Darson Strategy Report 2020 PDF

111-900-400 or www.darson.com.
pk
ASIA | PAKISTAN | EQUITIES
DARSON SECURITIES (PVT) LIMITED

TREC HOLDER : PAKSITAN STOCK EXCHANGE & PAKISTAN MERCANTILE EXCHANGE
Equities and Economic Outlook
PAKISTAN
Strategy Report- 2020
Bulls Igniting The Market - 52,500 Level
Research Department Notified Research Entity

Email : research@darson.com.pk www.JamaPunji.pk
Contact no: 021-32467224 Ext:125

Contents
S.No. Table Of Contents Page No.
1 Summary 3
2 Economic Survey 4
3 Economic Outlook 8
Year of Economic Turnaround 9
Fiscal Account-Noise of Another Mini Budget 10
Current Account-Structural Reforms Required for a Positive Balance 11
Inflation to Slow Down by 4QFY20 Thus Creating Room for Discount Rate Cut 12
IMF- Program for Economic Stability 13
FATF- Exiting Grey List Likely in CY20 14
Key Economic Indicators 15
4 Equities Outlook 16
5 Sector Outlook 25
Banks- Positive Year Ahead 26
E&P- High Risk Appetite Towards Untapped Areas 27
OMCs- Good Times Ahead? 28
Auto- Valuations Not Attractive Yet 29
Cements- Future Seems Lucrative 30
Fertilizer- Evergreen Demand 31
Chemicals- Prospects Evergreen Thus Monopoly Leads Market 32
Engineering- Cyclicality Continue to Swing 33
Textile- Future Would be Bright 34
IPPs- Dual Hedge 35
6 Top Picks 36
7 What Technical Says? 49
8 Stock Screen 62
9 Contact Details 64
10 Disclaimer 65
Page No. 2
Equities and Economic Outlook 2020
Summary
• KSE 100-INDEX is expected to reach at 52,500 level at the end of CY20 based on Justified P/E.
• Based on our technical analysis, we anticipate the index to touch a level of 50,000 points at end of Dec-20.
• Macro economic indicators stabilized and are showing signs of recovery. We foresee monetary easing to start from 4QFY20 which would provide support to economic
activity and positively impact the market.
• Our forecast of strong equity market performance is on the back of corporate earning growth (Darson Universe 7%), materialization of second Phase of CPEC, improvement
in macros and easing of monetary policy by the SBP.
• To tackle fiscal deficit, GoP entered into an IMF program which set conditions such as the tightening of monetary policy, an autonomy of institutions (SBP, OGRA and NEPRA),
flexible market exchange rate, adjustment in power tariffs, jacking up tax revenue and reduction of borrowing from SBP.
• Out of 27 recommendations by FATF, 5 of the recommendations have been fulfilled whereas the remaining 22 are still unsettled. FATF has given an extension for another
four months till February 2020 to meet the target within the timeline, however according to our understanding failure to meet these recommendations within this timeline
could result in a further extension granted by FATF.
• We have an overweight stance on Banks, Cement and E&P Sectors, marketweight stance on Fertilizer, Steel, Textile, and Chemicals while an underweight stance on the Auto
Sector.
• Our top picks include HBL, UBL, BAHL, OGDC, PPL, LUCK, ACPL, KOHC, MUGHAL, HUBC and TGL.
Page No. 3
Notified Research Entity
www.JamaPunji.pk
Darson
Economic Survey
Darson Economic Survey
• Darson Securities (Pvt.) Ltd. conducted a survey on economy, equity market and political outlook which included 27 respondents from banking industry, business executives,
fund managers, research analyst and high net worth individuals. Our survey consists of 14 questions with 3 options. Result of the survey is summarized below:
1. Real GDP Growth Rate in FY20 2. Monetary Policy Rate at end of Dec-2020
Between 2.5% to 3% Between 3% to 3.5% Between 3.5% to 4% Between 10% to 13% Less than 10% More than 13%
15% 7%
41% 19%
44% 74%
3. CPI Inflation in FY20 4. KSE 100 Index by Dec-2020

Between 10% to 13% Less than 10% More than 13% Between 35,000 - 40,000 Between 40,000 - 45,000 Between 45,000 - 50,000
7%
15%
30%
26% 59% 63%
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5. Government Stability 6. USD to PKR by Dec-2020 7. Current Account Deficit in FY20 (USD in Bn)
Mixed No Yes Between 140-150 Between 150-160 Between 160-170 Between 3 To 5 Between 5 To 7 Between 7 To 10
19% 7%
33% 33% 26%
63% 4% 67%
48%
8. Fiscal Deficit in FY20 (Rs in Tr) 9. SBP Reserves at end of Dec-2020 (USD in Bn)
Between 2.5-3.0 Between 3.0-3.5 Between 3.5-4.0 Between 10-13 Less than 10 More than 13
11%
41% 48% 45%
48%
7%
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10. Crude Oil Price by Dec-2020 11. IMF Program Continuation 12. Will Pakistan remain in MSCI in CY20
Between 50-60 Less than 50 More than 60 No Not Sure Yes No Not Sure Yes
4% 4%
22% 7%
19%
48%
30% 74%
92%
13. Will Pakistan Credit rating improve in CY20 14. Will Army Chief Retirement be extended
No Not Sure Yes No Not Sure Yes
19% 11%
15%
59% 22%
74%
Page No. 7
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Economic Outlook
Year of Economic Turnaround
Economic Outlook
Year of Economic Turnaround
• In order to curb twin deficit (fiscal and current account) and to hold dwindling foreign exchange GDP Growth
reserves, GoP and SBP took necessary actions such as depreciation of PKR against USD, increased the 6.00% 5.53%
5.22%
interest rate along with duties & taxes. 5.00% 4.56%
• As a result of the above measures Pakistan’s economy faced slowdown but Government succeeded in 4.00% 3.29%
3.67%
2.98%
stabilizing the economy. 3.00%
• Current account deficit declined to USD1.8bn in 5MFY20 as compared to USD6.7bn in last year same 2.00%
period (down by 73% YoY), 1QFY20 fiscal deficit contained while primary fiscal account turned into 1.00%
surplus of Rs286bn (0.6% of GDP) and PKR stabilized against USD. 0.00%
FY16A FY17A FY18A FY19A FY20E FY21E
• Inflows from friendly countries (Saudi Arabia, UAE, Qatar and China) and other multilateral agencies Source: PBS, Darson Research
resulted a positive impact on foreign exchange reserves.
• Govt. fulfilled the demands which were given by IMF which included structural changes and tough
Current Account Balance vs Exchange Rate
decisions. Current Account Bal. (Mn USD) PKR/USD
• Materialization of 2nd phase of CPEC, investment commitments from friendly countries (KSA and 500 200
0
Russia), Govt. focus on export growth, curtailing circular debt, improved energy situation and 150
-500
increasing tax base which were achieved through the implementation of proper documentation -1000 100
policies by the government. We believe these could be the key elements to support the growth of the -1500
50
economy. -2000
-2500 -
• We expect Pakistan GDP to grow at the rate of 2.98% in FY20 however from 2HCY20 economic
Mar-19
May-19
Jan-19
Oct-18
Oct-19
Dec-18
Nov-18
Nov-19
Jul-18
Jul-19
Apr-19
Jun-19
Sep-18
Feb-19
Sep-19
Aug-18
Aug-19
activities could start taking off.
Source: SBP, Darson Research
Page No. 9
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Economic Outlook
Fiscal Account – Noise of Another Mini Budget
Rs in Billions 1QFY20 1QFY19 YoY 4QFY19 QoQ
Total Revenue 1,489 1,102 35.1% 1,317 13.1%
• In 1QFY20, GoP reported the fiscal deficit of Rs286bn which is half compared to the same period last Tax Revenue 1,143 975 17.2% 1,311 -12.8%
year and showing significant decline of 81% on QoQ basis. Federal 1,038 887 17.1% 1,197 -13.3%
Provincial 105 89 17.9% 114 -8.4%
• Higher revenue growth along with curtailment of expenditure are the major reasons for the significant Non-Tax 346 127 172.8% 6 5975.9%
Federal 315 112 180.7% (15) NM
decline in fiscal deficit. Furthermore primary balance which is calculated as budget deficit minus Provincial 31 15 111.8% 21 47.4%
markup payment posted a surplus of Rs286bn which is 0.65% of GDP. Total Expenditure 1,775 1,644 8.0% 2,839 -37.5%
Current Expenditure 1,582 1,480 6.9% 2,306 -31.4%
• In first review IMF revised the tax collection target of FBR for FY20 from Rs5.50tr to Rs5.23tr. In our Of which : Mark-up Payments 572 507 12.7% 632 -9.5%
Defence 243 219 10.6% 372 -34.8%
view the revised target also seems unachievable.
Develop. Exp. & Net lending 147 109 35.1% 535 -72.5%
• According to the news, GoP might announce a mini budget by Feb-2020 to meet the revenue targets Statistical Discrepancy 46 55 -16.6% (1) NM
Budget Deficit (286) (542) -47.2% (1,522) -81.2%
by imposing new taxes and duties. Financing 286 542 -47.2% 1,522 -81.2%
• As the history suggest budget deficit of Pakistan remained at a lower level in the first half while in External 166 211 -21.0% (108) -254.5%
Domestic 120 331 -63.9% 1,630 -92.7%
second half of year the budget deficit increased. Non-Bank 243 238 1.7% 155 56.9%
Bank (123) 92 NM 1,476 NM
• Border tensions, attention diversion tactics by neighbor may escalate regional risk and increased
Privatization Proceeds - - - - -
defense expenditures. Total Revenue % of GDP 3.4% 2.9% 3.4%
Tax Revenue % of GDP 2.6% 2.5% 3.4%
• In order to meet fiscal deficit target set by IMF, GoP has to monitor the revenue and expenditure side. Nontax Revenue % of GDP 0.8% 0.3% 0.0%
Total Expenditure 4.0% 4.3% 7.4%
Current 3.6% 3.9% 6.0%
Of which : Mark-up Payments 1.3% 1.3% 1.6%
Defence 0.6% 0.6% 1.0%
Develop. Exp. and net lending 0.3% 0.3% 1.4%
Budget deficit -0.6% -1.4% -3.9%
Primary Balance (Rs in Bn) 286 (35) (891)
Primary Balance (as % of GDP) 0.65% -0.09% -2.31%
GDP (Rs. in Billion) 44,003 38,388 38,559
Source: MoF, Darson Research
Page No. 10
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Economic Outlook
Current Account- Structural Reforms Required for a Positive Balance
• Current account deficit in 5MFY20 posted a decline of 73% YoY to arrive at USD1.82bn as compared to CAD (USD in Mn)
USD6.7bn in the SPLY. 500
• Decline in imports by around 40% YoY played a major role in curtailment of overall current account 0
-500
deficit.
-1000
• Ban on imports of autos with increasing tax base plus shifting away from furnace oil to renewable
-1500
energy and RLNG based power production amid shrinking of raw material imports (impacted from -2000
cyclicality) are the main contributors that ultimately cooled down the imports of transport, petroleum -2500
Mar-19
May-19
Jan-19
Oct-18
Oct-19
Nov-18
Nov-19
Jul-18
Dec-18
Jul-19
Apr-19
Jun-19
Aug-18
Aug-19
Sep-18
Feb-19
Sep-19
and metals by 38%, 32% and 20% respectively.
• Economic downturn, increase in taxes & duties and weakening of local currency contributed to the Source: SBP, Darson Research
curtailment of imports.
• In 5MFY20, exports posted a growth of 4.7% that has reached to a level of USD10.3bn. However in
Trade Balance
dollar terms growth of exports were not significant, whereas if we look to volumes, the exports posted Exports (USD in Mn) Imports (USD in Mn) Trade Balance (USD in Mn)
an increase in some areas. 6,000
• Steep devaluation of PKR against USD provided room for the exporters to capture the international 4,000
market. 2,000
• We believe in FY20 CAD to be around USD4.3bn, however in order to manage the current account -
(2,000)
deficit Government has to focus on exports and investment in value added industries.
(4,000)
• Once the economic activities start moving in upward direction it is difficult to maintain the CAD at
Mar-19
May-19
Jan-19
Oct-18
Oct-19
Nov-18
Nov-19
Jul-18
Dec-18
Jul-19
Apr-19
Jun-19
Aug-18
Aug-19
Sep-18
Feb-19
Sep-19
current level.
Page No. 11
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Economic Outlook
Inflation to Slow Down by 4QFY20 Thus Creating Room for Discount Rate Cut
• In Nov’19, National CPI reached to 12.67% which was at a multi year high level. Increase in food 14%
CPI Policy Rate
prices, devaluation of PKR, increase in energy prices (Gas and Electricity) and imposition of taxes were 12%
the major reasons for a higher CPI in Nov. 10%

