E.

• Cement dispatches continued its downward trajectory in May-22, declining by 16% YoY and 6% MoM to 3.3mn tons, lowest since Aug-20. This is due to exorbitant rise in cement prices in last couple of months and extended Eid holidays. This takes 11MFY22 cement dispatches to 47.6mn tons, down 9% YoY.
• Local cement demand subsided due to lack of local triggers such as halt in PSDP funds in the ongoing quarter and rise in construction cost. Consequently, local dispatches shrunk 2% YoY to 3.2mn tons. North local demand declined 5% YoY, where as south demand exhibit a growth of 18% YoY. Cumulatively, local cement demand posted a negative growth of 2% YoY to 42.6mn tons during 11MFY22.
• Cement exports for the month remained depressed largely due to cheaper option available in the international market along with economic slowdown in global construction on the back of rising inflation expectation due to commodity super cycle.
• Industry utilization during May-22 clocked in at 57% compared to 68% in May-21, whereas, industry utilization in 11MFY22 declined to 74% compared to 81% in 11MFY21.
• During May-22, average cement prices in the north region stood at PKR 856/bag (+42% YoY) while south region cement prices averaged at PKR 902/bag (+42% YoY). Higher cement prices can be attributed to the abrupt rise in coal prices in the international market.

• As per the data released by NFDC, Urea offtake increased by 48% YoY to 459k tons, while DAP offtake reported at 95k tons vs 46k tons in the SPLY. For 4MCY22, Urea offtake exhibit an increase of 23% YoY to 2.1mn tons, while DAP offtake plunged to 343k tons, witnessing a decline of 5% YoY.
• Within the urea segment, FFC sold 182k tons in April-22 followed by EFERT with 157k tons. FFBL and Fatima offtake clocked in at 33k tons and 65k tons, while AGL urea sales number stood at 21k tons in April-22.
• On the other hand, FFBL DAP offtake stood at 35k tons, while FFC and EFERT offtake clocked in at 3k tons and 20k tons.
• Overall industry’s CAN offtake shrunk by 18% YoY to 57k tons.
• During April-22, domestic urea prices averaged at PKR 1,998/bag, up by ~17% YoY. Similarly, DAP prices also continued their upward trend and increased to PKR 9,396/bag, up ~73% YoY.
• We expect urea offtake to remain elevated at ~6.3mn tons during CY22 due to improving agroeconomics, low water availability and probable cross-border movement due to higher delta between international and domestic prices. DAP offtake is expected to remain dull in CY22 for being costlier.

• Indus Motor Company held its corporate briefing today to discuss 3QFY22 results. Earlier, the company reported net earnings of PKR 65.11 up 41.6% YoY. The result was also accompanied with an interim cash dividend of PKR 26/share (payout 40%) taking cumulative dividend for 9MFY22 to PKR 90.50/share.
• INDU's management has stated that due to the current macroeconomic uncertainty, the company has closed the booking of all its variants for the next 15 – 20 days. Furthermore, due to current high freight charges and PKR depreciation, the company will raise its car prices once booking re-opens.
• In terms of future sales, management now expects the passenger car market to shrink by 30%, instead of 20% previously stated, due to the worsening macroeconomic conditions and SBP's recent regulation to reduce the tenor of auto financing by 2 years.
• With regards to ban on the CKD and SKD kits, the management said that currently only CBU units are banned from imports.
• The company has reduced its payout to 40% in 3QFY22 from its historical average of 60%, owing to the uncertain economic condition and the investment of USD 100mn in the HEV project, which has already begun.
• As per the management, company’s 25%-30% sales consist of auto financing which will be adversely affected by the new SBP regulation.
• The updated localization levels of the company’s different models in terms of value are 60% for Corolla and Yaris and 40-50% for Hilux.
• IMC is currently producing in two shifts; however, in order to cut costs, the company plans to reduce the number of shifts in the coming fiscal year.

• Pak Suzuki Company held its corporate briefing today to discuss 1QCY22 results and future outlook. Earlier, the company reported a net loss of PKR 5.59, mainly on account of lower gross margin and higher finance cost.
• According to the company, the primary reason for gross margin contraction during 1Q was increased cost of production whereas the impact of price increase was not fully materialized during the quarter.
• Regarding the higher finance cost of PKR 1bn booked during 1Q, the management apprised that this mainly relates to compensation for late deliveries. As per the company, this figure will vary in future quarters. Just to recall, the company is required to pay late delivery charges for vehicles that are not delivered within 60 days after booking. Concerning the PKR 1bn charge, the company has confirmed that the amount was incorrectly charged in the motorcycle segment rather than the automobile segment. The company has stated that they will correct the error and upload the corrected financials to the exchange as soon as possible.
• PSMC's present capacity utilization is 82% and the management has no intentions to improve the capacity in the foreseeable future.
• The updated localization levels of the company’s different models in terms of value are Swift (35%), Cultus (51%), Wagon-R (60%), Alto (62%), Bolan (72%) and Ravi (68%). In the Motorcycle segment the company has a 35% localization of its GS-150 model.
• According to the company, the new SBP regulation to reduce the tenor of auto financing by two years will have a 2-5% negative impact on company sales. The current share of Auto financing in company’s sales is almost 35 – 40%.
• The management has stated that the new Swift model is well received by customers. The company had initially estimated 2,000 bookings per month, but in the first two months, the company was able to book 6,500+ units of ‘Swift’.
• Regarding the volatility in exchange rate, the management has stated that it is currently not using any hedging tools to protect itself from PKR depreciation, due to restriction from SBP to use any hedging tools for exchange rate risk.
• Concerning the new auto policy under which the government is providing incentives for car exports, the management has stated that it does not intend to export any of its models in the near future.
• The company is evaluating the local HEV market and plans to introduce new products in this area in the near future.

• HCAR is scheduled to announce its financial results for MY22 on 26^th May 2022. We expect the company to post an EPS of PKR 52, up 55% in MY22 as compared to an EPS of PKR 12.56 in SPLY. Along with the result, HCAR is likely to announce a final cash dividend of PKR 8.50/share.
• Net sales in MY22 are likely to grow 61% YoY to PKR 108.3bn. This increase is primarily due to a higher volumetric sale, up 57% YoY to 37,603, combined with a 3.5% increase in prices.
• Gross margins for MY22 are expected to contract 1.1pps YoY to settle at 4.7% due to increased cost of input resulting from PKR depreciation and higher commodity prices.
• Distribution expenses during MY22 are expected to increase by 11% YoY to PKR 818mn due to higher topline. Whereas, the administrative expenses are likely to increase by 17% to reach PKR 960mn.
• Similarly, other expenses are expected to increase by of 3.44x YoY due to higher exchange losses resulting from a 20% YoY PKR devaluation against the US dollar.
• Other income for MY22 is estimated to increase by 112% YoY to PKR 1.94bn primarily due to higher fund size on account of increase in customer advances.
• On quarterly basis, HCAR is expected to post an EPS of 3.05, down 52% YoY mainly on account of contraction in gross margin. We expect gross margin at 2.8% in 4Q against 5.2% in SPLY, due to currency devaluation and higher steel prices.
• We have a “BUY” recommendation on HACR. Our Dec-22 PT of PKR 265/share provides an upside of 53% along with a dividend yield of 4.9%.

• As per the data released by PAMA, auto industry volumes witnessed downward trend of 3% MoM during April 2022. With all segment experiencing negative MoM growth.
• In Apr-22, passenger car sales fell 18% MoM, led by HCAR, down 28% MoM (+15% YoY). Major decline is witnessed in City & Civic sales, down 31% MoM (+10% YoY), followed by BR-V sales declining 2% MoM.
• PSMC sales declined by 16% MoM (+47% YoY) to 12,639 units. Alto sales went down by 49% MoM, However the fall in 'Alto' sales were partially offset by the surge in Cultus sales (+470% MoM) due to low base effect. Just to recall, PSMC suspended Cultus booking in preceding month due to supply chain issues. Moreover, company delivered 2,273 newly introduced Swift cars in the month of April, resulting in 47% YoY surge in overall sales volume.
• INDU sales fell 18% MoM (+8% YoY), primarily as a result of higher prices coupled with slowdown in Ramadan.
• Overall Tractor sales declined by 14% MoM during April, mainly on account of decline in MTL volumetric sales, down 27% MoM.

• FFBL conducted its analyst briefing session today to discuss 1QCY22 financial results and future outlook of the fertilizer industry. Earlier, the company had posted an unconsolidated EPS of PKR 1.26, up 28% YoY as against an EPS of PKR 0.98 in 1QCY21. Key highlights of the earnings growth were higher DAP margins, better Urea offtake and increase in net treasury income.
• Regarding the latest news about Urea price capping by the GoP, company rules out any such price decline and informed that the company is in discussion with the government on number of issues regarding urea pricing and previously stuck subsidy and sales tax receivable.
• During 1QCY22, Urea and DAP production increased by 40K tons and 100K tons on the back of continuous gas supply to the company. The management informed that it has no plans of major plant turnaround in CY22.
• FFBL increased its DAP prices by PKR 500/bag to PKR 10,600/bag yesterday and expect it to remain at these levels till June-22. The prices may come down during 2HCY22 following expectation of decline in the international DAP and phosphoric acid prices.
• During 1Q, phosphoric acid prices settled at USD 1550/ton and freight charges have also increased, which led to DAP price hike. Furthermore, the management is anticipating a further hike in phosacid price to USD 2k/ton during the current quarter.
• The company is currently consuming a mix of Afghan, Malaysian, Indonesian and South African coal due to which the effective coal cost of the company is below than the current international prices.
• Management also informed that it had booked a exchange loss of ~PKR 800mn in 1QCY22 along with higher WPPF and WWF expenses.
• The management is considering number of options regarding Fauji Meat Ltd. (FML) restructuring and informed that its losses are decreasing on QoQ basis. Currently, FML is not exporting its products to any country. FFBL is not considering any impairment loss on FML in the ongoing year.
• During 1QCY22, the company did not receive any dividend from its subsidiaries and associates but expects better dividends later in CY22.
• The company is anticipating urea offtake of 6.4mn tons in CY22 while DAP offtake is expected to witness a decline of 10% YoY to settle at 1.6-1.8mn tons owing to its higher pricing.

• Bank Alfalah Limited held a conference call today to discuss its 1QCY22 financial performance and banking industry’s outlook. Earlier, the bank had reported strong earnings growth of 45% YoY to PKR 2.82/share in 1QCY22. Higher profitability was on the back of robust interest and non-interest income during the quarter.
• Management expects NIMs to improve further going forward as rate hike impact will be more visible from 2QCY22 onwards. The bank expects at least a 100bps hike in next monetary policy.
• BAFL investment book is largely skewed towards floating PIBs (85%) and shorter-term T-Bills. While fixed PIBs consists of 15% with a duration of 3.8 years and a yield of 10.64%.
• BAFL’s asset quality improved further to 3.4% in 1QCY22 vs 3.5% in 4QCY21 with coverage ratio further increased to 104.9% in 1QCY22 (4QCY21: 101.9%). During 1QCY22, BAFL did not take any reversals regarding Covid related general provisions which stood at PKR 2.25bn as at March-22.
• The bank will continue to expand its deposit market share and target 12-15% deposit growth during CY22. With regards to the advances growth, the bank expects it to grow by 10-15% despite headwinds in the economy. The management further informed that there is a pipeline in place with respect to TERF related facilities and financing to the SME sector under GoP initiative. Currently, there is no stress on the SME segment while the bank is maintaining a very cautious stance.
• Bank expects growth in fee income to continue to grow by 15% during CY22, while forex income is also likely to remain strong due to market volatility.
• The bank opened 6 new branches in 1QCY22 while plans to expand its branch network by 110 branches in CY22, while present cost to income ratio of 55% will likely to continue during CY22 or it may be improved further following healthy growth in NIMs.
• With regards to the Sri Lanka operation, the management informed that the bank does not have any exposure in Sri Lanka.
• CAR of the bank further improves to 14.8% in 1QCY22 compared to 14.4% in 4QCY21, while BAFL will continue to sustain its payout ratio on the back of healthy profitability, going forward.

• MCB Bank Limited held its conference call today to discuss 1QCY22 results. Earlier, the bank had reported unconsolidated net earnings of PKR 7.52/share for 1QCY21, up 31% YoY. The result was also accompanied with an interim cash dividend of PKR 5.0/share.
• Key highlights of healthy earnings were reversal in provisions to the tune of PKR 864mn in 1QCY22 compared to a reversal of PKR 177mn, last year. Non-interest income registered a growth 20% YoY to PKR 5.7bn on the back of rise in foreign exchange and dividend income by 94% & 81%, respectively.
• Foreign exchange income is anticipated to grow further due to volatile forex market during the quarter.
• With regards to the NIMS, the bank’s management informed that NIMs are likely to remain flattish in 2QCY22, while interest rate impact on the asset side will be visible from 2HCY22.
• With regards to the interest outlook, the management is expecting another 100-150bps hike in policy rate in next the monetary policy scheduled on 23^rd May 2022.
• MCB’s ADR for 1QCY22 clocks in at 42% which is expected to further decline to ~40% for CY22 due to slowdown in Advances on the back of soaring interest rates. Earlier, the bank had targeted to increase its ADR to 50% in CY22. While deposits are expected to grow by 15-18% led by targeting small ticket accounts through remittance.
• MCB do not see any risk on its asset quality going forward. In fact, the management is expecting provisioning reversal to the tune of PKR 3-4bn during CY22. These reversals are related to the general provisions being provided by the bank during CY20 on account of covid.
• Commenting on the recent development regarding acquisition of Telenor microfinance Easypaisa segment, the management informed that it will complete due diligence within 15 days.
• With regards to the Sri Lanka situation, the management disclosed that the bank had disposed of its foreign currency denominated exposure at the time of default.

• PIOC announced its financial result today, wherein the company posted profit after tax of PKR 485mn (EPS PKR 2.14) during 3QFY22, down 29% YoY and 27% QoQ. This takes 9MFY22 earnings to PKR 1.6bn (EPS PKR 7.17), up 26% YoY. The result came lower than our expectation on the back of lower than expected dispatches coupled with higher effective rates.
• Topline of the company surged 23% YoY to PKR 7.7bn in 3Q mainly due to 41% YoY rise in retention prices. This is despite decline in dispatches by 12.7% YoY.
• The company’s gross margin declined to 21.3% in 3Q compared to 24.7% in SPLY. Decline in gross margins is induced by higher cost of sales due to higher energy prices. However, to mitigate the adverse impact, company shifted its reliance on local and Afghan coal along with maximum reliance on captive power generation plant during the period under review.
• Finance cost of the company increased to PKR 764mn (up 56% YoY) during 3Q due to higher interest rates coupled with higher short term borrowing.
• Effective tax rate remained higher at 35.9% in 3Q, restricting the bottomline growth.
• On a sequential basis, earnings of the company decreased by 27% QoQ. This is due to volumetric decline in cement dispatches (down 17%) and higher financial cost (up 29%). However, gross margin improved by 0.7ppts QoQ owing to higher retention prices (up 9% QoQ).
• We have a ‘BUY’ recommendation on PIOC with our Dec-22 price target (PT) of PKR 150/share, providing an upside of 122%.