8%
• In anticipation of rising inflation SBP took the cautionary measure of increasing the policy rate by
6%
300bps in CY19.
4%
• We expect inflation to start slowing down from Mar-20 and the avg. inflation for FY20 to be around 2%
11.1% while for FY21 the expected inflation would be at a single digit level of around 7.9% 0%
Jan-19
Nov-18
Nov-19
Dec-18
Jun-18
Mar-19
May-19
Jun-19
Aug-18
Sep-18
Feb-19
Apr-19
Aug-19
Sep-19
Oct-18
Oct-19
Jul-18
Jul-19
• However, any increase in energy prices may change our assumption of the inflation forecast.
• On basis of our inflation forecast we expect SBP to start with an easing policy rate from 4QFY20 by Source: PBS, SBP, Darson Research
initial cut of 50bps, however till June-21 we expect the policy rate to come down to 10.5%.
PKR/USD vs REER
PKR to remain stable in short term while decline in REER provide support to Export 170
REER USD/PKR
160
• Since Nov-17 PKR depreciated by around 47% against USD which provided relief to the current 150
140
account deficit by curbing import while on the other hand made export competitive as compared to 130
120
regional countries. 110
100
• Real Effective Exchange Rate (REER) also declined from its high of 123.51 in Apr-2017 to 94.71 in Oct- 90
80
19 which made the exports competitive and provided support to the exporter. 70
60
• We expect PKR/USD to remain stable in FY20, although we expect an upward movement in PKR/USD
Jan-16
Jan-17
Jan-18
Jan-19
Oct-15
Oct-16
Oct-17
Oct-18
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Apr-17
Apr-18
Apr-19
Apr-16
at the end of FY21.
Page No. 12
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Economic Outlook
IMF- Program for Economic Stability
Date Mn of SDRs % of Quota Conditions
3-Jul -19 716 35 Approva l of a rra ngement
• On July 3, 2019 IMF Executive Board approved the 39-month, SDR4,268Mn (~ USD6bn or 210 percent
6-Dec-19 328 16 Fi rs t revi ew a nd end-September
of quota) Extended Fund Facility (EFF) program for Pakistan. 2019 performa nce/continuous
• The conditions imposed by IMF includes tightening of monetary policy with an autonomy of
6-Ma r-20 328 16 Second revi ew a nd end-
institutions (SBP, OGRA and NEPRA), flexible market exchange rate, adjustment in power tariffs, December 2019
increase in tax revenue and elimination of borrowing from SBP by the Govt. for budgetary support. performa nce/continuous
5-Jun-20 328 16 Thi rd revi ew a nd end-Ma rch
• Soon after the approval of program in July, IMF released its first tranche of USD1bn. On successful 2020 performa nce/continuous
completion of first review IMF released another tranche of USD453mn. cri teri a
4-Sep-20 328 16 Fourth revi ew a nd end-June
• Pakistan met all ‘continuous performance criteria (PCs)’ by September 2019. Five indicative targets 2020 performa nce/continuous
(Its) were missed which included tax refund and power sector arrears. Although Pakistan is on track to cri teri a
5-Ma r-21 560 28 Fi fth revi ew a nd end-December
complete them by the end of December 2019. 2020 performa nce/continuous
• IMF projects GDP growth of 2.4% for FY20 and 3.0% in FY21 while avg. Inflation is expected at 11.8%
3-Sep-21 560 28 Si xth revi ew a nd end-June 2021
in FY20. performa nce/continuous
• IMF has also cut the FBR's revenue target for FY20 from Rs5.50tr to Rs5.23tr for FY20. cri teri a
4-Ma r-22 560 28 Seventh revi ew a nd end-
• In case of any shortfall in revenue Govt. will unveil a mini budget by Feb-2020 to take measures such December 2021
as additional taxes and duties. performa nce/continuous
2-Sep-22 560 28 Ei ghth revi ew a nd end-June
• In worse case if Pakistan fails to meet IMF program objectives and blacklist by the Financial Action 2022 performa nce/continuous
Task Force (FATF) could restrict capital inflows. cri teri a
Total 4,268 210
Source: IMF, Darson Research
Page No. 13
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Economic Outlook
FATF- Exiting Grey List Likely in CY20
• The FATF (global watchdog for money laundering and terrorist financing) has put Pakistan in grey list Pakistan to remain on FATF GrayList till
Oct 18, 2019
February 2020
in June 2018. Previously the country was on a grey list for the period of 2012-2015.
• Due to non compliant of 40 recommendations given by FATF on money laundering and combating
Aug 23, 2019 APG Places Pakistan on Enhanced Follow-up
terror financing Pakistan had been listed on the grey list, since then the government is focusing on
these issues to ensure that the country exits the grey list. APG reviews 3rd Evaluation Report on anti-
Aug 21, 2019
• Until now Pakistan has fulfilled 5 recommendations with a satisfactory note, where as the remaining money laundring
22 has remained unresolved. In order to meet the target, FATF has given an extension for another FATF acknowledges efforts to curb terror
Jun 21, 2019
four months till February 2020. financing
• A positive feedback by the review committee has revived the investor confidence which is witnessed Feb 21, 2019 Govt. bans militants group Jamaatud Dawa
by the upsurge in Pakistan equity market.
Progress on FATF requirement turned
• We believe the regulators are actively working on recommendations in order to pull out the country Oct 19, 2018
unsatisfactory
from the grey list, although we see the chances of being further deteriorated to the black list are very
low. If targets are not met then further extensions could be given. APG team finds defencies in Pakistan's FATF
Aug 16, 2018
action plan
• Finance minister while addressing the media highlighted that all the institutions are on the same page
to combat terror financing and money laundering. APG team begins a 12-day on-site inspection
Aug 9, 2018
of Pakistan
Jun 28, 2018 Pakistan Placed on FATF GrayList again
Pakistan Placed on FATF GrayList for the