• OGDC announced its 3QFY22 financial results today where the company reported NPAT of PKR 43.2bn (EPS PKR 10.03), up 79% YoY. This impressive growth in earnings is mainly due to 1) higher crude oil price (+66% YoY, averaging at USD 100/bbl), 2) PKR devaluation (-11%, averaging at PKR 177.4/USD) and, 3) 4.1x YoY increase in other income. This takes 9MFY22 earnings to PKR 26.05/share, up 69% YoY. Along with the result, OGDC announced an interim cash dividend of PKR 1.0/share.
• Net sales grew by 36% YoY to PKR 89.1bn during 3Q. Despite significant increase in oil price and PKR devaluation, revenue growth remained restricted owing to decline in oil and gas production.
• Exploration expenditure declined by 50% YoY to PKR 2.8bn, as against PKR 5.6bn in SPLY due to lower number of dry well. Just to recall, OGDC encountered a dry well in Lakhi Rud block during 3Q.
• Other income increased by 4.1x YoY to PKR 8.4bn owing to exchange gains booked during the quarter.
• On a sequential basis, OGDC’s earnings grew by 22% QoQ owing to higher international crude oil prices and PKR devaluation.
• We have a ‘BUY’ stance on OGDC. Our Dec-22 price target (PT) of PKR 204/share provides an upside of 139% along with a dividend yield of 11%.

• ASL announced its 3QFY22 financial results today, where the company posted an EPS of PKR 0.05, down 97% YoY. The result was below our estimates mainly due to higher than estimated contraction in gross margins and lower volumetric sales. This takes ASL’s 9MFY22 earnings to PKR 0.53/share, down 89% YoY.
• The company’s net sales stood at PKR 17.5bn, up 14% YoY on the back of higher product prices. Gross margins clocked in at 4.7% as compared to 24.6% in SPLY mainly due to absence of inventory gains.
• Finance cost went up by 1.7x YoY to PKR 557mn mainly due to increased borrowing coupled with high interest rates.
• Effective tax rate stood at 41.0% in 3QFY22 against 29.0% in same period last year, compressing the earnings growth.
• On sequential basis, ASL posted earnings increase of 1.2x QoQ owing to higher volumetric sales and gross margin improvement by 1.4%.
• We have a ‘Buy’ stance on ASL. Our Dec-22 price target (PT) of PKR 30/share provides an upside of 134% along with a dividend yield of 4%.

• Lucky Cement reported 3QFY22 unconsolidated earnings of PKR 5.5bn (EPS PKR 17.12), down 23% YoY. The decrease in earnings is primarily attributable to sizeable increase in cost of sales. This takes 9MFY22 earnings to PKR 11.9bn (EPS PKR 34.97), down 3% YoY.
• During 3QFY22, LUCK’s revenue grew 25% YoY to PKR 21.34bn, primarily driven by an increase in local cement price which grew 29% YoY in North and 28% YoY in South, while the company local despatches dropped by 9.4% YoY in 3QFY22.
• Gross margins clocked in at 22.08% during 3QFY22 as compared to 35.93% in the same period last year. The decline in margins can be attributed to volatility of coal prices coupled with exuberantly high freight charges.
• Financial cost during the year declined by 5% YoY, owing to the decrease in short term Financing.
• On sequential basis, profitability of the company grew by 1.2x QoQ. Major reason behind higher profits was growth in other income which remained higher by 4.55x YoY to PKR 4.1bn, led by dividend contribution from Lucky Motor Company (LMC) and ICI. Moreover, company also recorded PKR 1.5bn in other income as a technical service provided to its joint venture in Congo.
• We have a ‘BUY’ stance on LUCK. Our Dec-22 SOTP based price target (PT) of PKR 1,004/share provides a potential upside of 77%.

• PSO’s announced its 3QFY22 financial results today where the company reported an EPS of PKR 69.4, up 2.74x YoY, driven by higher product prices, increase in volumetric sales and inventory gains during the quarter. The result came in above our expectation primarily due to higher-than-expected gross margin and other income. This takes 9MFY22 earnings to PKR 137.97/share, up 2.55x YoY.
• The company’s net sales grew by 99% YoY to PKR 568bn primarily due to 44% YoY increase in HSD sales and 15% YoY increase in MS sales. Similarly, higher POL product prices on YoY basis also supported the topline growth.
• Operating expenses went up by 101% YoY to PKR 8.3bn due to increase in topline, whereas the finance cost increased by 19% YoY to PKR 1.3bn due to higher interest rates and increased short term borrowings.
• On the contrary, other income witnessed 14.7x YoY increase to PKR 11.6bn possibly due to receipt of penal income during the quarter.
• On a sequential basis, PSO’s earnings went up by 61% QoQ mainly on account of improved gross margin amid higher inventory gains and increase in other income.
• We have a ‘BUY’ stance on the script with our revised Dec-22 PT of PKR 275/share. Our price target indicates an upside of 64% along with a dividend yield of 9%.

• FFC announced its 1QCY22 financial results today, the profitability of company increased by 7.3% YoY to PKR 6.2bn (EPS PKR 4.90) due to higher offtake and better other income up 27% YoY. Along with the result, company announced an interim DPS of PKR 3.70.
• Topline of the company increased by 22% YoY on back of the higher Urea offtake up 10% YoY and elevated Urea pricing up 8% YoY during the first quarter.
• Gross margin declined by 3.5 ppts to 35.6%, compare to 39.1% SPLY.
• During 1QCY22, distribution cost clocked in at PKR 2.1bn up 9.0% YoY, primarily due to higher transportation and fuel charges.
• Despite absence of dividend from AKBL, other income increased by 27% YoY during the quarter to PKR 3.4bn. The surge in other income is due to the higher dividend from subsidiaries (Wind power projects) and better return on investment portfolio.
• Finance cost surged 1.5x YoY to PKR 1.07bn in 1QCY22 due to the increased borrowing along with higher interest rate.
• We maintain our ‘BUY’ recommendation on FFC with Dec-22 price target (PT) of PKR 140/share. The stock provides total return of 27.2% from current levels (PT is offering an upside of 14.6% along with dividend yield of 12.7%).

• PPL’s announced its 3QFY22 financial results today where the company reported an EPS of PKR 7.5, up 70% YoY. The increase in earnings emanate from 66% YoY higher international crude oil prices and 11% YoY PKR devaluation. This takes 9MFY22 earnings to PKR 18.9/share, up 35% YoY.
• Net sales grew by 38% YoY to PKR 51.1bn as against PKR 36.9bn in SPLY. Despite significant increase in oil price and PKR devaluation, revenue growth remained restricted owing to 9% and 8% YoY decline in company’s oil and gas production, respectively. Decline in production came from TAL block, Adhi, Nashpa, Sui, Qadirpur and Kandhkot.
• Exploration expenditure went up by 1.7x YoY to PKR 1.6bn, as against PKR 602mn in SPLY mainly due to low base effect.
• Other income increased by 1.98x YoY to PKR 3.1bn owing to exchange gains on foreign currency booked during the quarter.
• Effective tax rate remained 33.6% during 3Q as against 28.4% in SPLY, which contained the bottomline growth.
• On a sequential basis, PPL’s earnings grew by 43% QoQ mainly on account of higher oil price (+25% QoQ) and currency devaluation (-2% QoQ).
• We have a ‘BUY’ stance on PPL. Our Dec-22 price target (PT) of PKR 169/share provides an upside of 125% along with a dividend yield of 7.3%.

• ASL’s board meeting is scheduled on April 28, 2022 to consider 3QFY22 financial results. We expect the company to post PAT of PKR 149mn (EPS PKR 0.15/share), down 93% YoY as against PAT of PKR 2.2bn (EPS PKR 2.32) in the SPLY. Decline in earnings is primarily due to lower volumetric sales and absence of hefty inventory gains booked during the corresponding period last year. This will take ASL’s 9MFY22 earnings to PKR 0.62/share, down 87% YoY.
• Net sales are likely to grow by 18% YoY and settle at PKR 18.1bn as against PKR 15.3bn in SPLY, mainly due to higher selling price during the quarter. On the contrary, we expect gross margin to clock in at 6% as against 24.6% in SPLY owing to absence of inventory gains and lower volumetric sales. It is pertinent to note here that ASL’s gross margin in preceding quarter contracted to 3.3%.
• Selling & distribution cost is likely to grow by 28% to PKR 136mn YoY due to increase in topline. Similarly, finance cost is expected to increase by 2.0x to PKR 627mn due to increase in short term borrowings amid higher interest rates.
• We have a “BUY” stance on ASL. Our Dec-22 PT of PKR 30/share indicates an upside of 133% along with a dividend yield of 4%.

• KOHC announced its financial result today, wherein the company reported profit after tax of PKR 1.65bn (EPS PKR 8.19) during 3QFY22, up 55% YoY. The result was higher than our expectation due to lower than expected cost of sales. This takes 9MFY22 earnings to PKR 4.63bn (EPS PKR 23.05), up 83% YoY.
• Despite decline in cement volumes by 4% YoY, topline of the company surged 28% YoY to PKR 8.5bn in 3Q primarily due to improved cement retention prices, up 34% YoY to PKR 454/bag.
• Cost of sales increased by 22% YoY to PKR 6.1bn in 3Q due to higher coal cost. However, it came lower than our expectation which could be attributable to higher mix of Afghan coal and optimal utilization of low cost inventory.
• Finance cost of the company increased by 21% YoY to PKR 144mn during 3Q on the back of higher short term borrowing coupled with higher interest rates.
• On a sequential basis, earnings of the company continued its upward momentum increasing by 3.8% QoQ on the back of improved cement retention prices (+4% QoQ) along with higher other income (+50% QoQ). However, gross margin declined by 1% QoQ owing to increase in cost of production courtesy higher coal prices.
• We have a ‘BUY’ recommendation on KOHC with our Dec-22 price target (PT) of PKR 270/share, providing an upside of 65%.

• PSO’s board meeting is scheduled on April 28, 2022 to consider 3QFY22 financial results. We expect the company to report an EPS of PKR 27.6, up 49% YoY, driven by higher product prices, increase in volumetric sales and inventory gains during the quarter. This will take 9MFY22 earnings to PKR 96.2/share, up 1.5x YoY. PSO is expected to skip interim dividend given the expected liquidity crunch amid increasing receivables from government.
• The company’s net sales are likely to grow by 1.1x YoY to PKR 609bn primarily due to 44% YoY increase in HSD sales and 15% YoY increase in MS sales. Similarly, higher POL product prices on YoY basis will also support the topline growth.
• Operating expenses are likely to go up by 56% YoY at PKR 6.4bn due to increase in topline, whereas the finance cost is expected to go up by 2.7x YoY to PKR 3.9bn due to higher interest rates and increased short term borrowings.
• On the contrary, 4.6x YoY higher other income at PKR 4.1bn is likely to support earnings growth.
• On a sequential basis, PSO earnings are expected to decline by 36% QoQ mainly on account of lower other income and higher finance cost. Furthermore, PSO’s HSD and MS volumetric sales also declined 4% and 1% QoQ, respectively further deteriorating the bottomline.
• We have a ‘BUY’ stance on the script with our revised Dec-22 PT of PKR 275/share. Our price target indicates an upside of 64% along with a dividend yield of 9%.

• FCCL announced its 3QFY22 results today wherein the company’s profitability grew by 22.16% YoY to 1.23bn (EPS PKR 0.89). This takes 9MFY22 earnings to PKR 2.94/share compared to PKR 1.89/share in 9MFY21.
• Topline of the company grew by 30% YoY to PKR 7.6bn in 3QFY22 compared to PKR 5.9bn in 3QFY21. This growth is primarily on the back of 31% YoY improved cement retention price to PKR 481/bag, despite the fact that company’s dispatches went down by 1% YoY.
• FCCL’s gross margin settled at 25.4% in 3QFY22, down 4ppts compared to 3QFY21 mainly due to escalating coal price.
• Selling & admin expense surged 19% YoY to PKR 197mn in 3QFY22 from 166mn in the SPLY.
• FCCL finance income grew to 163mn in 3QFY22 compared to PKR 15mn in 3QFY21, while its financial cost declined by 32% YoY, supporting the bottom line.
• On a sequential basis, the company reported a decline in earnings by 16.1%, primarily due to lower gross margin by 3% QoQ. This can be attributable to abrupt rise in coal prices. On the other hand, cement dispatches of the company declined by 10% QoQ, further restricting the bottomline growth.
• We have a ‘BUY’ recommendation on FCCL with our Dec-22 price target (PT) of PKR 28/share, providing an upside of 63% from current levels.

• PSMC’s announced its 1QCY22 result today, where the company posted a LPS of PKR 59 as compared to an EPS of PKR 9.45 in 1QCY21. The result was lower than our expectation. Main deviation came from lower than estimated gross profit margin, higher than expected finance cost and admin expenses.
• Topline during 1QCY22 clocks in at PKR 47.7bn up 32% YoY, on the back of higher volumetric sales and multiple price revisions.
• Gross margin during the period fell to 2.8%, as compared to 6.1% in 1QCY21 due to a sharp increase in cost of production led by PKR depreciation and higher steel prices.
• Distribution expenses increased 3% YoY to PKR 919mn during 1QCY21, while administrative expense increased by 11% YoY to PKR 740mn.
• Finance cost went up 3.12x to PKR 1.0bn in 1QCY22, this could be due to high exchange losses and high markup on late delivery.
• We have a “BUY” recommendation on PSMC. Our Dec-22 PT of PKR 259/share provides a upside of 27%, along with a dividend yield of 3.7%.

• Valuation & Recommendation
  • We initiate soft coverage on Hum Network Ltd (HUMNL) with price target of PKR 14.5/share, which offers an upside of 71% from its last closing of PKR 8.5/share. The stock trades at FY22E PER of 5.3x (FY14-21 avg: 14.7x) and FY22E PBV of 1.68x (FY14-21 avg: 4.3x). The company also offers a dividend yield of 9.4%. Helped by shrinking losses in the news segment and rising Youtube revenues, we expect HUMNL’s FY22 EPS to rise 53% YoY to PKR 1.6.

• Steep growth in “Hum News” ad revenue; shrinking losses
  • While 1HFY22 News segment revenues grew 130% YoY, news segment cost remained flat during the period. Breakeven is expected in 2HFY22 led by contained cost while upward adjustment in advertisement rate by 40% will further augment news channel revenue.

• Youtube subscription revenue are on a strong uptrend
  • Rising Youtube subscriptions have opened up a new avenue for monetization of HUMNL’s large cache of quality content. This is a huge upside considering that the production costs are largely expensed out.

• Stable entertainment segment
  • HUMNL’s entertainment segment’s ad revenue is a well-established revenue engine. With the continued recovery in corporate profits, growth in ad spend will likely continue going forward.

• Weak governance is a key risk
  • Sponsors have a very generous fixed and variable compensation structure. Sponsors’ remuneration has ranged between 17% to 26% of pretax earnings (before sponsors remuneration) during FY14-FY21.
  • HUMNL procures a significant share of its content from its related party. However, primary margins have been higher in the years in which share of related party content procurement rose.
  • The management took active steps to thwart a group of activist shareholders seeking board representation in CY20.

• As per the data released by NFDC, Urea offtake increased by 48% YoY to 509k tons, while DAP offtake fell to 80k tons vs 144k tons in the SPLY. For 1QCY22, Urea offtake exhibit an increase of 17% YoY to 1.6mn tons, while DAP offtake plunged to 247k tons, witnessing a decline of 21% YoY.
• Within urea segment, FFC sold 194k tons in March-22 followed by EFERT with 171k tons. FFBL and Fatima offtake clocked in at 44k tons and 74k tons, while AGL urea sales number stood at 27k tons in March-22.
• On the other hand, FFBL DAP offtake stood at 38k tons, while FFC and EFERT offtake clocked in at 6k tons and 21k tons.
• Overall industry’s CAN offtake increased by 24% YoY to 69k tons.
• During March-22, domestic urea prices averaged at PKR 1,855/bag, up by ~8% YoY. Similarly, DAP prices also continued their upward trend and increased to PKR 9,304/bag, up ~96% YoY.
• We expect urea offtake to remain elevated at ~6.3mn tons during CY22 due to improving agroeconomics and probable cross-border movement in wake of higher delta between international and domestic prices. DAP offtake is expected to remain dull in CY22 for being costlier.