2012-15
First Time
Source: FATF, Darson Research
Page No. 14
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Economic Outlook
Key Economic Indicators
Fiscal Year Unit 2016 2017 2018 2019 2020F 2021F

GDP at Current Market Price Rs in Million 29,075,633 31,922,303 34,618,576 38,558,769 41,410,148 46,363,238
GDP at Constant Price Rs in Million 11,116,802 11,696,934 12,343,499 12,750,126 13,129,711 13,611,262
GDP Growth Rate Percentage 4.56% 5.22% 5.53% 3.29% 2.98% 3.67%
Agriculture Growth Percentage 0.15% 2.18% 3.94% 0.85% 1.10% 1.50%
Manufacturing Growth Percentage 5.69% 4.55% 4.92% 1.40% 1.00% 1.50%
Service Growth Percentage 5.72% 6.47% 6.25% 4.71% 4.20% 5.00%
Inflation (Yearly Avg.) Percentage 2.86% 4.15% 3.92% 7.34% 11.10% 7.92%
SBP Policy Rate (FY End) Percentage 5.75% 5.75% 6.50% 12.25% 12.75% 10.50%
Current Account Deficit USD in Million -4,867 -12,621 -19,897 -13,508 -4,317 -5,779
Current Account Deficit % of GDP Percentage -1.75% -4.14% -6.32% -4.77% -1.62% -2.06%
Export (SBP) USD in Million 21,972 22,003 24,768 24,224 24,069 25,689
Import (SBP) USD in Million 41,255 48,683 56,592 52,388 44,560 48,345
Trade Deficit (SBP) USD in Million -19,283 -26,680 -31,824 -28,164 -20,491 -22,655
Remittances USD in Million 19,917 19,351 19,914 21,846 22,501 23,626
FDI USD in Million 2,305 2,747 3,471 1,667 1,833 2,200

Foreign Borrowing USD in Million 7,548 10,550 11,487 10,814 11,681 10,875
Debt Repayment (Principal) USD in Million 3,076 4,439 3,326 6,543 8,479 6,863
External Debt USD in Million 73,945 83,477 95,237 106,312 111,514 116,525
Reserve SBP USD in Million 18,143 16,145 9,765 7,280 13,825 18,416
PKR/USD Rate (Year End) 104.37 104.80 109.97 136.27 155.24 165.19
Source: SBP, PBS, EAD, MoF, Darson Research
Page No. 15
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Equities Outlook
Performing At Its Best..
Equity Market Outlook
2019 At a Glance
KSE-100
45,000 Moody’s Reserves
upgrades rise to
Pakistan USD17bn
UAE announced outlook to
42,500 USD3bn support for stable
Received First IMF
Pakistan
USD1bn from Pakistan tranche
UAE maintains MSCI received
40,000 Approval of State
EM Status
CAD Decline
Fund to support stock Supreme Court of
Received Pakistan grants six
USD1bn from Market USD5bn
received Pak gets 4 months months extension to
37,500 KSA to avoid FATF COAS
from
UAE/KSA FATF blacklist IMF/ADB
Crown Prince MBS Tensions on
blacklist support
commit to support the Pak-India
averted IMF positive reforms
35,000 Pakistan in financial crisis border
Developments
comments about
Rs200b Sukuk Pak Economy on the
Policy
issued opposition’s
rate hike
Azadi March
32,500 India Pakistan border
tension/ADB forecast
low growth
30,000 Decline in CAD Decline in

Fixed
Income
S&P keeps
Yields
27,500 Pakistan
outlook
stable
25,000
Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
Page No. 17
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Sluggish 2018, Inflection Point in 2019 and Revival in 2020
• We expect KSE-100 index to reach at 52,500 level by the end of CY20, providing a return of 28% from Country wise Regional Price to Equiy
December 2019 closing level. Our index target is based on justified P/E which comes out at 10.77x as P/E
23
against current index at a P/E of 8.39x. 18 18 19
16 16 17 17 17
13 15
12 13
• KSE-100 index trading at a P/E of 8.39x and D/Y of 4.23% which represents a discount against regional 10 11
8
markets.
• With better macros and improvement in corporate profitability would result an upsurge in equity
Emerging…
China
Saudi Arabia
Vietnam
Hong kong
Indonesia
Taiwan
Sri Lanka
Philippines
Pakistan
Singapore
Thailand
Nikkei 225 Japan
India
Malaysia
Frontier Mkts.
market.
• A bleak head start of CY19 with an index at 38k had miserably dwindled the KSE-100 index to its
lowest level by 10k points in August from its peak of 52k in mid of 2017. Since 2008, this was the
Source: Bloomberg, Darson Research
biggest drop for equity market.
• Since last year’s post election an ongoing discussion with IMF has raised serious concerns over
Country wise Regional Dividend Yield
vulnerable economic situation in Pakistan on back of
D/Y
1) locked Exchange Rate, 2) Current Account Deficit, 6
2) 3) Fiscal Deficit, 4) Balance of Payments, 4 4
4 3 4 4 3
3 3
3) 5) Circular Debt, 6) Foreign Exchange Reserves etc. 2 2
2 2 2
1
• The newly elected government PTI has initially let the market to decide USD/PKR rate as per one of
Emerging…
Nikkei 225…
the demands by IMF. After PKR got devalued by ~20% IMF gave a positive feedback thus the market
China
Vietnam
Saudi Arabia
Hong kong
Indonesia
Taiwan
Sri Lanka
Pakistan
Philippines
Singapore
Thailand
India
Malaysia
Frontier Mkts.
took off coupled with a stable outlook from S&P.
Page No. 18
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Eying on Political Stability
• Equity market relies on economic factors, foreign investments, security situations, credit rating, KSE-100
foreign affairs and other factors. Politics is also one of the key factor that steers the vision and sets 20,000 Gen. Pervez Mushraf Era
the direction for national economy as well as it embarks equity market. 15,000
• In the past It has been witnessed that the whole decade of Gen. Pervaiz Musharaf’s government was
10,000
an era of significant foreign direct investment (FDI). Before the end of his tenure Pakistan equity
5,000
market had outperformed the whole region.
• Global financial crisis in 2008 and resignation from president Pervaiz Musharaf had significantly pulled 0
Dec-98
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-99
out the investment from the equity market by foreigners as a net seller. After this crunch when the
government of PMLN Nawaz Sharif took charge (who was famous for his support for the business
community) it turnaround the prospects for the investors and also increased interests of foreign
investors. This further resulted in an acceleration of the GDP growth rate so as the equity market. KSE-100
• Political stability is a heavy weight factor that drives the equity market wherein we see that PTI 60,000
PPP Era PMLN Era PTI Era
government has faced a depressed time period in the initial year where as now we can see that the 50,000
economic indicators are turning toward the positive. 40,000

30,000
• Requirements by IMF are also been partially fulfilled, following reaching a stable outlook of credit
20,000
rating from the negative side.
10,000
• Silent consensus of almost all opposition parties on term extension of COAS, issuance of new NAB 0
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Ordinance and relief to arrested leaders of opposition parties, all eying on political stability.
Page No. 19
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Real Catalyst for Equities
• The real poison for the economy like Pakistan which is an import based economy has been shattered KSE-100 USDPKR
by the devaluation of local currency. 45,000 170

165
• Corporate profitability has been severely affected due to a rise in cost, where majority of the burden 40,000 160
155
35,000
has been passed to the consumers. This burden of price has an inverse pressure on demand side 150
30,000 145
squeezing sales volume and depressing the overall growth. 140
25,000 135
• Significant PKR devaluation has boosted the inflation in last couple of years. One of the major reason 130
20,000 125
of this inflationary pressure is attributed to the rise in petroleum prices (i.e. denominated in USD),
31-Jan-19
30-Apr-19
31-Dec-18
31-Dec-19
28-Feb-19
30-Sep-19
31-Mar-19
31-Jul-19
31-Oct-19
30-Nov-19
30-Jun-19
31-May-19
31-Aug-19
where as the partial impact still need to come in inflation.
• When the artificial exchange rate had been set free for the market to decide, another demand by the
Source: PSX, SBP, Darson Research
IMF was to increase the policy rate to tackle twin deficits and cool down the overheated economy.
• As of now exchange rate looks stable for this fiscal year and as far as the policy rate is concerned, it KSE-100 Policy Rate
seems monetary tightening phase has surpassed its peak and now we believe an easing phase is 13% 13% 13% 13% 13%
45000 12% 12% 14.00%
approaching. 40000 10% 10% 11% 11% 12.00%
10.00%
• Going forward the stable outlook on PKR-USD parity and monetary loosening could reiterate investor
35000 8.00%
confidence.
30000 6.00%
40799.53
39054.61
38649.34
36784.44
35974.79
33901.58
31938.48
29672.12
32078.85
34203.68
39287.65
40735.08
4.00%
25000
2.00%
20000 0.00%
Mar-19
Feb-19
Sep-19
Jul-19
Oct-19
Nov-19
Jun-19
Aug-19
May-19
Apr-19
Jan-19
Dec-19
Source: PSX, SBP, Darson Research
Page No. 20
www.JamaPunji.pk
Foreign Buying yet to Come SECTOR CY'18 CY'19
OTHER 42 3
• Economic reforms are a major agenda for current government as they are actively working towards CEMENT -73 27
BANKS -263 70
achieving those. However these steps are not very supportive for various sectors but for long term
FERT 11 34
these restructuring and amendments are mandatory to bring back the foreign investment FOOD -11 -5
• These reforms along with the active penetration of foreign affairs are attracting foreign investors O&G-E -148 -74
who are willing to invest in new projects. This shows that Pakistan has a growth potential and remains O&G-M -25 7
POWER -37 0
in top list for regional as well as global investment.
COMM -5 2
• Reserves remains the major concern as it demonstrates the ability of a country to finance its imports TEXTILE -28 -6
and other outflows. In FY20 SBP reserves jumped up by $3.6bn which was reflected in KSE-100 index Net Total -537.1 59.8
Source: NCCPL, Darson Research
which also tumbled by ~20%.
• To recall, in 2018 PSX witnessed heavy selling mainly by foreigners which caused the index to free fall. CLIENT CY'18 CY'19
Further in 2019 the market bottomed that attracted investors due to cheap valuations amid improved F-IND 4 -1
F-CORP -568 37
macros.
O/S PAK 27 24
• We have Overweight stance on Banks, Cement and E&P Sectors, Marketweight stance on IPP’s,
INDV. 153 149
Fertilizer, Steel, Textile, and Chemicals while Underweight on Auto Sector. COS. 109 34
• Despite absolute and relative regional attractive valuations of Pakistani Equities, foreigners are feeling BANKS -50 -35
more comfortable in home biased equity investments and enjoying ever highest domestic equity NBFC -1 1
FUND -12 -170
markets,
OTHER 57 18
BROKER -33 -6
INSUR 313 -50
Net -537.1 59.8
Source: NCCPL, Darson Research
Page No. 21
www.JamaPunji.pk
KSE-100 Index Performance Review
KSE-100 DAILY AVERAGE MCap (bn) Performance

60,000
1,600 214% 1,471 250%
50,000 1,400 1,296
1,200 200%
40,000
1,000 150%
30,000 800 59%
600 45% 37% 100%
20,000 24% 20% 258
400 134 15% 12% 50%
200 30 88 44 42 10% 10%
10,000 9 3
0 0%
0
Transoprt
Synthetic
Text.Weav
Text.Comp
O&G-E
Leather
Vanaspati
Inv.Bank/Sec
Banks
Glass
31-Aug-19
30-Sep-19
28-Feb-19
31-May-19
31-Jan-19
31-Mar-19
31-Oct-19
30-Nov-19
31-Jul-19
31-Dec-18
31-Dec-19
30-Apr-19
30-Jun-19
Source: PSX, Darson Research Source: PSX, Darson Research
PE RATIO DIV YIELD (12M) Vol. (mn) Performance

11.00
6000 5391 89% 100%
10.00 4738
5000 80%
9.00 3836
4000 60%
8.00 2982 25%
40%
3000 10% 2300
7.00 4% 1909 20%
2000 1453 1152
6.00 969 739 0%
1000 -4% -20%
5.00 -11% -13% -12% -27%
0 -33% -40%
4.00
Food
Power
O&G-M
Refinery
Banks
Vanaspati
Inv.Bank/Sec
Comm.
Fertilizer
Cement
31-Aug-19
28-Feb-19
30-Sep-19
31-May-19
31-Jan-19
31-Mar-19
31-Oct-19
30-Nov-19
31-Jul-19
31-Dec-18
31-Dec-19
30-Apr-19
30-Jun-19
Source: Bloomberg, Darson Research Source: PSX, Darson Research
Page No. 22
www.JamaPunji.pk
Portfolio Investments Details
Portfolio investments Comparison – Client wise

CY'18 CY'19
400 313
153
200 149
27 109
37 24 34 57
4 1 18
0
-1 -35 -1 -12 -33 -6
-50 -50
-200
-170
-400
-600 -568
F-IND F-CORP O/S PAK INDV. COS. BANKS NBFC FUND OTHER BROKER INSUR
Portfolio investments Comparison – Sector wise

CY'18 CY'19
200
100 70
42 27 34
3 11 7 2
0
-11 -5 0 -5 -6
-25 -37 -28
-100 -73 -74
-200 -148
-300 -263
-400
OTHER CEMENT BANKS FERT FOOD O&G-E O&G-M POWER COMM TEXTILE
Page No. 23
www.JamaPunji.pk
Major Events in 2020
MAJOR EVENTS IN 2020

Organization Date Description Venue
SBP Jan Monetary Policy Pakistan
FATF 16 Feb - 21 Feb Plenary and Working Group Meeting Paris
FED 28 Jan - 29 Jan Federal Open Market Committee Meeting US
OPEC 6-Mar 178th (Extraordinary) Meeting of the OPEC Conference Vienna
OPEC 6-Mar 8th OPEC and non-OPEC Ministerial Meeting Vienna
IMF 6-Mar Second review and end-December 2019 performance/continuous for SDR 328 Pakistan
FED 17 Mar - 18 Mar Federal Open Market Committee Meeting US
SBP Mar Monetary Policy Pakistan
SBP May Monetary Policy Pakistan
FED 28 Apr - 29 Apr Federal Open Market Committee Meeting US
IMF 5-Jun Third review and end-March 2020 performance/continuous criteria Pakistan
OPEC 9-Jun 179th (Ordinary) Meeting of the OPEC Conference Vienna
OPEC 10-Jun 9th OPEC and non-OPEC Ministerial Meeting Vienna
FED 09 Jun - 10 Jun Federal Open Market Committee Meeting US
FATF 21 Jun - 26 Jun Plenary and Working Group Meeting NM
IMF 5-Jun Third review and end-March 2020 performance/continuous criteria for SDR 328 Pakistan
FED 28 Jul - 29 Jul Federal Open Market Committee Meeting US
SBP July Monetary Policy Pakistan
IMF 4-Sep Fourth review and end-June 2020 performance/continuous criteria Pakistan
FED 15 Sep - 16 Sep Federal Open Market Committee Meeting US
SBP Sep Monetary Policy Pakistan
FATF 18-23 October 2020 Plenary and Working Group Meeting Paris
FED 4 Nov - 5 Nov Federal Open Market Committee Meeting US
SBP Nov Monetary Policy Pakistan
FED 15 Dec - 16 Dec Federal Open Market Committee Meeting US
Source: Darson Research
Page No. 24
www.JamaPunji.pk
Sector Outlook
Sector Outlook (Banks)
Banks- Positive Year Ahead
• Tightening of monetary policy, devaluation of PKR, losses on equity market and higher deposit cost Deposits, Advances & Investment (Rs in Bn)
would cause earnings of the banking sector to be depressed in CY19. However we expect earnings 20,000
could improve owing to repricing of assets (Investment and Advances) and better growth of deposits
15,000
in CY20.
10,000
• Amid concerns on the loan book of few banks remain as non performing loans are expected to
5,000
increase due to higher interest rate and slow down in economic activities.
• SBP deferred implementation of IFRS-9 till Dec-2020, however once it is implemented banks have to -
CY15 CY16 CY17 CY18 11MCY19
provide one time provisions.
Deposits Advances Investments
• News regarding Treasury Single Account (TSA) is also circulating, we believe the implementation of
TSA could mainly hurt the profitability of Govt. banks.
Non Performing Loans (Rs in Mn)