• INDU announced its 3QFY22 financial result today, wherein the company posted an EPS of PKR 65.11, up 40% YoY. The result is slightly higher than our expectation primarily due to lower-than-expected gross margins and higher other income. Cumulative EPS for 9MFY22 settled at PKR 194.56/share, up 82% YoY. Along with the result, the company announced lower than expected interim cash dividend of PKR 26/share (payout 40%) taking cumulative dividend to PKR 64.5/share in 9MFY22.
• The company's topline increased 32% YoY to PKR 68.2bn during 3QFY22, owing to 12% YoY increase in volumetric sales and multiple price increases during the quarter.
• Gross margin during the quarter declined to 7.7% vs 9.2% in SPLY, mainly due to rise in raw material costs as a result of recent PKR devaluation along with increase in commodity prices.
• Distribution expense contracted 6% YoY to PKR 372mn, while administrative expenses increased by 41% YoY to PKR 590mn.
• Other income during the quarter increased 122% YoY to PKR 3.2bn on the back of higher return on the cash available with the company.
• On a Quarterly basis, EPS increased by 8% during 3QFY22. This can be attributable to 27% QoQ increase in other income and 11% QoQ decrease in distribution costs.
• We have a “BUY” recommendation on INDU. Our Dec-22 PT of PKR 1,879/share provides an upside of 39% along with a dividend yield of 9.6%.

• CHCC announced its 3QFY22 results today wherein the company reported net earnings of PKR 1.06bn (EPS PKR 5.48) down 3% YoY, compared to net earnings of PKR 1.09bn (EPS 5.63) in 3QFY21. This accumulates 9MFY22 earnings to PKR 17.68/share compared to PKR 11.44 in 9MFY21, up 54.6% YoY.
• Net revenue of the company stood at PKR 7.8bn in 3Q, up 14% YoY mainly supported by higher cement retention price of PKR 430/bag, up 27% YoY. This is despite decline in cement volumes by 10% YoY.
• CHCC’s gross margin declined to 27% in 3QFY22, down 3ppts YoY compared to 3QFY21. The company registered a lower gross margin on the back of escalating coal prices.
• Finance cost of the company declined by 5% YoY to PKR 305mn during 3Q due to decline in long term financing by 23%.
• On a sequential basis, earnings of the company remained lower by 9.5% QoQ due to decline in local cement dispatches by 2% QoQ. Along with this, company’s other income also declined 9% QoQ as company reported exchange gain in previous quarter.
• We have a ‘BUY’ recommendation on CHCC with our Dec-22 price target (PT) of PKR 220/share, providing an upside of 54% along with a dividend yield of 3%.

• DGKC reported its 3QFY22 results today wherein the company’s profitability declined by 29.56% YoY to PKR 3.29/share. This takes 9MFY22 earnings to PKR 8.26/share compared to PKR 6.50 in 9MFY21. The profitability reported by the company is higher than our expectation primarily due to lower cost of goods sold.
• Topline of the company grew by 46% YoY to PKR 15.86bn during 3QFY22 compared to PKR 10.89bn in 3QFY21 primarily on the back of increased cement MRP as North region witnessed an increase of 28% YoY to PKR 787/bag during 3QFY22 while prices in south increased by 29% YoY to PKR 766/bag.
• DGKC’s gross margin settled at 18.6% in 3QFY22, up 4.2ppts compared to 3QFY21. Decline in margins can be attributed to higher cost of goods sold due to abrupt rise in coal prices.
• Selling & admin expense witnessed an increase of 22% YoY to PKR 691mn in 3Q owing to higher cement and clinker exports of 27% YoY to 0.39mn tons.
• Other income decreased significantly by 60% YoY to PKR 667mn in 3Q due to high base effect as MCB declared higher dividend last year.
• Financial cost increased by 32% YoY to 916mn, primarily due to monetary tightening policy.
• On a sequential basis, earnings remained on a rising trend as company witnessed increase in sequential profits by 13.6%, primarily due to improved retention prices of cement bag by 17% QoQ coupled with likely optimal utilization of coal inventory.
• We have a ‘BUY’ recommendation on DGKC with our Dec-22 price target (PT) of PKR 135/share, providing an upside of 95% from current levels.

• OGDC’s board meeting is scheduled on April 28, 2022 to consider 3QFY22 financial results where we expect the company to post EPS of PKR 10.3, up 84% YoY. This impressive growth in earnings is mainly due to 1) higher crude oil price (+66% YoY, averaging at USD 100/bbl), 2) PKR devaluation (-11%, averaging at PKR 177.4/USD) and, 3) 4.0x YoY increase in other income. This will take 9MFY22 earnings to PKR 26.35/share, up 71% YoY. Along with the result, we expect OGDC to announce an interim cash dividend of PKR 2.75/share.
• Net sales are likely to grow by 42% YoY to PKR 93bn during 3Q. Despite significant increase in oil price and PKR devaluation, revenue growth will remain restricted owing to decline in oil and gas production.
• Exploration expenditure is expected to go down by 12% YoY to PKR 4.9bn, as against PKR 5.6bn in SPLY. OGDC encountered a dry well in Lakhi Rud block during 3Q.
• Other income is likely to see an increase of 4.1x YoY to PKR 8.2bn owing to exchange gains booked during the quarter.
• On a sequential basis, OGDC is likely to post earnings growth of 26% QoQ owing to higher international crude oil prices and PKR devaluation.
• We have a ‘BUY’ stance on OGDC. Our Dec-22 price target (PT) of PKR 204/share provides an upside of 138% along with a dividend yield of 11%.

• PPL’s board meeting is scheduled on April 27, 2022 to consider 3QFY22 financial results where we expect the company to post an EPS of PKR 7.3, up 66% YoY. The increase in earnings can mainly be attributed to 66% YoY higher international crude oil prices (averaging at USD 100/bbl) and 11% YoY PKR devaluation (averaging at PKR 177/USD). This will take 9MFY22 earnings to PKR 18.7/share, up 34% YoY.
• Net sales are likely to clock in at PKR 49.3bn, up 34% YoY. Despite significant increase in oil price and PKR devaluation, revenue growth will remain restricted owing to 9% and 8% YoY decline in PPL’s oil and gas production, respectively. Oil production decline came from TAL block (-11% YoY), Adhi field (-23% YoY) and Nashpa field (-19% YoY). Similarly, lower gas production was due to Sui field (-6% YoY), TAL block (-10% YoY), Qadirpur field (-14% YoY) and Kandhkot field (-25% YoY).
• Exploration expenditure is expected to go up by 2.4x YoY to PKR 2.1bn, as against PKR 602mn in SPLY mainly due to low base effect.
• Other income is likely to see an increase of 57% YoY to PKR 1.7bn owing to exchange gains on foreign currency booked during the quarter.
• Effective tax rate is expected at 29% during 3Q as against 28% in SPLY, which will contain the bottomline growth.
• On a sequential basis, PPL’s earnings are expected to grow by 39% QoQ. Higher oil price (+25% QoQ) and currency devaluation (-2% QoQ) during 3Q will more than compensate for 5% and 4% QoQ decline in oil and gas production, respectively.
• We have a ‘BUY’ stance on PPL. Our Dec-22 price target (PT) of PKR 169/share provides an upside of 122% along with a dividend yield of 7.2%.

• PSMC’s board meeting is scheduled on 26^th April 2022, to consider its financial results for 1QCY22, where we expect the company to post an EPS of PKR 97 as compared to PKR 9.45 in 1QCY21.
• Top line during 1QCY22 is expected to clock in PKR 51bn up 41% YoY, on the back of higher volumetric sales and 8% increase in price.
• PSMC's volumetric sales increased by 33% to 46k units in 1QCY22, led by the 'Alto' and 'Wagon R', which increased by 63% and 56%, respectively.
• Gross margin during the period is estimated to clock in at 5.9%, down from 6.1% in 1QCY21 due to the increase in cost originating from PKR depreciation and rising steel prices.
• Distribution expenses during 1QCY21 are likely to increase 29% YoY to PKR 919mn, mainly resulting from higher sales volume
• Finance cost during 1QCY22 is expected to decrease by 74% due to reduction in borrowing.
• We have a “BUY” recommendation on PSMC. Our Dec-22 PT of PKR 261/share provides an upside of 28% along with a dividend yield of 5.9%.

• INDU’s board meeting is scheduled 25^th April 2022, to consider 3QFY22 financial result, where we expect the company to announce an EPS of PKR 64.5, up 40% YoY. This will take 9MFY22 cumulative earnings to PKR 193.9/share, up 81% YoY. Along with the result, company is also expected to announce and interim cash dividend of PKR 32/share in addition to PKR 64.5/share already announced.
• The company's topline is expected to increase by 37% YoY during the quarter, owing to a 22% YoY increase in prices coupled with a 12% YoY increase in volumetric sales. Fortuner and Hilux sales increased by 39% YoY, while Corolla and Yaris volume witnessed an increase of 6% YoY.
• Gross margins for the quarter are estimated to contract by 70bps to 8.5%, mainly due to rise in raw material costs as a result of recent PKR devaluation along with increase in commodity prices.
• Distribution expense is expected to increase by 8% YoY to PKR 424mn on the back of higher volumes, while administrative expenses are expected to increase 12% YoY to PKR 470mn.
• Other income is likely to increase by 72% YoY to PKR 2.46bn on the back of higher cash base on account of a strong order book and higher interest rate.
• We have a “BUY” recommendation on INDU. Our Dec-22 PT of PKR 1,879/share provides an upside of 39% along with a dividend yield of 9.6%.

• HTL announced its 3QFY22 financial results today where the company reported consolidated net earnings of PKR 1.5/share, up 3% YoY as compared to PKR 1.46/share in same period last year. The result is in line with our estimates. This takes 9MFY22 net earnings to PKR 4.35/share, up 19% YoY.
• HTL’s 3Q topline settled PKR 3.8bn, up 45% YoY, primarily driven by higher volumetric sales and improved product prices. Gross margins, however, contracted during 3QF22 clocking in at 19.2% as against 23.8% in same period last year.
• Operating expenses increased by 12% YoY to PKR 420mn, mainly due to inflationary pressures.
• Other income clocked in at PKR 19mn, down 34% YoY while finance cost went up by 1.8x YoY to PKR 71mn, mainly on account of higher interest rates and increased short-term borrowings.
• Effective tax rate during 3Q clocked in at 20.3% as against 21.3% in same period last year which supported the net profitability.
• On sequential basis, HTL recorded decline of 28% QoQ in earnings primarily due to lower volumetric sales.
• We have a ‘BUY’ stance on the script with the Dec-22 PT of PKR 62/share. Our price target indicates an upside of 39% along with a dividend yield of 7%.

• ACPL announced its financial result today, wherein the company posted unconsolidated EPS of PKR 2.39 during 3QFY22, down 21% YoY. This takes 9MFY22 EPS to PKR 8.59 compared to 6.98 in 9MFY21, up 23% YoY.

• Company’s topline depicted a growth of 15% YoY to PKR 6.1bn in 3Q mainly due to increase in domestic cement retention prices. ACPL’s local dispatches grew by 9% while exports declined by 49% YoY.

• The gross margins declined to 19% in 3QFY22 vs 23% in 3QFY21 mainly due to higher fuel cost as coal prices surged by 30% in 3QFY22 compared to last year.

• The selling expense declined by 9% YoY in 3QFY22 due to lower exports during the quarter.

• Company recorded higher effective tax rate of 43.5% in 3QFY22 as compared to 24.6% during 3QFY21. We believe higher taxation could be due to deferred tax adjustment.

• On a sequential basis, earnings of the company declined by 43% QoQ, largely due to decline in gross margins coupled with lower other income as company recorded dividend from its associates and exchange gains in last quarter.

We have a ‘BUY’ recommendation on ACPL with a Dec-22 price target (PT) of PKR 175/share, providing an upside of 52.4% along with a dividend yield of 4.6%.

• FFBL announced its 1QCY22 results wherein the company posted an EPS of PKR 1.26, up 28% YoY as against an EPS of PKR 0.98 in 1QCY21. The result was below than our expectations mainly due to exorbitant increase in other expenses and higher tax charge.

• Net sales increased 91% YoY to PKR 24.8bn during 1Q, mainly driven by ~96% YoY increase in the DAP prices avg. to PKR 9,304/bag despite witnessing decline in offtake by 2% YoY to 114.6k tons.

• Gross margins improved to 21.7% YoY in 1Q, compared to 19.0% in SPLY, in line with the improvement in international DAP margins from USD 177/ton in 1QCY21 to USD 267/ton in 1QCY22.

• Other charges clocked in at PKR 949mn up 5.8x YoY, while the company recorded higher than expected effective tax rate of 36% in 1Q compared to 26% in SPLY. We await clarity in this regard.

• We recommend ‘BUY’ on FFBL with Dec-22 price target (PT) of PKR 34/share, offering an upside of 35.6% along with a dividend yield of 8.0%.

• POL announced its 3QFY22 financial result today, wherein the company reported an EPS of PKR 23.2, up 1.25x YoY. Higher international oil price and PKR devaluation during the quarter led to this massive surge in earnings. This takes 9MFY22 earnings to PKR 61.6, up 83% YoY.

• Company’s net sales grew by 41% YoY and settled at PKR 13.3bn during the quarter primarily due to 66% YoY increase in oil price and 11% YoY PKR devaluation. It is pertinent to note here that the revenue growth remained restricted owing to 13% and 10% YoY decline in POL’s oil and gas production, respectively.

• Other income clocked in at PKR 2.1bn vs loss in SPLY mainly due to exchange gains booked during the period.

• Effective tax rate during the quarter clocked in at 30.3% as opposed to 39.9% in SPLY which further supported the bottomline growth.

• On sequential basis, POL’s earnings grew by 16% QoQ mainly due to higher crude oil prices and PKR devaluation; however, lower oil and gas production restricted the earnings growth.

• We have a “BUY” stance on the stock with our Dec-22 price target (PT) of PKR 530/share, which provides an upside of 39% along with a dividend yield of 16%.

• ISL announced its 3QFY22 financial results today, where the company posted an EPS of PKR 2.60, down 52% YoY. The result was above our estimates mainly due to lower than estimated financial charges, other charges and effective tax rate. This takes ISL’s 9MFY22 earnings to PKR 12.31/share, up 4% YoY.
• The company’s net sales stood at PKR 27.3bn, up 57% YoY on the back of higher product prices. Gross margins clocked in at 8.4% as compared to 23.5% in SPLY mainly due to absence of inventory gains.
• Distribution expense increased by 35% to PKR 346mn, whereas finance cost went up by 129% YoY to PKR 361mn mainly due to increased borrowing coupled with high interest rates.
• Effective tax rate stood at 18.0% in 3QFY22 against 29.0% in same period last year, augmenting the earnings growth.
• On sequential basis, ISL posted earnings decline of 27% QoQ owing to lower volumetric sales and gross margin contraction by 6.8%.
• We have a ‘Buy’ stance on ISL. Our Dec-22 price target (PT) of PKR 114/share provides an upside of 77% along with a dividend yield of 9%.

• APL announced its 3QFY22 financial result today, where the company reported an EPS of PKR 46.6, up 2.1x YoY. This growth in earning is mainly attributable to higher volumetric sales and hefty inventory gains. This takes 9MFY22 earnings to PKR 113/share, up 2.1x YoY.
• APL’s net sales increased by 90% YoY to PKR 86.8bn owing to 42% and 16% YoY growth in HSD and MS volumetric sales.
• The gross margin for 3QFY22 clocks in at 9.8%, compared to 6.4% in SPLY owing to inventory gains amid higher oil prices during the quarter.
• Operating expenses went up by 1.2x YoY to PKR 2.0bn in line with increase in topline. On the contrary, net finance income increased to PKR 135.3mn vs net finance cost of PKR 25.4mn in SPLY primarily due to high interest rates during the quarter.
• Moreover, effective tax rate came in at 29% during 3Q vs 29.6% in SPLY, further supporting the bottom-line.
• On sequential basis, APL’s earnings grew by 10% QoQ mainly on account of higher product prices, slightly improved gross margins and lower effective tax rate during 3Q.
• We have a ‘BUY, stance on APL. Our Dec-22 PT of PKR 415/share provides an upside of 25% along with a dividend yield of 17%.

• United Bank Limited (UBL) announced its 1QCY22 financial results today, wherein the bank posted upbeat earnings growth of 29% YoY to PKR 7.78/share. The result is also accompanied with interim dividend of PKR 5.0/share.
• During the quarter, NII grew 27% YoY to PKR 21.5bn wherein interest expense surged at a higher pace of 77% YoY versus 51% YoY increase in the interest income due to abrupt rise in interest rates.
• Non-interest income also drove the solid profitability as it surged 17% YoY to PKR 6.7bn in 1QCY22. Fee & commission income grew 29% YoY to PKR 3.9bn and forex income increased 165% YoY to PKR 1.3bn while dividend income also supported the non-interest income growth.
• Operating expenses remained higher by 19% YoY to PKR 12.1bn in 1QCY21. Cost to income ratio settled at 43% in 1QCY22 vs 45% in 1QCY21.
• Effective tax rate of the bank came in at 40% in 4QCY22 (1QCY21:39%). Higher effective tax can be due to lower ADR related to additional tax imposed on the banks.
• On a sequential basis, earnings of the bank grew by 17% QoQ led by 19% growth in NII. While fee and commission income rose by 17% QoQ which also supported the bottomline growth.
• We have a ‘BUY’ stance on the stock with Dec-22 PT of PKR 190/share, providing a capital upside of 33.5% whereas dividend yield stands at 15.5%.

• HBL posted consolidated net earnings of PKR 5.78/share, up 2% YoY during 1QCY22. Along with the result, the bank also announced interim cash dividend of PKR 2.25/share.
• Net interest income (NII) for 1QCY22 increased by 12% YoY to PKR 36.3bn. Interest income increased by 36% YoY while interest expense increased by 62% YoY due to the upward adjustment of interest rate hike.
• Non-interest income grew 12% YoY to PKR 10.3bn in 1QCY22 on the back of higher fee & commission income (up 24% YoY to PKR 7.3bn) while forex income recorded at PKR 2.5bn vs 896mn in SPLY, supporting the non-interest income growth.
• The bank’s provisioning expense declined by 35% YoY to PKR 1.2bn during 1QCY22, supporting the bottomline growth.
• Admin expenses of the bank increased by 27% YoY to PKR 30.8bn which could be due to continuous spending towards information technology and digitalization and inflationary pressures. Consequently, cost to income ratio increased to 66% in 1QCY22 compared to 60% in 1QCY21.
• The effective tax rate of the bank stood at 41% in 1QCY22 which can be attributed to lower ADR.
• On a sequential basis, consolidated earnings of the bank grew 2% QoQ mainly due to lower provision (-52%), tax (-16%) along with increase in NII by 6% QoQ.
• We have a ‘BUY’ rating on the scrip with Dec-22 price target of PKR 155/ share, implying an upside of 39.6% along with a dividend yield of 9.9%.

• MCLF reported its 3QFY22 results today wherein the company posted a consolidated profit after tax of PKR 1.56bn (EPS PKR 1.42/share), up 30% YoY and 52% YoY for 9MFY22. The 9MFY22, earnings of the company clocked in at PKR 4.32bn (EPS PKR 3.93/share), up 52% YoY. The result is also accompanied with an announcement to Buy-back 25mn share and cancels the same to reduce share capital of the company.
• Topline of the company grew by 27% YoY to settle at PKR 11.99bn during 3QFY22 compared to PKR 9.46bn in 3QFY21. This growth is primarily on the back of 42% YoY improved cement retention price of PKR 526/bag, despite the fact that company’s dispatches went down by 11% YoY.
• MLCF’s gross margin settled at 27.4% in 3QFY22, up 1ppts YoY compared to 3QFY21. We believe that higher cement retention prices, use of cheaper Afghan coal and pet coke resulted in higher gross margins.
• The company reported finance expense of PKR 474mn, up 56% YoY in 3Q due to higher short-term borrowings coupled with higher interest rates.
• On a sequential basis, earnings of the company declined by 18% QoQ, largely due to the rising cost of goods sold coupled with lower cement dispatches. Resultantly, gross margin of the company plunged 4% QoQ.
• We have a ‘BUY’ recommendation on MLCF with our April-22 price target (PT) of PKR 55/share, providing an upside of 45% from current levels.

• HTL’s board meeting is scheduled on April 22, 2022 to consider 3QFY22 financial results, where we expect the company to post an EPS of PKR 1.5, up 18% YoY as compared to EPS of PKR 1.46 in corresponding period last year. This will take 9MFY22 earnings to PKR 4.4/share, up 20% YoY.
• During the quarter, company’s top-line is likely to settle at PKR 3.2bn, up 22% YoY, primarily driven by higher product prices and increased volumetric sales.
• Operating expenses are likely to increase by 8% YoY to PKR 404mn, mainly due to inflationary pressures.
• Other income will increase by 18% to PKR 34mn, whereas finance cost is expected to increase to PKR 92mn, up 2.6x YoY mainly on account of higher interest rates and increased short-term borrowings.
• On a sequential basis, HTL is expected to post EPS decline of 28% QoQ, primarily due to lower volumetric sales. Just to recall, 2Q is seasonally strong quarter for the company.
• We have a ‘BUY’ stance on the script with our Dec-22 PT of PKR 62/share. Our price target indicates an upside of 36% along with a dividend yield of 7%.

• EFERT announced its 1QCY22 financial results on April 19^th, wherein the company reported consolidated net earnings of PKR 4.13/share, down 4.0% YoY. The result was slightly higher than our expectation due to better than expected margins on trading portfolio (DAP business). Along with the result, the company also announced dividend of PKR 5.5/share. The dividend was also higher than our expectation and market consensus.
• Topline of the company increased 25% YoY to PKR 36.8bn despite the fact that Urea and DAP offtake declined 9% YoY and 2% YoY during 1QCY22. This is due to significant rise in DAP prices by 96% YoY.
• Company’s gross margins declined significantly to 29.5%, down 10ppts YoY during 1QCY22 due to suspension of concessionary gas to the new plant and costlier gas on PP12.
• Industry Urea offtake witnessed an uptick of 17% YoY to 1.6mn tons during 1QCY22. The company highlighted that as per the agronomics, local urea demand has only increased by 2% YoY, however, the management was of the view that there is a strong probability of cross border movement of urea due to high delta between international and local prices (i.e., 9,823/bag). Moreover, farmers are consuming more urea as substitute of DAP due to price disparity.
• Currently, both Urea plants are operating at maximum capacity and company has plan to perform BMR activities on old plant in 2HCY22 for 50-60 days.
• We have ‘HOLD’ recommendation on EFERT. Our Dec-22 PT of PKR 85/share provides a downside of 11.5% while the stock is offering dividend yield of 14.0%.

• APL’s board meeting is scheduled on April 21, 2022 to consider 3QFY22 financial results. We expect the company to post an EPS of PKR 38.4, up 1.5x YoY primarily driven by higher volumetric sales and hefty inventory gains. This will take 9MFY22 earnings to PKR 104.8/share, up 1.85x YoY.
• APL is expected to book 97% YoY growth in net sales to PKR 89.9bn owing to 42% YoY growth in HSD and 16% YoY growth in MS volumetric sales during 3Q. The company also managed to regain its market share in HSD, which stood at 8.8% in 3QFY22 compared to 7.7% in SPLY. Similarly, MS market share also increased to 8.2% from 7.9% in SPLY.
• We expect gross margin to clock in at 7.4%, compared to 6.4% in SPLY owing to inventory gains during the quarter.
• On sequential basis, earnings are expected to decline by 9.5% QoQ owing to decline in volumetric sales. HSD volumes declined by 11% QoQ whereas MS volumes remained flat during the period.
• We have a ‘BUY, stance on APL. Our Dec-22 PT of PKR 415/share provides an upside of 17% along with a dividend yield of 25%.

• POL’s board meeting is scheduled on April 21, 2022, to consider 3QFY22 financial results, where we expect the company to post an EPS of PKR 20.9, up 103% YoY. The increase in earnings can mainly be attributed to 66% YoY higher international crude oil prices (averaging at USD 100/bbl) and 11% YoY PKR devaluation (averaging at PKR 177/USD). This will take 9MFY22 earnings to PKR 59.4/share, up 76% YoY.
• Net sales are likely to clock in at PKR 13.5bn, up 42% YoY. Despite significant increase in oil price and PKR devaluation, revenue growth remained restricted owing to 13% and 10% YoY decline in POL’s oil and gas production, respectively. Major decline is expected from TAL block and Adhi field.
• Other income is likely to clock in at PKR 2.1bn Vs loss in SPLY owing to exchange gains on financial assets booked during the quarter.
• On a sequential basis, POL is expected to post earnings growth of 5% QoQ. Despite higher crude oil prices and PKR devaluation, earnings growth is likely to remain subdued due to decline in oil & gas production by 5% QoQ each.
• We have a ‘BUY’ stance on POL. Our Dec-22 price target (PT) of PKR 530/share provides an upside of 37% along with a dividend yield of 16%.

• We present result previews of Akseer’s Cement universe for 3QFY22, wherein earnings of our universe to decline by 7% QoQ to PKR 10.4bn. Decline in earnings can be attributable to lower cement dispatches along with commodity supercycle caused by various international factors.
• Total Cement dispatches remained dull during the current quarter clocking in at 13.36mn, down 9% QoQ. Local dispatches in the northern region declined by 8% QoQ while South region posted an uptick of 11% QoQ. On the other hand, exports observed a significant decline of 32% QoQ to 1.25mn.
• On the pricing front, average domestic cement prices observed an uptick by 6% QoQ to PKR 772/bag. The north and south region observed similar levels of price increase of 6% QoQ to PKR 766 and PKR 787 per bag, respectively. The price increase is largely to pass on the rising coal cost.
• Despite slowdown in cement dispatches, topline of our universe is expected to grow by 1% QoQ to PKR 87.9bn during 3QFY22.

• Bank AL Habib announced its 1QCY22 financial results today and reported unconsolidated net earnings of PKR 4.47/share, up 8% YoY. Higher profitability is due to rise in net interest income on the back of strong balance sheet growth and higher non-interest income.

• The bank posted 22% YoY increase in net interest income (NII) to PKR 16.0bn during 1QCY22. Interest income increased by 32% YoY to PKR 34.2bn while interest expense increased by 42% YoY to PKR 18.2bn due to the upward adjustment of interest rate hike.

• Non-interest income increased by 31% YoY to PKR 4.2bn mainly due to significant rise in fee and commission income by 43% YoY to PKR 2.8bn. However, non-interest income remained lower by 5% QoQ due to decline in forex income by 45% QoQ.

• The bank charged provisioning expense of PKR 154mn in 1QCY22 compared to provisioning reversal of PKR 245mn in 1QCY21.

• Admin expenses during the quarter increased by 25% YoY to PKR 11.8bn. Aggressive branch network expansion led to double digit hike in the cost. Resultantly, cost to income (C/I) ratio of the bank remained elevated at 59% during the 1Q.

We maintain our ‘BUY’ recommendation on BAHL. Our Dec-22 price target (PT) of PKR 100/share provides an upside of 41% along with a dividend yield of 13%.

• ISL’s board meeting is scheduled on April 21, 2022 to consider 3QFY22 financial results. We expect the company to post earnings decline of 67% YoY to PKR 1.8/share as against PKR 5.47/share in SPLY. This decline in earnings mainly emanate from lack of inventory gains booked in corresponding period last year. This takes ISL’s 9MFY22 earnings to PKR 11.5/share, down 3% YoY.
• Net sales are likely to grow by 36% YoY to PKR 23.7bn on account of higher product prices and increased volumetric sales. On the contrary, we expect gross margin to clock in at 9% as against 24% in SPLY owing to absence of inventory gains.
• Selling and Admin expenses are expected to decline by 16% and 39% YoY, respectively, whereas we expect finance cost to increase by 2.5x YoY to PKR 553mn, on the back of increased borrowings and higher interest rates.
• Furthermore, we expect effective tax rate to remain 29% during 3QFY22.
• We have a “BUY” stance on ISL. Our Dec-22 PT of PKR 114/share indicates an upside of 71% along with a dividend yield of 9.0%.

• We present 1QCY22 result previews of Akseer’s banking universe. We expect profitability of the sector to decline 8% QoQ to PKR 38.7bn in 1QCY22 as NIMs are expected to bear the brunt of abrupt rise in interest rates. However, 1Q earnings will likely be up 5% on YoY basis.
• We expect Net Interest Income (NII) of our banking universe to remain flat at PKR 116.6bn on QoQ basis despite significant jump in deposit cost on the back of sharp increase in policy rates in late Nov/Dec-21. However, NIMs are likely to grow by 13% YoY on the back of strong balance sheet growth.
• Non-interest income will likely to decline by 14% QoQ to PKR 31.3bn due to absence of higher forex income during 1QCY22. While, non-interest income to grow by 7% YoY 1Q on the back of higher fee & commission income.
• For 1QY22, we have built provisioning expense at PKR 6.5bn compared to PKR 2.2bn in the preceding quarter, as most of the banks booked hefty provision reversals, last year.
• With the ongoing network expansion by some of the banks coupled with increasing digitalization activities, the operating expenses are likely to remain on the higher side during 1Q, and rise 11% YoY to PKR 76.9bn.
• Effective tax rate is expected to clock in at 40% in 1QCY22 versus 39%, last year due to lower ADR for some of the banks.