Key Risk to our sector:
900,000
(1) Higher provision charges, (2) Implementation of IFRS9, 800,000
700,000
(3) Other regulatory issue and (4) Lower deposits growth 600,000
500,000
400,000
300,000
200,000
100,000
-
Oct-17
Oct-18
Dec-16
Apr-17
Dec-17
Apr-18
Dec-18
Apr-19
Jun-17
Jun-19
Jun-18
Aug-17
Aug-19
Aug-18
Feb-17
Feb-18
Feb-19
Page No. 26
www.JamaPunji.pk
Sector Outlook (E&P)
E&P- High Risk Appetite Towards Untapped Areas
• E&Ps were in limelight at the start of the year due to an offshore drilling in kekra-1 well where no oil Gas production (mmcfd)
and gas was found. Exploration companies are still participating in overseas blocks to diversify their 4,200
portfolios. 4,000
• Oil and gas sector profitability soared in the preceding year which was attributed to rupee 3,800
devaluation. Till now the partial impact of currency fluctuation has been witnessed wherein we see 3,600
the remaining devaluation impact has yet to come. 3,400
• In preceding years Pakistan has faced crisis in the energy sector amid gas shortages reached an
3,200
Mar-19
May-19
Jan-19
Oct-19
Dec-18
Nov-18
Jul-19
Apr-19
Jun-19
Feb-19
Sep-19
Aug-19
alarming situation where the government has taken steps to import RLNG i.e. expensive against local.
• To attract overseas and local exploration companies a new petroleum policy could be expected in
Source: PPIS, Darson Research
future to incentivize the regions which are still untapped and have potential. Furthermore a new zone
in frontier line could be introduced with better pricing of wells for exploration companies.
Oil production (bopd)
• E&Ps started drilling aggressively albeit the government has increased auctions of blocks across the
100,000
country. Also some of the regions were remain underexplored previously due to security situation that
80,000
are now being tapped by the companies to arrest the decline in gas.
60,000
• The belt of the energy sector is hurt by the circular debt that remains unresolved and which causes
40,000
PPL (the major gas producing company) to post a negative cash flow.
20,000
• Currently oil and gas sector valuations look attractive with P/E of 4.5x and D/Y of 10% in FY20E.
0
Key Risk to our sector:
Mar-19
Jan-19
Oct-19
May-19
Nov-18
Dec-18
Jul-19
Jun-19
Apr-19
Feb-19
Aug-19
Sep-19
1) exchange rate fluctuations, 2) fall in oil prices,
3) unfavorable petroleum policy amendments, 4) Potential rise in exploration cost, Source: PPIS, Darson Research
5) decline in production
Page No. 27
www.JamaPunji.pk
Sector Outlook (OMCs)
OMCs- Good Times Ahead?
• In 5MFY20 petroleum sales posted a decline of 6% YoY. HSD and FO posted the highest decline among Industry Sales Volume (Mn Tons)
other products. Higher prices of petroleum products, lower economic activities and lower production
MS HSD FO Total
from FO based power plants were the major reasons for the lower sales volume.
30
• HSD volumetric sales are expected to improve in the coming months due to the start of economic 25
activities, and materialization of CPEC. Furthermore, Govt. step to curb smuggling could provide 20
support to HSD volume as in the past smuggling from Pak-Iran border had dampened the volumetric 15
10
sales.
5
• Shifting away from FO to alternate energy sources and implementation of IMO-2020 standard -
resulting lower sales of FO. sales are expected to remain on lower side as the Govt. is also forcing FY16 FY17 FY18 FY19 5MFY20
Source: OCAC, Darson Research
refineries to curb their FO production and produce efficient fuel. On MS front, we expect sales to
remain in positive trajectory due to increase in vehicle on roads.
Market Share
100%
• PTI Govt. seeks to eliminate circular debt by the end of 2020 for which Govt. is planning to issue 2nd PSO APL HASCOL SHEL
Sukuk of Rs200bn and take other such measures. Any development on this front could be beneficial 80%
10.27% 9.38% 6.88%
for OMCs (specially for PSO) which could improve their cash flow position. Furthermore link of HSD 6.53% 8.33% 11.80% 8.24% 8.28%
60% 7.56% 8.13% 10.42% 5.79%
and MS margins with CPI and stable PKR/USD rate may result in better earnings of OMCs as compared 8.82% 10.44%
10.49%
to previous year. 40%
55.95% 54.64%
Key Risk to our sector: 50.44% 46.89%
20% 42.14%
(1) Price hike, (2) Unexpected slowdown in economy,

0%
(3) PKR devaluation and (4) Ban on FO FY16 FY17 FY18 FY19 5MFY20
Source: OCAC, Darson Research
Page No. 28
www.JamaPunji.pk
Sector Outlook (Automobiles)
Auto Sector-Valuations Not Attractive Yet
• Pakistan’s auto industry is in deep crisis owing to several factors such as (1) FED revision in Budget’20 Current Market share
(engine capacity ranging from 0 to 1,000cc were proposed to be taxed at 2.5%, cars from 1,001cc to INDU HCAR PSMC
2,000cc at 5% and cars from 2,001cc and above at 7.5%.), (2) Additional custom duty, (3) Multiple
price hike owing to currency devaluation (24% since FY18), (4) higher financing rate, (5) Purchasing
26%
power contraction resulted in less demand and an increase in the tax rates for non-filer have also
affected the sector. 55%
19%
• To recall, auto industry has grown at a 4-yr CAGR of ~16% (FY14-FY18) owing to lower financing rate,
government scheme (Apna Rozgar Scheme), better law and order situation and a lower inflation rate
but at present sales numbers are very discouraging as car sales for 5MFY20 plunged 44% YoY (highest
Source: PAMA, Darson Research
in last 5 years). As a result, automakers (INDU & HCAR) had to halt their production.
• Going Forward, we expect car sales to remain depressed throughout the year but to recover
Total Car Sales
moderately by FY21.
Total Cars Sales (In 000) Growth
Key Risks to our sector: 250 40%