• Urea price hikes to support revenue growth

• Fauji Fertilizer Company Limited (FFC)

• Fauji Fertilizer Bin Qasim Limited (FFBL)

• As per the data released by PAMA, auto industry volumes witnessed increase of 12% MoM during March 2022. except Trucks and Buses, all segment recorded growth.
• Passenger car sales climbed by 26% MoM, led by INDU, up 53% MoM (-1% YoY) in Mar-22. This increase is primarily due to the low base effect as in February company’s plant remained closed for one week owing to maintenance.
• PSMC sales increased 18% MoM (+48% YoY), led by 'Alto,' which grew 37% MoM (+107% YoY). Cultus sales decreased by 81% MoM as the company supplied just 806 units in Mar-22 due to supply chain concerns. HCAR sales increased by 33% MoM (+16% YoY), due to higher demand for newer generation City and Civic Variants.
• Jeep and Pickup segment volumes have increased by 16% MoM and 27% MoM, respectively in Mar-22 led by ‘Fortuner and Hilux’ sales which depicted a growth of 70% MoM to 1,673 units.
• Tractor volumes grew 25% MoM (+2%). The increase could be attributed to pre-purchases of Tractors for the kharif agricultural sowing season, which begins in May and June

• As per the latest numbers released by the NFDC, industry Urea offtake registered an uptick of 30% YoY to 527k tons in Feb-22. Production on the other hand, increased 19% YoY to ~520k tons. Urea inventory levels increased to 69k in Feb-22 compared to 27k tons in Jan-22, thanks to the arrival of imported urea in the country.
• Within the urea segment, FFC sold 212k tons in feb-22 followed by EFERT with 170k tons. FFBL and Fatima group offtake clocked in at 39k tons and 75k tons, respectively.
• Industry DAP offtake declined to 55k tons during Feb-22 compared to 88k tons in the same period last year. Company wise data shows that FFBL sold 15k tons, while FFC and EFERT sold 13k tons each, respectively.
• Overall industry’s CAN offtake declined by 15% YoY to 70k tons.
• During Feb-22, domestic urea prices averaged at PKR 1,827/bag, up by ~6% YoY. Similarly, DAP prices also continued upward trajectory and increased to PKR 9,347/bag, up ~100% YoY.
• We expect urea offtake to remain elevated at 6.3mn tons during CY22 due to increase in crop supporting prices ahead of the election year. DAP offtake is expected to remain subdued in CY22 due to higher international DAP prices.

• PSMC announced its CY21 financial results today, where the company posted an EPS of PKR 32.56. The result was below our expectation primarily due to lower-than-expected gross margins. Furthermore, higher than expected distribution and finance cost also dented the bottom-line. Along with the result, the company announced a final cash dividend of PKR 6.50/share.
• Net sales increased by 109% YoY to PKR 160bn during CY21. This growth is mainly attributable to recovery in volumetric sales to 155,106 units, up 104% YoY.
• Gross margin during the year expands to 5.1% as compared to 4.7% in SPLY, mainly on account of multiple price increases during the period.
• Distribution expenses increased by 79% YoY to PKR 2.943bn, mainly due to increase in topline. Similarly, admin expenses increase by 39% to 2.481bn.
• Finance cost went down by 72% YoY to PKR 737mn during CY21 as a result of a reduction in company’s overall borrowings.
• On quarterly basis, EPS declined by 52% to PKR 5.94 during 4Q. This is primarily due to lower gross profit margin, which contracts to 3.6% vs 8.2% in SPLY on the back of 8% YoY currency devaluation and higher steel prices. Moreover, higher admin expense (+102% YoY) and higher effective tax rate of 31% vs 28% in SPLY, further dragged the earnings.
• We have a “BUY” recommendation on PSMC. Our Dec-22 PT of PKR 280/share provides an upside of 37% along with a dividend yield of 4.9%.

• PSMC’s board meeting is scheduled on 22^nd March 2022, to consider its financial results for CY21, where we expect the company to post an EPS of PKR 69 as compared to LPS of 19.31 in CY20. Along with the result, company is also expected to announce final cash dividend of PKR 5.50/share.
• Net sales are likely to go up 114% YoY to PKR 164.37bn during CY21. This growth is mainly attributable to recovery in volumetric sales where the company sold 155,106 units as compared to 76,063 units in CY20, depicting a growth rate of 104% YoY.
• Gross margin during the year is expected to remain 5.3%, up 1% YoY mainly on account of multiple price increases during the period.
• Distribution expenses during CY21 are likely to increase 63% YoY to PKR 2.67bn, mainly due to increase in topline.
• Finance costs is likely to decrease by 83% YoY to PKR 453mn during CY21 as a result of an 89% reduction in company’s borrowing.
• On quarterly basis, PSMC is expected to post an EPS of 10.7, down 18% YoY during 4Q. Despite 80% YoY increase in topline, company’s gross margin is likely to contract by 3.7% YoY due to 8% YoY currency devaluation and higher steel prices. Furthermore, higher admin expenses (+158%) and other expenses (+34%) are also expected to drag earnings.
• We have a “BUY” recommendation on PSMC. Our Dec-22 PT of PKR 280/share provides an upside of 40% along with a dividend yield of 5.0%.

• As per the data released by PAMA, auto industry volumes declined 11% MoM and 8% YoY in Feb-22. Where, all the segments except passenger cars and jeeps registered negative growth.
• Interestingly, passenger car segment sales increased by 6% MoM mainly led by PSMC, which posted exceptional sales growth of 40% MoM in Feb-22. This rise is mostly attributable to the 'Alto' and 'Cultus' sales increasing by 86% MoM and 44% MoM, respectively. This could be due to increasing demand for fuel efficient cars owing to all time high local petrol prices. Excluding PSMC, passenger car sales are down by 32% MoM.
• On the other hand, both INDU and HCAR volumes remained lower by 32% MoM each as a result of consistent rise in car prices and stringent car financing rules by the SBP. For 8MFY22, passenger car sales posted a growth of 57% YoY.
• Jeep segment volumes increased by 23% MoM in Feb-22 led by Tucson sales which depicted a growth of 4.7x MoM to 774 units. Cumulatively, Jeep sales remained higher by 71% YoY during 8MFY22.
• Trucks and Buses volumes fell 63% MoM, where HINO and GHNI volumes posted a negative growth of 11% MoM and 32% MoM, respectively. For 8MFY22, Truck and buses sales increased by 66% YoY.

• As per NFDC, industry Urea offtake clocked in at 598k tons, down 8% YoY in Jan-22. Production increased to 556k tons, up 12% YoY. Urea inventory levels declined to their lowest since CY08 and stood at 27k tons.
• FFC remained the market leader in urea segment with 225k tons, followed by EFERT with 209k tons sales.
• Industry DAP offtake remained 113k tons during Jan-22, up 37% YoY. Company wise data showed that FFBL sold 62k tons, while FFC and EFERT sold DAP quantity of 6k tons and 23k tons, respectively.
• Overall industry’s CAN offtake declined by 30% YoY to 76k tons.
• During Jan-22, domestic urea prices averaged at PKR 1,844/bag up by ~8% YoY. Similarly, DAP prices also continued upward trajectory and increased to PKR 9,237/bag, up ~1.2x YoY.
• We expect urea offtake to remain elevated at 6.3mn tons during CY22 due to increase in crop supporting prices ahead of the election year. DAP offtake is expected to normalize in CY22 after declining by 13% in CY21 following expected decline in international DAP prices.

• ASL announced its 2QFY22 financial results today, where the company reported a net loss of PKR 286mn (LPS PKR 0.29), as compared to net profit of PKR 1.8bn (EPS PKR 1.92). The result is below our estimates mainly due to lower volumetric sales and gross margin contraction. This takes ASL’s 1HFY22 earnings to PKR 0.5/share, down 81% YoY.
• The company’s net sales stood at PKR 13.6bn, down 4% YoY. Despite higher product prices, net revenue declined due to lower volumetric sales during the quarter.
• Gross margins clocked in at 3.3% as compared to 21.8% in SPLY, down 18.5ppts YoY mainly due to absence of hefty inventory gains.
• Distribution expense increased by 2.9x to PKR 122mn owing to higher freight charges, whereas finance cost went up by 1.8x YoY to PKR 737mn mainly due to increase in short term borrowings amid higher interest rates.
• On the contrary, ASL booked a tax credit of PKR 138mn during 2Q, as compared to the effective tax rate of 27% in SPLY, restricting the quantum of loss.
• We have a ‘Buy’ stance on ASL. Our Dec-22 price target (PT) of PKR 31/share provides an upside of 132% along with a dividend yield of 8%.

• PPL announced its 2QFY22 financial results today, where the company reported a consolidated EPS of PKR 5.25, up 21% YoY. This growth can mainly be attributed to higher international crude oil prices and PKR devaluation. This takes 1HFY22 earnings to PKR 11.44/share, up 19% YoY. Along with the result, the company also declared an interim cash dividend of PKR 1.5/share.
• Net sales grew by 28% YoY to PKR 46.8bn during the 2Q. Despite significant increase in oil price and PKR devaluation, revenue growth remained restricted owing to 13% and 9% YoY decline in PPL’s oil and gas production, respectively.
• Exploration expenditure went up by 3.3x YoY to PKR 4.2bn, as against PKR 973mn in SPLY. PPL encountered a dry well in Gambat South block during 2Q.
• Furthermore, PPL booked PKR 2.4bn 3D seismic cost related to offshore block in Abu Dhabi during 2Q, which restricted the bottom-line growth.
• Other income increased by 1.5x YoY to PKR 2.7bn owing to exchange gains on foreign currency booked during the quarter.
• Effective tax rate remained 34% during 2Q as against 23% in SPLY, restricting the earnings growth.
• On a sequential basis, PPL posted a 15% QoQ decline in earnings. Increase in admin expenses (+26% QoQ), other operating expenses (+67% QoQ) and lower other income (-40% QoQ) kept earnings depressed. Furthermore, PKR 2.4bn expense related to the Abu Dhabi block also weighed down the earnings.
• We have a ‘BUY’ stance on PPL. Our Dec-22 price target (PT) of PKR 156/share provides an upside of 99% along with a dividend yield of 6.4%.

• INDU announced its 2QFY22 financial results today, where the company posted an EPS of PKR 43, up 61% YoY. The result below our expectation primarily due to lower than estimated gross margins. This takes 1HFY22 earnings at PKR 129.45, up 1.12x YoY. Along with the result, the company announced an interim cash dividend of PKR 30.00/share, in addition to PKR 34.5 already announced in 1Q, taking the cumulative payout during 1HFY22 to PKR 64.5/share.
• The company’s topline increased by 53% YoY primarily due to 35% YoY increase in volumetric sales coupled with higher prices. Similarly, the topline for 1HFY22 grew by 70% YoY on the back of 46% YoY growth in volumetric.
• Gross margins during 2QFY22 contracted to 7.6% vs 8.2% in SPLY owing to rise in raw material costs amid higher commodity prices.
• Distribution expenses surged by 21% YoY to PKR 418mn during 2QFY22 driven by increased sales volume. Similarly, administration expense increased by 41% YoY to PKR 463mn.
• Other income during the 2Q went up by 83% YoY to PKR 2.5bn mainly due to higher interest rates.
• Effective tax rate clocked in at 26% in 2Q vs 29% in SPLY, further supporting the growth in bottom-line.
• We have “BUY” recommendation on INDU. Our Dec-22 PT of PKR 2,023/share provides an upside of 43% along with a dividend yield of 13%.

• HBL posted consolidated net earnings of PKR 23.88/share, up 13% YoY in CY21. For 4QCY21, consolidated earnings came in at PKR 5.67/share, up 46% YoY. Along with the result, the bank also announced final cash dividend of PKR 2.25/share, taking cumulative payout to PKR 7.5/share for CY21.
• Net interest income (NII) for 4QCY21 increased by 9% YoY to PKR 34.3bn. Interest income and expense, both grew by 10% YoY. For CY21, NII grew by meagre 1% YoY to PKR 131.4bn.
• Non-interest income jumped 62% YoY to PKR 10.6bn in 4QCY21 on the back of higher fee & commission income (up 38% YoY to PKR 7.5bn) while forex income recorded at PKR 2.5bn vs 172mn in SPLY, supporting the non-interest income growth. However, provisioning of loss on derivatives to the tune of PKR 650mn restricted the non-interest income growth.
• The bank recorded higher than expected provision of PKR 2.6bn during 4QCY21. We await further clarity in this regard. For CY21, the cumulative provisions stood at PKR 8.1bn, down 34% YoY.
• The bank recorded double digit growth in admin expenses of 11% YoY to PKR 26.6 which could be due to inflationary pressures. For full year CY21, cost to income ratio declined to 58.2% vs 59.4% in CY20.
• The effective tax rate of the bank stood at 45.6% in 4QCY21 which can be attributed to lower ADR.
• On a sequential basis, consolidated earnings of the bank depicted a drop of 8% QoQ mainly due to higher provision (+47%), admin expenses (+13%) and tax (+15%) despite increase in NII & non-interest income by 6% QoQ and 31% QoQ, respectively.
• We have a ‘BUY’ rating on the scrip with Dec-22 price target of PKR 155/ share, implying an upside of 33.5% along with a dividend yield of 11.0%.

• ASL’s board meeting is scheduled on 25^th February 2022 to consider 2QFY22 financial results. We expect the company to post net earnings of PKR 1.05/share, down 45% YoY as against an EPS of PKR 1.93 in the SPLY. Decline in earnings is primarily due to absence of hefty inventory gains. This will take ASL’s 1HFY22 earnings to PKR 1.81/share, down 30% YoY.
• Net sales are likely to grow by 54% YoY, and settle at PKR 21.8bn as against PKR 14.2bn in SPLY, mainly due to increase in CRC prices by 45% YoY during the quarter.
• Gross margin of the company is expected to contract to 12% during 2Q vs 22% in SPLY, owing to absence of inventory gains.
• Selling & distribution cost will go up by 2.5x to PKR 109mn owing to higher freight charges. Similarly, finance cost is likely to grow by 2.8x to PKR 996mn due to increase in short term borrowings amid higher interest rates.
• On a sequential basis, ASL’s earnings are expected to grow by 39% QoQ on the back of higher volumetric sales.
• We have a “BUY” stance on ASL. Our Dec-22 PT of PKR 31/share indicates an upside of 92% along with a dividend yield of 7%.

• OGDC conducted its conference call today following the 1HFY22 financial results announcement, wherein the management discussed its half yearly performance and status of ongoing projects. Main points discussed during the call are presented below.
• Answering to our question regarding gas sector circular debt, OGDC’s management apprised that different options are being discussed with the government to resolve this issue and the management is optimistic about it. Regarding the Weighted Average Cost of Gas (WACOG) bill, which has been approved in the senate of Pakistan, the company expects positive impact on its cash flows in terms of better recovery from customers; however, the timeline of the impact is dependent on the implementation of the said WACOG mechanism. Its impact could be visible in 6 months period from the date of implementation. Just to recall, OGDC’s overdue receivables have reached PKR 352bn as at Dec 31, 2021, up from PKR 304bn as at 30 June, 2021 depicting an increase of PKR 48bn in first 6 months of current fiscal year.
• Regarding Pakistan International Oil Limited (PIOL), OGDC has invested USD 25mn so far. Seismic acquisition has been completed for the offshore block 5 in Abu Dhabi and interpretation of the acquired data is in process. The management informed that further investment will be done once the drilling of the exploratory well starts. Just to recall, OGDC in 2QFY22 charged PKR 2.4bn cost related to loss from associate. This is 3D seismic cost pertaining to Offshore block 5 and its non-recurring.
• The management, while providing the timeline for the commencement of production from Wali discovery, stated that if the negotiation with SNGP is successful in laying a 60km pipeline, the production can commence in a year’s time; otherwise it would take 2 to 3 years for the production to come online. Further the management informed that the CO2 content in Wali field’s gas is 4.2% as against standard of 3%. In our view, OGDC will probably have to invest in the infrastructure to reduce CO2 content to an acceptable level. Wali discovery in 3 formations cumulatively yielded 2,850bpd of oil and 37mmcfd of gas in initial testing. 2 more wells are expected to be drilled in the next 2 to 3 months to reliably assess the reserve size of this discovery.