20%
200
(1) Price hike, (2) Increase in inflation, 0%
150 -20%
(3) Unexpected slowdown in economy, -40%
100 -60%
(4) PKR devaluation to increase cost of imported raw material and
-80%
50
(5) New entrants (KIA & Hyundai) to create competition -100%
0 -120%
FY16 FY17 FY18 FY19 5MFY19 5MFY20
Source: PAMA, Darson Research
Page No. 29
www.JamaPunji.pk
Sector Outlook (Cement)
Cements- Future Seems Lucrative
• Year 2019 ended up with a negative growth of 2.34% YoY (previously grown by ~15.42% YoY in FY18) Local Dispatches to grow at a 5-yr CAGR of 5%
owing to couple of factors such as cost pressures, monetary tightening and economic slowdown. Industry Local Dispatches (Mn.Ton) Growth
• The current expansion cycle is most likely to end by 3QFY20. The overall production capacity is 60 20%
expected to rise by 17% to reach at ~69.69 MTPA. However, at present there is a lack of demand 50 15%
which could further hamper the utilization level, due to this price breakdown can be seen. 40
10%
30
• We think demand should improve by FY21 as the country would be on a proper track (stabilization, 5%
20
PSDP disbursement by GOP, start of CPEC 2nd phase, government projects (Dams and Housing 10 0%
scheme) as well as monetary easing (decline of interest rate probably by Mar’20) which would boost 0 -5%
FY16 FY17 FY18 FY19 FY20E FY21E FY22E FY23E FY24E FY25E
construction activities. We estimate local sales volume to grow at a 5-yr CAGR of 5%. On the export Source: APCMA, Darson Research
front, southern players have started exporting surplus quantity to offset supply glut however margins
on export are less but still helpful in absorbing the fixed cost.
Industry In Expansion Phase (MTPA)
• Our cement universe (covers 74% of market capitalization of cements) is trading at an average of
80
~USD44.59 EV/ton as compared to plant replacement cost of ~USD75-120/ton, which portrays a
70
significant discount. 60
50
40
Key Risks to our sector:
30
(1) Unexpected slow down in economy, (2) Increase in coal price, 20
(3) Delay in government projects and (4) Severe price cut 10
0
FY16 FY17 FY18 FY19 FY20
Source: Co. Financials, Darson Research
Page No. 30
www.JamaPunji.pk
Sector Outlook (Fertilizers)
Fertilizer Sector-Evergreen Demand
• Pakistan fertilizer demand has been fairly resilient through out the boom and bust cycles of the UREA SEGMENT
economy and national conditions as evident by historical offtakes. Fertilizer offtakes have survived Urea Industry sales (In 000) Production (In 000) Import (In 000)
floods, famine, high prices, water shortage and farmer agronomics, yet nothing could dent the 7000
demand of aggregate fertilizer. However, nutrient wise patterns keep on changing due to dynamic 6000
5000
cropping pattern of the farmers. 4000
• We expect urea demand would continue its historical pace given limited arable land of the country. 3000
2000
Urea is virtually price inelastic due to the specific nature of soil. Around 90% of total fertilizer offtakes 1000
are consumed by 5 major crops of Pakistan; Wheat, Maize, Cotton, Rice and Sugarcane, out of which 0
2012 2013 2014 2015 2016 2017 2018 2019
wheat crop has a lion share of 50%. Source: NFDC, Darson Research
• We anticipate that gas prices would remain at the current rate, in short to medium term provided that
current gas prices have broadly covered the financial burden of gas sector. Thus, urea prices would
UREA PRICES
only show inflationary pressures amid no further increase in prices due to gas cost increase. That's
Equivalent Int'l Urea Local Urea Price
why, we have incorporated only marginal increase of PKR 40 per 50kg bag per year of urea in our
2400
workings. 2200
Key Risks to our sector: 2000
1800
(1) Lack of government support, (2) Gas curtailments, 1600
1400
(3) Decrease in fertilizer offtakes due to change in consumption pattern and 1200
1000
(4) Rivalry amongst industry barons
1QCY'14
2QCY'14
3QCY'14
4QCY'14
1QCY'15
2QCY'15
3QCY'15
4QCY'15
1QCY'16
2QCY'16
3QCY'16
4QCY'16
1QCY'17
2QCY'17
3QCY'17
4QCY'17
1QCY'18
2QCY'18
3QCY'18
4QCY'18
1QCY'19
2QCY'19
3QCY'19
Source: Bloomberg, NFDC, Darson Research
Page No. 31
www.JamaPunji.pk
Sector Outlook (Chemicals)
Chemicals- Prospects Evergreen Thus Monopoly Leads Market
• Chemical sector was one of the most attractive sector in depressed market conditions in 2018 and
PTA-PX International Margin
2019. EPCL and LOTCHEM have enjoyed the pricing power as they are linked with international prices.
PTA Paraxylene (Px) PTA-Px International Margin
• Both companies are the sole producer of PVC & PTA in Pakistan, whereas both are protected from the
1500
government due to duty structure. Country like Pakistan which is facing severe conditions where the
imports are burdened and to curtail this the government is taking necessary actions to substitute 1000
$/ton
imports. 500
• Engro Polymer is continuing to innovate by adding new products in the portfolio which is heavily
0
dependent on imports. The major product is PVC with caustic soda. EPCL also announced PVC
Mar-17
Mar-18
Mar-19
May-17
May-18
May-19
Jan-17
Jan-18
Jan-19
Nov-17
Nov-18
Nov-19
Jul-17
Jul-18
Jul-19
Sep-17
Sep-18
Sep-19
expansion which could fulfill total demand post expansion. Further Diversification could lead to
sustainability. Source: Bloomberg, Darson Research
• The company is also adding Linear Alkyl Benzene Sulphonic Acid (LABSA) which can be sold to an
PVC Ethylene Core Delta
existing customer base of caustic soda. Hydrogen peroxide (H2O2) is another product that EPCL is
PVC Ethylene PVC-Ethylene Core Delta
adding to its portfolio which is produced during the process of PVC manufacturing. EPCL has a 1400
competitive advantage among peers. 1200
1000
• LOTCHEM is the only producer of PTA in the country which has a market share of ~70%. In CY18, local
800
$/ton
demand stood at ~800ktons per annum.
600
• PTA margins have been potentially hurt owing to US-China trade war and lower operating rates. 400
Key Risks to our sector: 200
0
1) Strengthening of local currency, 2) Narrowing of PVC and PTA margins,
Mar-18
Mar-19
Mar-17
May-17
May-18
May-19
Jan-18
Jan-19
Jan-17
Nov-17
Nov-19
Nov-18
Jul-17
Jul-18
Jul-19
Sep-17
Sep-18
Sep-19
3) Unfavorable import duties and 4) Rise in gas prices
Page No. 32
www.JamaPunji.pk
Sector Outlook (Engineering)
Engineering- Cyclicality Continue to Swing
• Economic downturn severely hurt the local steel industry players viz a viz other cyclical sectors (i.e. Rebar & Scrap Prices
Scrap Rebar
cement & auto).
600
• Steel manufacturers experienced slowdown on the following attributes 1) potential cut in PSDP, 2) 500
LSM declined by 6.48% in 4MFY20 and 3) hike in policy rates. 400
$/ton
• ISL & ASL are two players in flat steel industry. Both companies have successfully completed the 300
200
announced expansion. Also the industry is protected against imports with anti-dumping duties.
100
Combined effect of currency devaluation and substantially increase of HRC cost with burden of duties 0
Mar-19
Jan-19
Oct-19
May-19
Nov-19
Dec-19
Jul-19
Jun-19
Apr-19
Feb-19
Aug-19
Sep-19
has enabled the sales volume to remain unaffected.
• Dent in gross margin in last couple of years were on the back of 1) rupee weakening of ~46%, 2) HRC-
CRC margins rigorously shrinking, 3) slowdown in auto sales i.e. (2, 3 and 4 wheels segment), 4)
construction activities were depressed and 5) higher borrowing cost
• MUGHAL and ASTL are two major long bar producers. Both players have a good market share in north Flat Steel Prices
HRC CRC
and south markets. Recently, these companies have successfully achieved their commercial 700
operations of previously announced expansions.
600
Key Risks to our sector are:
$/ton
500
1) Surge in scrap and billet prices, 2) narrowing of international primary margins (HRC-
CRC & scrap-rebar) and 400
3) lower pricing power and 4) Delay in infrastructure projects. 300
Mar-17
Mar-18
Mar-19
May-18
May-19
May-17
Jan-17
Jan-18
Jan-19
Nov-18
Nov-19
Nov-17
Jul-17
Jul-18
Jul-19
Sep-17
Sep-18
Sep-19
Page No. 33
www.JamaPunji.pk
Sector Outlook (Textile)
Textile- Future Would be Bright
• The textile sector in Pakistan has an overwhelming impact on the economy, contributing 60% to the Pakistan Textile Export (value US$mn)
Total Textile Exports
country’s exports. Year 2019 was not very encouraging as total exports (in terms of value) declined by 15000 10%
1.5% to US$13.3bn despite heavy currency devaluation and incentives provided to the sector however
12000
5%
only value added segment witnessed a growth of 3% owing to cheaper financing.
9000
• The recently unveiled budget has put in words the worst fear of the textile sector. As GOP withdraws 0%
zero rated status for major exporters and decided to impose 17% sales tax. This has resulted in a 6000
-5%
liquidity crunch. 3000
• The implementation of CPFTA-II will be a big leap forward towards balancing the trade inequality 0 -10%
between China and Pakistan. China has agreed to immediately abolish tariff on the 313 tariff lines. FY16 FY17 FY18 FY19 5MFY19 5MFY20
Source: PBS, Darson Research
Pakistan's 724 products already have the zero duty access to Chinese markets under the first Free
Trade Agreement of 2006. Combining these both agreements, around 1047 Pakistani goods would
Category Wise Export (US$mn)
now enjoy duty free access to China. This will give a boost of $10 billion to the Pakistani exports in the
Basic Textile Knitwear Bedwear
upcoming years. Towels Readymade Garments Other Textile Products
15,000
• We have a positive stance on textile sector on account of (1) Incentives to the sector (subsidized rates
on electricity and gas), (2) Fixed rate ERF & LTFF, (3) Export package and (4) China-Pak FTA2. 10,000
Key risk to our sector: 5,000
(1) Decline in Cotton production (2) Delay in refunds and

-
3) Appreciation in PKR against USD FY16 FY17 FY18 FY19 5MFY19 5MFY20
Source: PBS, Darson Research
Page No. 34
www.JamaPunji.pk
Sector Outlook (IPPs)
Independent Power Producers- Dual Hedge
• Power sector offers fixed return on equity which is indexed to PKR/USD so any upward movement Source Wise Generation (GWH)
Hydel Coal HSD RFO
would give positive impact on earnings.
Gas/RLNG RLNG Nuclear Import Iran
• Pakistan is switching towards cheaper fuel i.e Coal, RLNG and other renewables resources as power 6000
generation on FO is quiet costly. However, currently furnace oil prices are declining worldwide so this
4000
could encourage the government to resume power production by old furnace oil-based plant.
2000
• Power producers are now facing liquidity issues due to circular debt payments (~860 billion at
present) so major players like KAPCO and HUBCO have reduced their dividends as compared to the 0
Mar-19
May-19
Jan-19
Oct-19
Jul-19
Apr-19
Jun-19
Aug-19
Feb-19
Sep-19
past. As a result, cash flow concerns leading to short-term borrowing. However, GOP is resolving
circular debt issue and is expected to eliminate it by Dec’20. If GOP issues’ another Sukuk of Rs200bn,
Source: NEPRA, Darson Research
this would result in healthier cash flows.
Key risks to our sector:

(1) Appreciation of PKR and (2) Cash-flow concerns
Page No. 35
www.JamaPunji.pk
Top Picks
Top Picks (Habib Bank Ltd.)
HBL- Ready to Shine Again Current Prise Target Price Stance

163.3 202.57 BUY
KSE-100 HBL
• Higher operating cost of international business, losses on FX operation and capital losses were the
45,000 200
main culprit for the lower bottom line of HBL in 9MCY19.
40,000
• In order to pay NY related penalty HBL acquired foreign loan of USD225mn in CY17. Devaluation of 35,000 160
30,000
PKR against USD resulted in huge exchange losses. The management of HBL expects to reduce this 25,000
120
position gradually, with 25-30% would be wound down by the end of CY19. This would reduce the 20,000
80
15,000
earnings risk in case of another sharp devaluation. 10,000 40
5,000
• Expected stable exchange rate and with improved equity market condition we expect a possible
0 0
30-Jun-19
31-Jul-19
30-Apr-19
31-Mar-19
31-Dec-18
31-Dec-19
30-Nov-19
28-Feb-19
30-Sep-19
31-Jan-19
31-May-19
31-Aug-19
31-Oct-19
turnaround in the earning of HBL in CY20.
• Furthermore, we believe the re pricing of assets (PIBs) have had an impact such as a higher yield
support for the NIMs in CY20. Further on the cost side we expect the cost to income ratio to start
Source: PSX, Darson Research
coming down in 2HCY20.
Key Indicators
• Asset quality of HBL both on international and domestic fronts improved as the infection ratio of bank 52 week High 168.99
52 week Low 102.01
stand at 14.3% and 5.25% as compared to 15.9% and 6.62% at the end of CY17.
Outstanding shares (000) 1,466,852
• We have a BUY recommendation on the stock with Dec-20 target price of Rs202/share providing 24% Market Cap (000) 239,536,932
upside from LCP. Stock is currently trading at CY19 and CY20 P/B of 1.09x and 0.96x respectively.
Valuation Snapshot CY18A CY19E CY20E
EPS 8.22 10.84 25.09
Key risks to the scrip are: (1) Higher International Provision, (2) Implementation of IFRS-9, (3) Other P/E x 19.87 15.06 6.51
DPS 4.30 5.00 13.00
regulatory issues 4) Devaluation of PKR and 5) Higher than expected time required for closure of NY D/Y % 2.6% 3.1% 8.0%
branch. B.V 135.84 149.85 170.38
P/B x 1.20 1.09 0.96
Page No. 37
www.JamaPunji.pk
Top Picks (United Bank Ltd.)
UBL- ROE to Pickup in CY20 Current Prise Target Price Stance