• OGDC announced its 2QFY22 financial results today where the company reported an EPS of PKR 8.2, up 87% YoY. This impressive growth in earnings is mainly attributable to 83% YoY higher crude oil price, 7.6% YoY PKR devaluation and 15.2x YoY increase in other income. This takes 1HFY22 earnings to PKR 16.02/share, up 63% YoY. Along with the result, OGDC also declared an interim cash dividend of PKR 2.0/share.
• Net sales clocked in at PKR 79.6bn, up 46% YoY during 2Q. Despite significant increase in oil price and PKR devaluation, revenue growth remained restricted owing to decline in oil and gas production.
• Exploration expenditure went up by 1.03x YoY to PKR 4.6bn, as against PKR 2.3bn in SPLY. This is mainly due to a dry well encountered in Baratai block during 2Q.
• Other income grew by 15.2x YoY to PKR 10.4bn owing to exchange gains booked during the quarter.
• OGDC booked loss from associate amounting to PKR 883mn during the 2Q as against profit of PKR 1.5bn in SPLY. This is mainly due to 3D seismic cost of PKR 2.4bn related to Pakistan International Oil Limited (PIOL) booked during the quarter.
• On a sequential basis, OGDC posted an earnings growth of 5% QoQ. 8% higher oil price and 5.5% PKR devaluation during 2Q was offset by lower oil and gas production of 6% QoQ, each.
• We have a ‘BUY’ stance on OGDC. Our Dec-22 price target (PT) of PKR 185/share provides an upside of 107% along with a dividend yield of 12%.

• United Bank Limited (UBL) announced its CY21 financial results, wherein the bank announced upbeat earnings growth of 48% YoY to PKR 25.2/share. For 4QCY21, net earnings of the bank grew by 68% YoY to PKR 6.6/share. The result is also accompanied with higher than expected final dividend of PRK 6.0/share, taking the cumulative payout to PKR 18.0/share vs PKR 12.0/share in CY20.
• During the quarter, NII increased by 8% YoY to PKR 18.1bn wherein interest expense surged at a higher pace of 45% YoY versus 25% YoY increase in the interest income. On sequential basis, NII depicted a drop of 3% QoQ where interest income declined by 6% while interest expense remained lower by 8%. For CY21, NII declined by 4% YoY.
• The bank recorded provisioning reversal of PKR 541mn in 4QCY21, taking total reversal to PKR 955mn in CY21. This depicts further improvement in bank’s asset quality in Dec-21. (Sep-21 domestic GIR at 5.9%)
• Non-interest income also drove the solid profitability as it surged by 50% YoY to PKR 6.1bn during 4QCY21. Fee & commission income grew by 2% YoY to PKR 3.3bn and forex income increased by 93% YoY to PKR 1.4bn while capital gains and dividend income also supported the non-interest income growth. For full year CY21, Non-interest income depicted a growth of 37% YoY.
• Operating expenses remained higher by 6% YoY to PKR 11.9bn in 4QCY21. Expenses grew by 7% YoY in CY21. Resultantly, cost to income ratio settled at 46% vs 45% in CY20.
• Effective tax rate of the bank came in at 36.6% in 4QCY21 (CY:40.8%). Higher effective tax can be due to lower ADR related to additional tax imposed on the banks.
• We have a ‘BUY’ stance on the stock with Dec-21 PT of PKR 196/share, whereas the dividend yield stands at 14.8%.

• INDU’s board meeting is scheduled 24^th February 2022, to consider 2QFY22 financial result, where we expect the company to announce an EPS of PKR 72.6, up 93% YoY. This will take 1HFY22 cumulative earnings to PKR 141.6/share, up 1.3x YoY. Along with the result, company is also expected to announce and interim cash dividend of PKR 40.0/share in addition to PKR 34.5/share already announced in 1QFY22.
• The company’s topline is estimated to increase 53% YoY during the quarter, mainly due to a 33% YoY increase in sales volumes. To highlight Corolla and Fortuner sale volumes increased 91% and 143% YoY.
• Gross margins for the quarter are expected to clock in at 10.9%, depicting a 280bps increase on YoY basis. We anticipate the margin expansion on the back of ~14% YoY price increase during the period.
• Distribution expense is expected to increase by 1.30x YoY to PKR 794mn on the back of higher volumes, while administrative expenses are expected to increase 72% YoY to PKR 566mn.
• Other income is likely to increase by 67% YoY to PKR 2.3bn on the back of higher cash base on account of a strong order book and higher interest rate.
• We have “BUY” recommendation on INDU. Our Dec-22 PT of PKR 2,023/share provides an upside of 44% along with a dividend yield of 13.1%.

• MCLF reported its 2QFY22 results today wherein the company posted highest ever quarterly consolidated profit after tax of PKR 1.9bn (EPS PKR 1.75/share), up 79% YoY and 129% QoQ. For 1HFY22, earnings of the company clocked in at PKR 2.8bn (EPS PKR 2.51/share), up 70% YoY. The result was higher than our expectation owing to better than anticipated gross margins.
• Topline of the company grew by 34% YoY to settle at PKR 12.2bn during 2QFY22 compared to PKR 9.1bn in 2QFY21. This growth is primarily on the back of 48% YoY improved cement retention price of PKR 500/bag, despite the fact that company’s dispatches went down by 9% YoY.
• MLCF’s gross margin settled at 31.8% in 2QFY22, up 7ppts YoY compared to 2QFY21. We believe that higher cement retention prices, use of cheaper Afghan coal and pet coke and recently added WHR plant of 9.3MW resulted in higher gross margins.
• Selling & admin expense surged by 29% YoY to PKR 611mn in 2Q owing to higher transportation expenses.
• The company reported finance expense of PKR 323mn, up 15% YoY in 2Q due to higher borrowings along with higher interest rates.
• On a sequential basis, earnings of the company remained higher by 129% QoQ supported by higher local cement dispatches of 9% QoQ along with improved retention prices of 14% QoQ. Resultantly, gross margin of the company went up by 9ppts QoQ.
• We have a ‘BUY’ recommendation on MLCF with our Dec-22 price target (PT) of PKR 55/share, providing an upside of 67% from current levels.

• OGDC’s board meeting is scheduled on February 23, 2022 to consider 2QFY22 financial results where we expect the company to post EPS of PKR 7.9, up 81% YoY. This impressive growth in earnings is mainly due to 1) higher crude oil price (+83% YoY, averaging at USD 80/bbl), 2) PKR devaluation (-7.6%, averaging at PKR 174/USD) and, 3) 11.8x YoY increase in other income. This will take 1HFY22 earnings to PKR 15.8/share, up 60% YoY. Along with the result, we expect OGDC to announce an interim cash dividend of PKR 2.5/share.
• Net sales are likely to grow by 39% YoY to PKR 75.9bn during 2Q. Despite significant increase in oil price and PKR devaluation, revenue growth will remain restricted owing to decline in oil and gas production.
• Exploration expenditure is expected to go up by 1.1x YoY to PKR 4.8bn, as against PKR 2.3bn in SPLY. OGDC encountered a dry well in Baratai block during 2Q.
• Other income is likely to see an increase of 11.8x YoY to PKR 8.2bn owing to exchange gains booked during the quarter.
• Effective tax rate is expected at 29% during 2Q as against 33% in SPLY, further supporting the bottomline growth.
• On a sequential basis, OGDC is likely to post earnings growth of 2% QoQ. Lower oil and gas production by 6% QoQ, each is expected to offset 8% QoQ higher oil price and 5.5% QoQ currency devaluation.
• We have a ‘BUY’ stance on OGDC. Our Dec-22 price target (PT) of PKR 185/share provides an upside of 105% along with a dividend yield of 12%.

• Meezan Bank Limited (MEBL) announced its CY21 financial results, wherein the bank reported net earnings of PKR 17.4/share, up 28% YoY compared to PKR 13.6/share in CY20. For 4QCY21, net earnings of the bank settled at PKR 5.4/share (up 115% YoY). Along with the result, the bank also announced interim cash dividend of PKR 1.5/share taking cumulative payout for CY21 to PKR 6.0/share.
• Higher than anticipated earnings were on the back of impressive growth in net interest income which could be due to higher than expected growth in interest earning assets.
• Net interest income (NII) for the quarter grew on YoY basis to PKR 20.4bn in 4QCY21. Interest expense of the bank surged by 47% YoY while interest income grew by 39% YoY. Significant increase in cost of deposits could be due to double digit deposit growth along with upward adjustment of recent hike in interest rate. During CY21, NII remained higher by 6% YoY.
• The bank reported highest ever quarterly non-interest income of PKR 4.6bn, up 59% YoY on the back of higher fee & commission income and forex income.
• The bank charged lower than estimated provisions of PKR 439mn during 4QCY21, depicting improvement in the asset quality. For CY21, the bank booked cumulative provisions of PKR 993mn compared to PKR 8.2bn recorded in SPLY.
• Operating expenses during the quarter surged by 37% YoY to PKR 9.7bn. This could be attributable to the incremental cost associated with the opening of new branches. The bank had planned to add more than 50 branches in 4QCY21.
• Effective tax rate of the bank stood at 40.3% in CY21 compared to 40.0% in CY20. We had incorporated higher effective tax during 4Q due to the fact that bank’s ADR was lower than 50%, however topline growth indicating that the bank has achieved 50% ADR by Dec-21. We await further clarity in this regard once detailed financial accounts are published.
• We have a ‘Buy’ stance on MEBL with Dec-22 price target of PKR 196/share. The stock is offering an upside of 41% along with a dividend yield of 7.4%.

• FCCL reported its 2QFY22 results today wherein the company’s profitability grew by 62% YoY and 8% QoQ to PKR 1.07/share. This takes 1HFY22 earnings to PKR 2.05/share compared to PKR 1.16 in 1HFY21. The result was slightly higher than our expectation likely due to higher than anticipated cement retention price.
• Topline of the company grew by 36% YoY to settle at PKR 8.3bn during 2QFY22 compared to PKR 6.1bn in 2QFY21. This growth is primarily on the back of 41% YoY improved cement retention price of PKR 470/bag, despite the fact that company’s dispatches went down by 4% YoY.
• FCCL’s gross margin settled at 28.4% in 2QFY22, up 3ppts compared to 2QFY21 mainly due to higher cement retention prices.
• Selling & admin expense surged by 40% YoY to PKR 276mn in 2Q owing to higher transportation expenses.
• The company reported finance income of PKR 126mn in 2Q, which also supported the bottomline growth.
• On a sequential basis, earnings of the company remained higher by 8% QoQ supported by higher local cement dispatches of 10% QOQ along with improved retention prices of 13% QoQ. The gross margin of the company shrunk by 2ppts QoQ due to rising cost of production.
• We have a ‘BUY’ recommendation on FCCL with our Dec-22 price target (PT) of PKR 28/share, providing an upside of 62% from current levels.

• PPL’s board meeting is scheduled on February 25, 2022 to consider 2QFY22 financial results where we expect the company to post an EPS of PKR 6.2, up 44% YoY. The increase in earnings can mainly be attributed to 83% YoY higher international crude oil prices (averaging at USD 80/bbl) and 7.6% YoY PKR devaluation (averaging at PKR 174/USD). This will take 1HFY22 earnings to PKR 12.4/share, up 29% YoY. Along with the result, we expect the company to announce an interim cash dividend of PKR 2.0/share.
• Net sales are likely to clock in at PKR 43.6bn, up 20% YoY. Despite significant increase in oil price and PKR devaluation, revenue growth will remain restricted owing to 13% and 9% YoY decline in PPL’s oil and gas production, respectively. Oil production decline came from TAL block (-13% YoY), Adhi field (-21% YoY due to ATA in October) and Nashpa field (-13% YoY). Similarly, lower gas production was due to Sui field (-6% YoY), TAL block (-9% YoY), Qadirpur field (-10% YoY) and Kandhkot field (-41% YoY due to low off-take from GTPS).
• Exploration expenditure is expected to go up by 78% YoY to PKR 1.7bn, as against PKR 973mn in SPLY. PPL encountered a dry well in Gambat South block during 2Q.
• Other income is likely to see an increase of 3.3x YoY to PKR 4.8bn owing to exchange gains on foreign currency booked during the quarter.
• Effective tax rate is expected at 29% during 2Q as against 23% in SPLY, which will contain the bottomline growth.
• On a sequential basis, PPL’s earnings are expected to remain flat. Higher oil price (+8% QoQ) and currency devaluation (-5.5% QoQ) during 2Q is likely to be offset by 2% and 3% QoQ decline in oil and gas production, respectively.
• We have a ‘BUY’ stance on PPL. Our Dec-22 price target (PT) of PKR 156/share provides an upside of 92% along with a dividend yield of 6.2%.

• HTL announced its 2QFY22 financial results today where the company reported net earnings of PKR 2.1/share, up 35% YoY as compared to EPS of PKR 1.55 in corresponding period last year. The result came in above our expectation primarily due to lower effective tax rate and lower operating expenses. This takes 1HFY22 earnings to PKR 2.85/share, up 30% YoY. Along with the result, the company also declared an interim cash dividend of PKR 1.8/share.
• HTL’s top-line settled at PKR 3.9bn in 2Q as compared to PKR 2.8bn in SPLY, up 43% YoY, primarily driven by higher product prices.
• Operating expenses went up by 20% YoY to PKR 434mn, mainly due to inflationary pressures.
• Other income declined by 58% to PKR 17mn, whereas finance cost increased to PKR 60mn, up 1.7x YoY mainly on account of higher interest rates and increased short-term borrowings during 2Q.
• Moreover, lower effective tax rate of 20% Vs 17% in SPLY, further supported the bottom-line growth.
• On a sequential basis, HTL posted an earnings growth of 30% QoQ, primarily driven by volumetric growth as 2^nd quarter is seasonally strong for the company.
• We have a ‘BUY’ stance on the script with our Dec-22 PT of PKR 65/share. Our price target indicates an upside of 38% along with a dividend yield of 6%.

• DGKC reported its 2QFY22 results today wherein the company’s profitability grew by 10% YoY and 40% QoQ to PKR 2.90/share. This takes 1HFY22 earnings to PKR 4.97/share compared to PKR 1.83 in 1HFY21.
• Topline of the company grew by 43% YoY to settle at PKR 16.2bn during 2QFY22 compared to PKR 11.3bn in 2QFY21 primarily on the back of higher cement dispatches (+11% YoY) and increased cement MRP as North region witnessed an increase of 31% YoY to PKR 723/bag during 2QFY22 while prices in south increased by 22% YoY to PKR 745/bag.
• DGKC’s gross margin settled at 17% in 2QFY22, down 4ppts compared to 2QFY21. Decline in gross margin can be attributed to higher coal prices (+103% YoY) and inability of the company to pass on the full impact of higher cost of production.
• Selling & admin expense surged by 63% YoY to PKR 877mn in 2Q owing to higher cement and clinker exports of 84% YoY to 0.72mn tons.
• Other income of the company surged by 164% YoY to PKR 749mn mainly due to receipt of dividend from MCB.
• On a sequential basis, earnings of the company remained higher by 40% QoQ supported by higher local (15% QoQ) and export (167% OoQ) cement dispatches. The gross margin of the company shrunk by 2ppts QoQ due to rising cost of production.
• We have a ‘BUY’ recommendation on DGKC with our Dec-22 price target (PT) of PKR 135/share, providing an upside of 80% from current levels.

• KOHC announced its financial result today, wherein the company posted profit after tax of PKR 1.58bn (EPS PKR 7.90) during 2QFY22, up 64% YoY and 13% QoQ. This takes 1HFY22 earnings to PKR 2.98bn (EPS PKR 14.86), up 103% YoY.
• The result came in higher than our expectation due to better gross margins of 30% in 2Q. Improved gross margins can be attributed to lower than estimated coal inventory cost and possibly due to a change in energy mix.
• Topline of the company surged 38% YoY to PKR 8.2bn in 2Q primarily due to improved cement retention prices, up 41% YoY to PKR 436/bag. On the other hand, company’s cement volumes declined by 2% YoY.
• Finance cost of the company declined by 13% YoY to PKR 118mn during 2Q due to lower borrowings.
• On a sequential basis, earnings of the company increased by 13% QoQ on the back of higher cement volumes (+7% QoQ) along with improved cement retention prices (+13% QoQ). However, gross margin declined by 3% QoQ owing to higher coal prices.
• We have a ‘BUY’ recommendation on KOHC with our Dec-22 price target (PT) of PKR 270/share, providing an upside of 55%.

• CHCC reported its 2QFY22 results today wherein the company’s profitability grew by 44% YoY to PKR 6.06/share. This takes 1HFY22 earnings to PKR 12.20/share compared to PKR 5.81 in 1HFY21.
• Net revenue of the company stood at PKR 7.6bn in 2Q, up 20% YoY mainly supported by higher cement retention price of PKR 430/bag, up 40% YoY. However, cement volumes declined by 15% YoY to 0.9mn tons in 2Q, restricting the top-line growth.
• CHCC’s gross margin settled at 27% in 2QFY22, up 1ppts compared to 2QFY21. The company reported higher gross margins despite elevated coal price. We believe, higher usage of local and Afghan coal helped the company to increase its gross margins.
• Finance cost of the company declined by 17% YoY to PKR 301mn during 2Q due to lower borrowings.
• Effective tax rate clocked in at 28% in 2Q vs 25% in SPLY, restricting the earnings growth.
• On a sequential basis, earnings of the company declined by 1% QoQ. The company reported growth in revenue by 6% QoQ despite lower cement dispatches of 6% QoQ as local cement prices improved by 13% QoQ. However, higher coal prices resulted in gross margins attrition by 1.7% QoQ.
• We have a ‘BUY’ recommendation on CHCC with our Dec-22 price target (PT) of PKR 220/share, providing an upside of 54% along with a dividend yield of 3%.

• HTL’s board meeting is scheduled on February 18, 2022 to consider 2QFY22 financial results, where we expect the company to post an EPS of PKR 1.1, down 29% YoY as compared to EPS of PKR 1.55 in corresponding period last year. This will take 1HFY22 earnings to PKR 1.85/share, down 16% YoY. Along with the result, the company is also expected to announce an interim cash dividend of PKR 1.5/share.
• HTL’s 2QFY22 top-line is likely to settle at PKR 3.2bn, up 14% YoY, primarily driven by higher product prices. Volumes are expected to remain lower by 6% YoY during 2Q.
• Operating expenses are likely to increase by 30% YoY to PKR 469mn, mainly due to inflationary pressures.
• Other income will decline by 33% to PKR 28mn, whereas finance cost is expected to increase to PKR 80mn, up 2.6x YoY mainly on account of higher interest rates and increased short-term borrowings.
• Effective tax rate is expected at 31% Vs 17% in SPLY, further deteriorating the bottom-line.
• On a sequential basis, HTL is expected to post EPS growth of 46% QoQ, primarily driven by volumetric growth as 2^nd quarter is seasonally strong for the company.
• We have a ‘BUY’ stance on the script with our Dec-22 PT of PKR 65/share. Our price target indicates an upside of 37% along with a dividend yield of 6%.

• PIOC announced its financial result today, wherein the company posted profit after tax of PKR 663mn (EPS PKR 2.92) during 2QFY22, up 3% YoY and 38% QoQ. This takes 1HFY22 earnings to PKR 1.1bn (EPS PKR 5.03), up 88% YoY.
• Topline of the company surged by 60% YoY to PKR 8.6bn in 2Q mainly due to 10% YoY increase in cement dispatches to 0.98mn tons and improved cement retention prices, up 46% YoY to PKR 440/bag.
• Despite higher coal prices, the company’s gross margin remained 20.6% in 2Q vs 15.5% in SPLY. Increased margins can be attributed to higher cement dispatches, better retention prices and higher reliance on in house power generation.
• Finance cost of the company increased by 45% YoY to PKR 593mn during 2Q due to higher interest rates.
• Effective tax rate clocked in higher at 36.8% in 2Q vs tax credit in SPLY, restricting the bottomline growth.
• On a sequential basis, earnings of the company increased by 38% QoQ. This is due to higher cement dispatches (+26% QoQ) and improved retention prices (11% QoQ). However, gross margin declined by 3% QoQ owing to higher coal prices.
• We have a ‘BUY’ recommendation on PIOC with our Dec-22 price target (PT) of PKR 150/share, providing an upside of 79%.

• EFERT posted CY21 net profit of PKR 21.1bn (EPS PKR 15.80) compared to net profit of PKR 18.3bn (EPS PKR 13.58) in CY20. 4QCY21 EPS of the company stood at PKR 4.62, down 9% YoY. Along with the result, the company also announced a cash dividend of PKR 5.0/share for 4Q taking the CY21 DPS to PKR 15.0 compared to DPS of PKR 13.0 during same period last year.
• The company’s urea production was down by 7% YoY to 2.1mn tons during CY21 due to its Enven plant turnaround for 22 days during 3Q. During CY21, urea sales of the company increased by 12% YoY to 2.3mn tons due to higher urea inventory available at the beginning of year.
• Finance cost of the company during CY21 clocked in at PKR 1.6bn, down by ~50% YoY.
• Highest ever PAT of PKR 21.1bn for CY21 is supported by one-offs of around PKR 1.7bn. These include reassessment of depreciation rate, inventory gain (earlier procurement of DAP) and sales to registered dealers.
• Going forward, the management sees urea demand to hover around 6.1mn tons due to increase in area under cultivation (up by ~2mn hectares in last 2 years), use of hybrid seeds, and increase in urea applicability per hectare with change in farming methods.
• The company is paying concessionary rates for gas due to the stay order. Meanwhile, following prudent approach company is booking gas cost on non-concessionary rates.
• The management disclosed that the company is gearing up for further avenues. However, current dividend stream will continue till new plans are finalized.
• We recommend ‘HOLD’ on EFERT, as stock is offering capital downside of 5.3% and a dividend yield of 14.26%.

• PSO announced its 2QFY22 financial results today where the company reported an unconsolidated EPS of PKR 43.0, up 3.6x YoY as compared to earnings of PKR 9.3/share in corresponding period last year. Higher volumetric sales, increase in other income and hefty inventory gains led to massive growth in bottomline. This takes 1HFY22 earnings to PKR 68.6/share, up 2.4x YoY. The company has skipped the interim dividend in 2Q.
• PSO’s net sales during 2Q increased by 82% YoY to PKR 523bn, primarily driven by higher POL product prices and volumetric sales. HSD sales went up by 14% YoY whereas, MS volumes recorded 13% YoY increase.
• Gross margins clocked in at 5.1% during 2Q as compared to 3.1% in SPLY, owing to inventory gains which supported the growth in bottomline.
• Other income went up by 1.8x YoY to PKR 8.9bn (PKR 13.3/share), owing to penal income booked by PSO relating to power sector receivables.
• Operating expenses clocked in at PKR 5.6bn, up 8% YoY mainly due to increase in other expenses, whereas finance cost went up by 36% YoY to PKR 784mn due to higher interest rates.
• Effective tax rate stood at 31.3% in 2Q as against 33.4% in SPLY, further supporting the bottomline growth.
• On a sequential basis, PSO’s earnings grew by 68% QoQ mainly due to higher other income booked during 2Q.
• We have a ‘BUY’ stance on PSO. Our Dec-22 PT of PKR 350/share provides an upside of 78% along with a dividend yield of 8%.

• MCB announced its CY21 financial results today, where the bank reported higher than expected unconsolidated profit after tax of PKR 30.8bn (EPS PKR 26.0), up 6% YoY. For 4QCY21, MCB earnings grew by 35% YoY and 6% QoQ to PKR 4.7bn (EPS PKR 6.97/share). Along with the result, the bank announced final cash dividend of PKR 5.0/share, taking cumulative dividend for CY21 to PKR 19.0/share compared to PKR 20.0/share in CY20.
• The bank posted 2% YoY increase in NII during 4Q to PKR 16.2bn. Interest income increased by 15% YoY to PKR 33.4bn while interest expense remained higher by 32% YoY to PKR17.2bn due to the upward adjustment of interest rate hike. For full year CY21, NII declined by 10% to PKR 63.9bn.
• Non-interest income, nevertheless, grew by 24% YoY to PKR 5.7bn during 4QCY21 mainly on account of higher than expected forex income (up 132% YoY to PKR 1.4bn). Other positive contributors were fee & commission income (+13% YoY) and dividend income (+ 68% YoY) which offset the decline in capital gains of 79% YoY. For full year CY21, non-interest income increased by 11% YoY to PKR 20.1bn.
• The bank booked provisioning reversals of PKR 1.3bn during 4Q compared to provision expense of PKR 2.2bn in the same period last year. For CY21, MCB recorded provisioning reversals of PKR 4.8bn compared to provisioning expense of PKR 7.3bn, last year.
• Admin expenses grew by 13% YoY to PKR 9.5bn in 4Q, which led the cost to income ratio to increase by 42%. For CY21, the cost to income ratio stood at 42%, up 6ppts compared to last year.
• We have a ‘BUY’ rating on the scrip with Dec-22 price target of PKR 205/share, implying an upside of 25% along with a dividend yield of 15%.

• PSO’s board meeting is scheduled on February 11, 2022 to consider 2QFY22 financial results. We expect the company to report an EPS of PKR 28.6, up 2.1x YoY, driven by higher product prices, increase in volumetric sales and inventory gains during the quarter. This will take 1HFY22 earnings to PKR 54.2/share, up 1.7x YoY. Along with the result, PSO is expected to announce an interim cash dividend of PKR 5.0/share.
• The company’s net sales are likely to grow by 60% YoY to PKR 457bn primarily due to 14% YoY increase in HSD sales and 13% YoY increase in MS sales. Similarly, higher POL product prices on YoY basis will also support the topline growth. In addition, we expect gross margin to clock in at 4.8% during 2Q compared to 3.1% in SPLY owing to inventory gain.
• Operating expenses are likely to decline by 12% YoY at PKR 4.5bn during 2Q, whereas the finance cost is expected to go up by 62% YoY to PKR 939mn due to higher interest rates. On the contrary, 12% YoY higher other income at PKR 3.6bn is likely to support earnings growth.
• On a sequential basis, PSO earnings are expected to go up by 12% QoQ on the back of higher inventory gain and other income during 2Q.
• We have a ‘BUY’ stance on the script with our Dec-22 PT of PKR 350/share. Our price target indicates an upside of 79% along with a dividend yield of 10%.

• BAHL announced its CY21 financial results today, where the bank reported unconsolidated profit after tax of PKR 18.7bn (EPS PKR 16.83), up 5% YoY. For 4QCY21, BAHL earnings grew by 2% YoY to PKR 4.7bn (EPS PKR 4.29/share). Along with the result, the bank announced higher than expected final cash dividend of PKR 7.0/share compared to PKR 4.5/share in CY20.
• The bank posted 5% YoY increase in NII during 4Q to PKR 14.1bn. Interest income increased by 16% YoY to PKR 31.1bn while interest expense increased by 28% YoY to PKR16.9bn due to the upward adjustment of interest rate hike. For full year CY21, NII declined by 3% to PKR 55.6bn.
• Non-interest income came in higher than our expectation and grew by 37% YoY to PKR 4.3bn during 4QCY21. Major growth in this segment came from fee & commission income (+39% to PKR 2.7bn) and forex income (+44% YoY PKR 1.0bn). However, the bank realized loss on securities during 4Q amounting to PKR 42mn compared to capital gain of PKR 171mn in same period last year. For full year CY21, non-interest income increased by 37% YoY to PKR 14.0bn.
• Provisions clocked in at PKR 86mn during 4QCY21 compared to PKR 1.1bn recorded in 4QCY20. For CY21, BAHL recorded provisioning reversals of PKR 47mn compared to provisioning expense of PKR 4.5bn, last year.
• Admin expenses during the quarter increased by 15% YoY to PKR 10.5bn. Aggressive branch network expansion led to double digit hike in the cost. Resultantly, cost to income (C/I) ratio of the bank remained elevated at 57% during the 4Q. For CY21, C/I ratio surged to 57% versus 51% in CY20.
• We have a ‘BUY’ rating on the scrip with Dec-22 price target of PKR 102/share, implying an upside of 38.5% along with a dividend yield of 12.9%.

• ACPL announced its financial result today, wherein the company posted unconsolidated EPS of PKR 4.23 during 2QFY22, up 37% YoY. The result came in higher than our expectations primarily on the back of dividend income received from its subsidiary in Iraq (expected EPS impact PKR 2.6). This takes 1HFY22 EPS to PKR 6.20, up 56% YoY. Along with the result, the company also announced interim cash dividend of PRK 2.0/share.
• Had there been no dividend income, normalized earnings of the company would have settled at PKR 2.3/share, in line with our estimates.
• Earnings growth during 2Q remained restricted due to higher effective tax rate at 39% as compared to 33% in SPLY and 23% in the previous quarter. We believe higher taxation could be due to the adjustment of deferred tax.
• Ex-dividend income, the company recorded 16% growth in profit on a sequential basis aided by higher cement dispatches (14% QoQ) along with improved retention prices (12% QoQ) and through prudent management of coal inventory.
• We believe, the company held coal inventory at an average cost of USD 125-130/ton during 2Q. Moreover, the company has also switched towards higher use of local and Afghan coal to shield the margins. Resultantly, gross margins of the company grew by 1pps QoQ at 20% during 2Q.
• Selling and Admin expenses reduced to PKR 577mn in 2Q (-34% YoY) due to lower exports.
• We have a ‘BUY’ recommendation on ACPL with a Dec-22 price target (PT) of PKR 175/share, providing an upside of 29% along with a dividend yield of 9%.

• We expect 2QFY22 earnings of Akseer’s cement universe to decline by 6% QoQ as higher coal prices are expected to trim margins. However, 2Q earnings will likely be up 11% on YoY basis. Higher local cement retention prices are likely to have partially offset the impact of a sharp increase in coal prices in 2QFY22.
• Total cement dispatches grew by 14% QoQ to 14.6mn tons during 2QFY22 and will likely lend support to earnings. Industry’s local dispatches grew by 13% QoQ to 12.8mn tons, while exports also grew 19% QoQ to 1.9mn tons due to normalization of sea freight at the end of 2Q.
• Average Cement prices witnessed an uptrend and rose by 10% QoQ during 2QFY22 to PKR 731/bag. Cement prices in North and South region rose by a similar quantum and averaged PKR 723/bag and PKR 745/bag, respectively.
• Higher dispatches and increased retention prices will likely result in topline growth of 31% YoY and 24% QoQ for Akseer’s cement universe to PKR 86.1bn in 2QFY22. On QoQ basis, DGKC’s and PIOC’s net sales are likely to surge by 46% QoQ and 37% QoQ due to higher dispatches growth.
• In terms of profitability, MLCF is likely to outshine with an expected 24% QoQ jump in the bottom-line due to improved cost efficiencies post addition of another Waste Heat Recovery Plant (WHR) during 2QFY22.