175.28 213.52 BUY
• Absence of pension charge and lower provisioning charges on international book have supported UBL KSE-100 UBL
to post a 65% growth of bottom line in 9MCY19. 45,000 200

40,000
• International loan book infection ratio moved to 20.25% as compared to 11.30% raising concerns on 35,000 160
30,000
the quality of assets. Bank charges comprising of 79% are provision charges, however if the bank takes 120
25,000
the FSV benefit the ratio would move to more than 90%. 20,000
80
15,000
• With strong deposit growth, repricing of PIBs at higher yield, control cost and growth in fee income
10,000 40
will be the main driver for earning growth in CY20. 5,000
0 0
• We expect UBL ROE to reach about ~18%, going forward as compared to 10.60% in CY18 and 12.69%
30-Jun-19
30-Apr-19
31-Jul-19
31-Mar-19
31-Dec-18
31-Dec-19
30-Nov-19
30-Sep-19
31-Jan-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
expected in CY19.
• We have BUY recommendation on stock with Dec-20 target price of Rs213/share providing 22%
upside from LCP. Stock is currently trading at CY19 and CY20 P/B of 1.14x and 1x respectively.
Key Indicators
52 week High 178
Key risks to the scrip are : (1) Higher International Provision, (2) Implementation of IFRS-9, (3) Other 52 week Low 118.01
regulatory issues and 4) Devaluation of PKR.
Market Cap (000) 214,574,095

EPS 12.65 16.54 23.96
P/E x 13.86 10.60 7.32
DPS 11.00 11.00 12.00
D/Y % 6.28% 6.28% 6.85%
B.V 137.74 153.82 174.71
P/B x 1.27 1.14 1.00
Page No. 38
www.JamaPunji.pk
Top Picks (Bank Al Habib)
BAHL- A Safe Investment Current Prise Target Price Stance

81.75 106.38 BUY
• We have BUY stance on BAHL with the Dec-20 TP of Rs106.38/share providing 30% currently trading KSE-100 BAHL
at the CY19 and CY20 P/B of 1.55x and 1.25x respectively. 45,000 100
40,000
• BAHL posted 9MCY19 profit after tax of Rs6.9bn (EPS: Rs6.29) as compared to Rs5.9bn (EPS: Rs5.35) in 35,000 80
30,000
SPLY, up by 18% YoY mainly due to higher NII and growth in fee income. 60
25,000
• BAHL provided the highest ROE among conventional banks with the expected CY19E ROE of 18.39% 20,000
40
15,000
and 22.61% for CY20E.
10,000 20
• BAHL charged an additional general provision of Rs3bn which helped the bank to cover any adverse 5,000
0 0
impacts of IFRS-9 implementation.
30-Jun-19
30-Apr-19
31-Jul-19
31-Mar-19
31-Dec-18
31-Dec-19
30-Nov-19
30-Sep-19
31-Jan-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
• BAHL has the lowest infection ratio among banks with an infection ratio of 1.4% at the end of Sep-19.

Key risks to the scrip are: (1) Implementation of IFRS-9, (2) Other regulatory issues and 4) Lower deposits
Key Indicators
growth 52 week High 88.25
52 week Low 63
Market Cap (000) 90,858,994

EPS 7.61 9.70 14.84
P/E x 10.74 8.43 5.51
DPS 2.50 2.50 4.00
D/Y % 3.06% 3.06% 4.89%
B.V 44.98 52.74 65.64
P/B x 1.82 1.55 1.25
Page No. 39
www.JamaPunji.pk
Top Picks (Oil & Gas Development Corporation)
OGDC- Titan Will Dominate Current Prise Target Price Stance

149.48 200 BUY
• We have a Buy recommendation on stock with Dec-20 TP of Rs200/share with an upside of 33% (excl. KSE-100 OGDC
D/Y) 45,000 200

40,000
• OGDC is currently trading at a FY20E P/E of 5.25x and Dividend yield of 8%. 35,000 160
30,000
• Our investment pitch is attributed to 1) Aggressive drilling strategies, 2) less volatility in international 120
25,000
oil prices, 3) rupee devaluation can further ignite topline, 4) expected amendments in PP12, 4) 20,000
80
15,000
exploring the high risk and reward region, 5) Diversified exposure across the region.
10,000 40
• The largest oil and gas producer has a target to drill 30 wells for FY20. The company has a better 5,000
0 0
success ratio among peers.
30-Jun-19
30-Apr-19
31-Jul-19
31-Mar-19
31-Dec-18
31-Dec-19
30-Nov-19
30-Sep-19
31-Jan-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
• OGDC has planned to initiate drilling to explore shale oil and gas reserves from five years ago. Until
now OGDC is the first E&P Company who is entering in shale oil and gas exploration.
• We foresee the company participating in oversees bidding in order to broaden their horizons.
Key Indicators
52 week High 155.5
Key risks to the scrip are: 1) low production from major fields i.e. Nashpa and others, 2) fall of oil prices, 52 week Low 101.1
3) Pak rupee strengthening, 4) continuous delay in the circular debt issue and 5) spike in exploration
Market Cap (000) 642,902,717
and development cost.
Valuation Snapshot FY19A FY20E FY21E
EPS 27.53 28.47 32.86
P/E x 5.43 5.25 4.55
B.V 145.4 161.87 182.73
P/B x 1.03 0.92 0.82
Page No. 40
www.JamaPunji.pk
Top Picks (Pakistan Petroleum Limited)
PPL- Enlarging With Mineral Mining Current Prise Target Price Stance
143.2 184.03 BUY
• We have BUY recommendation on stock with Dec-20 TP of Rs184/share providing an upside of 29%, KSE-100 PPL
the scrip currently trading at a FY20E P/E of 5.45x. Rising demand of gas across the country and better 45,000 250
40,000
pricing forces the E&Ps to aggressively explore in order to fulfill the demand. As per management PPL 35,000 200
30,000
is most affected among peers by circular debt due. This has resulted in the company posting negative 150
25,000
cash flows for the first time. 20,000
100
15,000
• Issuance of Sukuk could be positive outcome for PPL as it will allow SNGP and SSGC to repay PPL thus
10,000 50
enhancing its cash flows. 5,000
0 0
• PPL has set a target for 20 wells in FY20 out of which 10 wells would be partner operated, the
30-Jun-19
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31-Oct-19
31-Aug-19
company has also acquired 2 new blocks in the current year.
• In Block 8, Iraq drilling has started wherein the management is aggressive within this region.
Furthermore oil production from Adhi South is expected to increase.
Key Indicators
• PPL has a joint venture in Bolan Mining Enterprises (BME) with a 50 percent working interest. 52 week High 194.7
Additionally company has also applied for EPCC & mineral licensing and further completed two phases 52 week Low 100.16
of feasibility for Lead and Zinc mining.
Market Cap (000) 389,642,474
• To diversify the company has a plan to further enhance their mining portfolio in overall business
activities and as far as oil and gas is concern PPL is eying to explore frontier areas to gauge a high risk Valuation Snapshot FY19A FY20E FY21E
EPS 22.65 26.29 29.01
area with high returns. P/E x 6.32 5.45 4.94
B.V 109.74 130.03 153.04
P/B x 1.30 1.10 0.94
Key risks to the scrip are: 1) soaring of circular debt, 2) failure to discover Iraq block 8 and 3) unable to
find hydrocarbons for replacement of reserves.
Page No. 41
www.JamaPunji.pk
Top Picks (Lucky Cement Limited)
LUCK – Acing The Market Current Prise Target Price Stance