• POL announced its 2QFY22 financial result today, wherein the company reported an EPS of PKR 19.96, up 88% YoY. Increase in earnings can be attributed to higher international crude oil prices and currency devaluation. 1HFY22 earnings settled at PKR 38.48/share, up 64% YoY. The company also announced an interim cash dividend of PKR 20/share, which is in line with our expectation.
• Company’s net sales grew by 44% YoY to PKR 12.6bn, during 2Q. This growth in topline remained restricted due to lower hydrocarbon production (Oil down 11% and Gas down 9% YoY) which was more than compensated by 83% YoY higher oil price and 7.6% YoY PKR devaluation against USD.
• Exchange gains on financial assets during 2Q lifted the other income by 7.3x YoY to PKR 2.0bn, further supporting the growth in bottomline.
• Effective tax rate of 36% during 2Q, as opposed to 39% in the SPLY, also resulted in earnings growth.
• On a sequential basis, POL’s earnings grew 8% QoQ, led by 8% higher oil price and 5.5% PKR devaluation. On the contrary, oil and gas production fell 4% and 3%, respectively.
• We have a “BUY” stance on POL. Our Dec-22 price target (PT) of PKR 530/share provides an upside of 34% along with a dividend yield of 12.6%.

• APL announced its 2QFY22 financial results today, where the company reported an EPS of PKR 42.4, up 5.4x YoY. This bumper growth in earnings is mainly attributable to huge inventory gains and higher volumetric sales. This takes 1HFY22, earnings to PKR 66.4/share, up 2.1x YoY. The company also declared an interim cash dividend of PKR 15/share.
• APL’s net sales grew by 82% YoY to PKR 81.4bn during 2Q on account of 37% and 15% YoY growth HSD and MS volumetric sales; however, FO volumes fell 30% YoY mainly due to lower offtake from the power sector.
• Besides inventory gain, higher OMC margins during the quarter also led to improved gross margin of 9.65%, compared to 3.79% in SPLY.
• Operating expenses clocked in at PKR 1.7bn, up 86% YoY in line with increase in topline. Similarly, higher interest rate during the quarter kept finance cost up by 7% YoY to PKR 400mn.
• Effective tax rate stood at 29.6% in 2Q as against 23.3% in SPLY, restricting the growth in bottomline.
• On a sequential basis, APL’s earnings grew by 77% QoQ owing to huge inventory gains, despite a 16% decline in overall volumetric sales.
• We have a ‘BUY, stance on APL. Our Dec-22 PT of PKR 430/share provides an upside of 27% along with a dividend yield of 13%.

• APL’s board meeting is scheduled on February 4, 2022 to consider 2QFY22 financial results. We expect the company to post an EPS of PKR 23.1, up ~2.5x YoY primarily driven by higher volumetric sales and inventory gains. This will take 1HFY22 earnings to PKR 47.1/share, up 1.2x YoY. We also expect the company to declare an interim cash dividend of PKR 15.0/share along with the results.
• APL is expected to book 70% YoY growth in net sales to PKR 76.0bn owing to 37% YoY growth in HSD and 15% YoY growth in MS volumetric sales during 2Q. APL’s HSD & MS market share also increased to 8.2% and 8.9% YoY, respectively during 2Q. On the other hand, FO volumes recorded a decline of 30% YoY mainly due to lower offtake from power the sector.
• Gross margin is likely to clock in at 5.5%, compared to 3.8% in SPLY owing to inventory gains during the quarter.
• Furthermore, we expect an effective tax rate to be around 29% for 2Q as against 23.3% in SPLY.
• On sequential basis, earnings are expected to decline by 4% QoQ owing to 16% decline in overall volumetric sales. Major decline is witnessed in FO sales (down 56% QoQ) followed by MS (5% QoQ).
• We have a ‘BUY, stance on APL. Our Dec-22 PT of PKR 430/share provides an upside of 26% along with a dividend yield of 10%.

• POL’s board meeting is scheduled on February 4, 2022, to consider 2QFY22 financial results, where we expect the company to post an EPS of PKR 18.3, up 72% YoY. The increase in earnings can mainly be attributed to 83% YoY higher international crude oil prices (averaging at USD 80/bbl) and 7.6% YoY PKR devaluation (averaging at PKR 174/USD). This will take 1HFY22 earnings to PKR 36.8/share, up 57% YoY. Along with the result, we expect the company to announce an interim cash dividend of PKR 20/share.
• Net sales are likely to clock in at PKR 11.1bn, up 26% YoY. Despite significant increase in oil price and PKR devaluation, revenue growth remained restricted owing to 11% and 9% YoY decline in POL’s oil and gas production, respectively. Major decline is expected from TAL block and Adhi field.
• Other income is likely to see an increase of 7.7x YoY to PKR 2.1bn owing to exchange gains on financial assets booked during the quarter.
• On a sequential basis, POL is expected to post earnings decline of 1% QoQ, which is likely to be driven by lower oil & gas production of 4% and 3%, respectively. Furthermore, lower other income would also keep earnings in check.
• We have a ‘BUY’ stance on POL. Our Dec-22 price target (PT) of PKR 530/share provides an upside of 33% along with a dividend yield of 12.5%.

• BAFL announced its CY21 financial results today, where the bank reported unconsolidated profit after tax of PKR 14.2bn (EPS PKR 8.0), up 36% YoY compared to net profit of PKR 10.5bn (EPS PKR 5.9) in CY20. For 4QCY21, BAFL earnings grew by 74% YoY to PKR 3.7bn (EPS PKR 2.1/share). Along with the result, BAFL announced final cash dividend of PKR 2.0/share taking total payout to PKR 4.0/share during CY21.
• The bank posted 19% YoY increase in NII during 4Q to PKR 12.1bn. Interest income increased by 37% YoY to PKR 28.5bn while interest expense increased by 54% YoY to PKR16.4bn. For full year CY21, NII grew by 3% to PKR 46.0bn.
• Non-interest income came in higher than our expectation and grew by 76% YoY to PKR 4.9bn during 4QCY21. Major growth in this segment came from fee & commission income (+26% to PKR 2.2bn), forex income (+109% YoY PKR 1.3bn) and realization of capital gains which stood at PKR 1.1bn in 4QCY21 compared to 138mn in 4QCY20. For full year CY21, non-interest income increased by 29% YoY to PKR 16.5bn.
• Provisions clocked in at PKR 893mn during 4QCY21, down 32% YoY. For CY21, provisioning charge declined by 70% YoY to PKR 2.3bn.
• Admin expenses during the quarter increased by 21% YoY to PKR 9.8bn. Aggressive branch network expansion led to double digit hike in the cost. Resultantly, cost to income (C/I) ratio of the bank remained elevated at 58% during the 4Q. For CY21, C/I ratio surged to 59% versus 56% in CY20.
• We have a ‘BUY’ rating on the scrip with Dec-22 price target of PKR 55/share, implying an upside of 45% along with a dividend yield of 16.5%.

• As the year end result season commences, we present CY21 result previews of Akseer’s banking universe. We expect profitability of the sector to rise 15% YoY to PKR 151.4bn in CY21 despite witnessing pressure on NIMs on the back of abrupt rise in interest rates. For 4QCY21, banking universe profitability will likely reach PKR 35.4bn, up 29% YoY, but lower by 11% on QoQ basis.
• We expect Net Interest Income (NII) of our banking universe to grow 9% YoY and 2% QoQ to PKR 112.1bn during 4Q despite significant rise in deposit cost amid sharp increase in policy rates. This is attributable to a quick upward adjustment in investment yields as market had already incorporated higher interest rates. During CY21, NII is likely to decline 2% YoY.
• Non-interest income will likely grow by 23% YoY to PKR 29.5bn during 4Q on the back of higher fee & commission income. During CY21, non-interest income is expected to grow by 20% YoY to PKR 118.4bn as business activities normalized during the year.
• Provisioning expense is estimated to have shrunk by 74% YoY to PKR 3.6bn given the banks are not expecting any major NPL charge during the quarter. For CY21, cumulative provisioning expense is likely to stand at PKR 7.1bn, down 88% YoY as most banks made hefty provisions last year.
• With the ongoing network expansion coupled with increased digitalization activities, the operating expenses are likely to remain on the higher side during 4Q, and rise 7% YoY to PKR 73.7bn.
• Effective tax rate is expected to clock in at 45% in 4QCY21 versus 38%, last year due to lower ADR for some of the banks.

• FFBL held its analyst briefing on January 31^st, to discuss its CY21 financial results. The company reported net profit of PKR 6.3bn in CY21 compared to PKR 2.2bn in CY20.
• Increase in profitability is due to 1) record high DAP prices, 2) higher contribution from urea segment, 3) lower financial charges and 4) higher other income.
• Globally, DAP and Phosphoric acid prices witnessed record surge during CY21 where DAP prices rose from USD 433/ton to USD 915/ton. Similarly, phosphoric acid prices increased from USD 795/ton to USD 1,330/ton.
• Management informed that future contract of phosphoric acid may go up to USD 1,580/ton which will result in further hike in local DAP prices. The company is expecting DAP offtake to remain subdued owing to higher DAP prices.
• Company management is comfortable with the current performance of coal power plant, Fauji foods and PMP operations.
• FFBL has recorded expected credit loss on receivables from FML and it has been decided to convert loan of PKR 7bn to FML into equity. Furthermore, the management is considering number of options regarding Fauji Meat Ltd. (FML) including joint venture/ toll processing or divestment; however, no decision has been taken yet in this regard.
• The higher effective tax rate during 4QCY21 is attributable to normalization of tax rate as the company was earlier charged on turnover basis due to lower profitability. Moreover, increased tax on intra company dividend and sales to unregistered dealers led to higher taxation.
• Currently, the company is receiving gas in order to meet urea shortfall in the country, resultantly the company has postponed its annual plant turnaround in 1QCY22.

• FFC announced its CY21 financial results today, wherein the company profitability surged 5% YoY to PKR 17.21/share, against PKR 16.36/share in CY20. For 4QCY21 EPS stood at PKR 4.72, down 15% YoY, against an EPS of PKR 5.55 in SPLY.
• Along with the results, company announced an interim DPS of PKR 4.65 which took CY21 payout to PKR 14.50/share compared to PKR 11.20/share, last year. The announced dividend was higher than our expectation due to improved liquidity during the year.
• Lower profitability during 4QCY21 can be attributable to the absence of gain recognized on GIDC during SPLY and higher financial charges.
• Despite lower offtake of Urea (3% YoY) and DAP (25% YoY) during 4QCY21, FFC’s net sales increased by 20% YoY due to higher prices of Urea (+12% YoY) and DAP (+95% YoY).
• Consequently, gross margin improved by 4 ppts to 32.8%, compare to 28.8% SPLY.
• During 4QCY21, distribution cost clocked in at PKR 2.4bn up 8.0% YoY, primarily due to higher transportation and fuel charges.
• Other income increased by 36% YoY during the quarter to PKR 2.0bn, on the back of higher dividend from subsidiary, associates and better return on investment portfolio.
• Finance cost surged 80% YoY to PKR 840mn in 4QCY21 due to increased short-term borrowing along with higher interest rate.
• We maintain our ‘BUY’ recommendation on FFC with Dec-22 price target (PT) of PKR 135/share. The stock provides total return of 40% from current levels (PT is offering an upside of 27.1% along with dividend yield of 13.0%).

• ISL announced its 2QFY22 financial results today, where the company posted an EPS of PKR 3.58, down 30% YoY. The result was below our estimates mainly due to lower volumetric sales. This takes ISL’s 1HFY22 earnings to PKR 9.7/share, up 52% YoY. Along with the results, company declared an interim cash dividend of PKR 2.0/share.
• The company’s net sales stood at PKR 18.8bn, up 5% YoY on the back of higher product prices. Gross margins clocked in at 15.3% as compared to 20% in SPLY, down 4.7ppts YoY mainly due to absence of inventory gains.
• Distribution expense increased by 38% to PKR 217mn, whereas finance cost went up by 106% YoY to PKR 368mn mainly due to increased borrowing coupled with high interest rates.
• On the contrary, effective tax rate remained 24.1% as against 28.8% in same period last year, restricting the decline in bottomline.
• On sequential basis, ISL posted earnings decline of 42% QoQ owing to lower volumetric sales and gross margin contraction by 2.4%.
• We have a ‘Buy’ stance on ISL. Our Dec-22 price target (PT) of PKR 112/share provides an upside of 61% along with a dividend yield of 11%.

• ISL’s board meeting is scheduled on January 31, 2022 to consider 2QFY22 financial results. We expect the company to post earnings of PKR 4.4/share, down 14% YoY. This decline is attributable to contraction in gross margins led by absence of inventory gains during the quarter. This will take ISL’s 1HFY22 earnings to PKR 10.5/share, up 65% YoY. Along with the results, we expect the company to declare an interim cash dividend of PKR 4.0/share.
• Net sales are likely to record 54% YoY growth to PKR 27bn on account of higher product prices and increased volumetric sales. On the contrary, we expect gross margin to clock in at 13.3% as against 20% in SPLY owing to absence of inventory gains.
• Other operating charges are expected at PKR 266mn, down 7% YoY, whereas finance cost during 2Q is expected to increase by 57% YoY to PKR 281mn, on the back of higher borrowings and interest rates.
• Furthermore, we expect effective tax rate in this quarter to be around 29%.
• We have a “BUY” stance on ISL. Our Dec-22 PT of PKR 112/share indicates an upside of 63% along with a dividend yield of 11.6%.

• FFBL announced its CY21 results today wherein the company posted an EPS of PKR 4.95, up 1.1x YoY as against an EPS of PKR 2.35 in CY20. For 4QCY21 company reported an EPS of PKR 0.19, down 92% YoY as against an EPS of PKR 2.40 in 4QCY20. The result was below our expectations mainly due to lower gross margins, higher tax charge and allowance for expected credit losses booked by the company during the 4Q. No dividend was announced by the company for the stated period.
• Net sales increased 26% YoY during 4Q, mainly driven by ~95% YoY increase in the DAP prices as the offtake remained sluggish (down 25% YoY).
• Gross margins shrank to 18.1% in 4Q, compared to 21.8% in SPLY, possibly due to higher phosphoric acid prices.
• The company booked allownace for expected credit loss of PKR 4.25bn with impact of PKR 3.3/share during 4Q. We expect the amount is booked on the loans provided to the FML and FFL.
• The effective tax rate was also on the higher side at 92.5% in 4Q compared to 35.1% in SPLY, further deteriorating the bottomline.
• We recommend ‘BUY’ on FFBL with our rolled over Dec-22 price target (PT) of PKR 29/share, offering an upside of 19% along with a dividend yield of 15.5%.

• In line with the forward guidance provided in the last monetary policy, SBP kept the policy rate unchanged at 9.75% in its Jan-22 Monetary Policy Statement (MPS), after consecutive hikes in last four meetings totaling 275bps.
• SBP now has a more comfortable posture on the existing monetary setting, mainly due to the contractionary stance of the fiscal policy after the recently passed Finance Supplementary Act 2022 which will help in containing the country’s budget deficit and slowdown demand growth.
• While SBP expects YoY CPI inflation to remain close to the upper end of its forecast range of 9% to 11% in the next few months, it believes that sequential momentum of inflation and inflation expectations have fallen significantly.
• The SBP has reiterated that current real interest rates are mildly positive on a forward-looking basis and that the current monetary policy stance is sufficient to guide inflation to the target range of 5-7% during FY23; but at a quicker pace than previously expected.
• This effectively implies that as per current assessment of SBP, the interest rates have peaked, with SBP expecting small adjustments of policy rate on either side, depending upon the subsequent data outturns. This could be a key trigger for the stock market.
• Despite recent rally in global oil prices, SPB maintained its Current Account Deficit (CAD) target in the range of USD13-14bn during FY22, as CAD appears to have stopped growing since Nov-21, and non-oil Current Account balance is expected to be in a small surplus during FY22.
• The SBP has lowered its GDP growth rate target to 4.5% from previous estimates of 5% due to upward revision of FY21 growth and expectation of a slowdown in demand owing to a blend of monetary and fiscal tightening.