463.46 543.27 BUY
• Lucky cement is our top preferred scrip for the following reasons: (1) A well diversified portfolio KSE-100 LUCK
(cement, chemicals, auto’s, power and pharmaceutical), (2) The largest plant in the cement industry 45,000 600
40,000
500
after expansion to reach at 12.15 MTPA with 17% capacity based market share, (3) Cost-efficient plant 35,000
30,000 400
(100% in house power generation), (4) Lowest break even price in the industry to shield against price
25,000
300
disruption and (5) debt–free balance sheet. 20,000
15,000 200
• With diversified investments, company enjoys significant growth in earnings. Currently, the core 10,000
100
business constitutes ~75% and remaining comes from non-core investments. Once 660mw coal based 5,000
0 0
power plant comes online by Mar’21- the outlook would be more lucrative. As per our calculation, this
30-Jun-19
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31-Mar-19
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31-Dec-19
30-Nov-19
30-Sep-19
31-Jan-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
project would add Rs154.97/share to our estimated TP, representing ~30% of EPS by FY22E. KIA Lucky
motors has started CKD production in 1QFY20. Though, auto industry is in deep crisis yet we think
demand should rebound from FY21 as macro economic outlook would start improving. We estimate,
Key Indicators
this venture to add Rs26.15/share to our estimated TP. 52 week High 513
• Valuation: We have valued LUCK by using SOTP analysis to arrive at a Dec-20 TP of Rs543.27/share. 52 week Low 320.2
Outstanding shares (000) 323,375
The core business is valued at Rs204/share by using 5-yr FCFF methodology. We used RFR of 12%, Market Cap (000) 149,871,378
Market risk premium of 6%, adjusted beta of 1.35x and terminal growth rate is grown at 3.5%. The
scrip currently trades at FY20E P/E of 19.55x.
EPS 32.44 23.71 30.43
P/E x 14.29 19.55 15.23
G.M 29.12% 25.38% 29.22%
Key risks to the scrip are: (1) Steep rise in the gas tariff, (2) Political uncertainty in Iraq, (3) Slowdown in
B.V 291.67 308.13 332.05
the auto industry could effect Kia lucky motor sales, (4) Unexpected increase in coal prices and (5) delay in P/B x 1.59 1.50 1.40
660MW coal power plant Source: PSX, Darson Research
Page No. 42
www.JamaPunji.pk
Top Picks (Attock Cement)
ACPL - Premium Pricing on Account of Strong Market Presence Current Prise Target Price Stance
104.12 126.67 BUY
• The company is well known by its brand name “Falcon”, ACPL has highest exposure of cement/clinker KSE-100 ACPL
export due to plants location being nearest to the sea-port. Post expansion in FY18-company market 45,000 140
40,000 120
share has raised up to ~21% (the 2nd largest player in south), the company has also made investments 35,000
100
30,000
in the cement grinding unit (0.9 MTPA) in Iraq via joint venture (60:40). All these factors are key
25,000 80
drivers for earnings growth. 20,000 60
15,000
• International Joint Venture: Attock cement is the second player to enter in IRAQ after LUCK. The 40
10,000
20
company has setup its grinding unit of 0.9MTPA via joint venture (60:40) with the Iraq-based Al- 5,000
0 0
Geetan Commercial Agency to form a subsidiary. Iraq economy is improving gradually following the
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31-Aug-19
deep economic crisis from the last four years so cement consumption should be boosted by strong
reconstruction programs. We estimate the Project to add Rs15.89/share to our estimated TP. (We
have taken assumptions from LUCK Iraq operations such as net margins/ton, bag price etc)
Key Indicators
• Valuation: We have valued ACPL by using SOTP analysis to arrive at a Dec-20 TP of Rs126.67/share. 52 week High 122
The core business is valued at Rs109.86/share by using 5-yr FCFF valuation. We used RFR of 12%, 52 week Low 64.17
market risk premium of 6%, adjusted beta of 1.17 and terminal growth rate is grown at 3.5%. The scrip Market Cap (000) 14,308,795
currently trading at FY20E P/E of 10.31x.
Key risks to the scrip are: (1) Steep rise in grid tariff, (3) PKR devaluation will increase coal cost, (3) EPS 15.09 10.1 11.83
P/E x 6.90 10.31 8.80
Weak demand G.M 23.11% 23.56% 22.84%
B.V 117.15 123.23 130.06
P/B x 0.89 0.84 0.80
Page No. 43
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Top Picks (Kohat Cement)
KOHC – Unawaken Scrip Current Prise Target Price Stance

78.39 111.44 BUY
• Company has Lowest EV/Ton of US$29 versus industry average of US$ 44.59, upcoming expansion of KSE-100 KOHC
7800tpd by 2HFY20 would increase capacity share from 6% to 9%. KOHC owns investment properties 45,000 100
40,000
having market value of Rs5.4bn (as per FY19 financials) which translates EPS impact of Rs26.88, Debt 35,000 80
30,000
level is quite low compared to other players (excl. LUCK & FCCL)-which is a plus point in high interest 60
25,000
rate environment. We have a “Positive” stance on the scrip. 20,000
40
15,000
• Upcoming expansion of 2.3 MTPA would increase its capacity share to 9% from 6% and is expected to
10,000 20
come online by 3QFY20. As a result, we are expecting local dispatches to grow at a 5-yr CAGR of 10% 5,000
0 0
versus 5% for the local industry.
30-Jun-19
30-Apr-19
31-Jul-19
31-Mar-19
31-Dec-18
31-Dec-19
30-Nov-19
30-Sep-19
31-Jan-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
• For expansion, company has financed (55%) in-house cash which is considerably more compared to its
peers (MLCF,CHCC,PIOC & DGKC). This is an advantage for the company in a high interest environment
as finance cost will not deteriorate earnings as much. However, Debt/Asset ratio is relatively low
Key Indicators
versus other players (excl. LUCK & FCCL) which portrays a stronger financial structure further the 52 week High 95.37
company may also be able to meet it’s future financial obligations by disposing of their assets. In 52 week Low 40.12
addition, KOHC breakeven is less than MLCF, DGKC and CHCC which shields them in price disruption.
Market Cap (000) 15,745,494
• We have valued KOHC by using FCFF methodology to arrive at a Dec-20 TP of Rs111.44/share. The
scrip currently trades at FY20E P/E of 4.94x. Valuation Snapshot FY19A FY20E FY21E
EPS 26.88 15.88 19.48
P/E x 2.92 4.94 4.02
Key risks to the scrip are: (1)Steep rise in grid tariff, (2) PKR devaluation will increase coal cost, (3) Delay G.M 26.88% 15.88% 19.48%
B.V 97.94 103.86 115.52
in expansion
P/B x 0.80 0.75 0.68
Page No. 44
www.JamaPunji.pk
Top Picks (Fauji Fertilizer Limited)
FFC - Multifariousness Current Prise Target Price Stance

102.12 127.4 BUY
• FFC is one of the oldest fertilizer plant of Pakistan having average market share of 42% for last 5 years. KSE-100 FFC
Having capacity of ~2Mn Tonnes of urea, FFC has been operating at above ~120% utilization level for 45,000 120
40,000
the said period. FFC has the largest allocation of uninterrupted natural gas from Mari Field at the 100
35,000
30,000 80
normal industrial price. This pricing policy has made the company prone to the change in gas prices
25,000
60
unlike other players who operate on concessionary gas pricing. This has made FFC a price setter in the 20,000
15,000 40
industry. FFC owns the strongest distribution network and charges premium on its urea brand.
10,000
20
• FFC has been accruing the GIDC amount for the last 4 years. Current GIDC amount to ~56bn as per 5,000
0 0
latest financials. This huge pile-up of accruals has all the allowed company to diversify.
30-Jun-19
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31-Dec-18
31-Dec-19
30-Nov-19
30-Sep-19
31-Jan-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
• Due to the nature of its core business, future growth is solely dependent on diversification. Recently,
FFC has invested in Thar Electric Limited which translates into value addition of ~Rs3.00 into our target
price.
Key Indicators
• We have applied sum-of-the-part valuation method to arrive at a Dec-20 TP of Rs127.40/share. We 52 week High 109.75
used RFR of 12%, Market risk premium of 6% and terminal value is grown at 5%. 52 week Low 84.7
Market Cap (000) 129,920,945
Key risks to the scrip are: (1) Decline in urea offtakes due to unforeseen circumstances, (2) Increase in
gas prices beyond pass-on level (3) Poor farmer agronomics amid unenforceable support prices and (4) Valuation Snapshot CY18A CY19E CY20E
EPS 11.35 14.89 17.48
Water scarcity. P/E x 9.00 6.86 5.84
G.M 26.00% 29.00% 30.00%
B.V 26.24 29.64 32.37
P/B x 3.89 3.45 3.15
Page No. 45
www.JamaPunji.pk
Top Picks (Mughal Steel)
MUGHAL- Nailing The Market Share Current Prise Target Price Stance
46.1 61.41 BUY
• We have a buy stance on scrip with the TP of Rs61.41/share providing an upside of 33% from LCP. KSE-100 MUGHAL
• MUGHAL has a strong presence in the market and providing quality products which gives it an edge 45,000 50
40,000
among peers. Likewise cement sector sales volume would have a significant impact on the positive 35,000 40
30,000
side with materialization of dams and Naya Pakistan housing scheme construction. 30
25,000
• fragmented market still dominates resulting in less pricing power even for quality rebar 20,000
20
15,000
manufacturers. The priority of consumers is still vague on the back of inflated prices. Local bar
10,000 10
manufacturers are also fully protected against dumped imports through imposition of anti-dumping 5,000
0 0
duties on rebar’s and billets (intermediate product). Another positive externality for long steel
30-Jun-19
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31-Dec-18
30-Nov-19
31-Dec-19
30-Sep-19
31-Jan-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
industry is shutting down of Gadani ship breaking market which held a good market share.
• In the long run sector outlook would be positive once local development and infrastructure starts to
kick off that could nourish the company with positive sales volumes and margins. Naya Pakistan
Key Indicators
housing scheme and construction of dams would be one of the major game changers as this would 52 week High 47.1
potentially lift up the demand of steel sector. 52 week Low 18.01
Market Cap (000) 11,598,714
Key risks to the scrip are: (1) Increase in energy prices (highly energy intensive), 2) Volatility of
international scrap prices, 3) Weak demand and 4) Threat of new entrants
EPS 5.46 5.06 6.41
P/E x 8.44 9.11 7.19
G.M 10.34% 14.51% 13.96%
B.V 29.82 34.49 40.49
P/B x 1.55 1.34 1.14
Page No. 46
www.JamaPunji.pk
Top Picks (Hub Power Company)
HUBC- Twin Utilities Current Prise Target Price Stance

93.38 129.6 BUY
• THE HUBCO is the largest power producer in Pakistan with an installed power generation capacity of KSE-100 HUBC
2,920 MW. 45,000 100

40,000
• Thar Energy Limited (TEL) and Thal Nova is expected to COD by end of Mar’21. However, Sindh Engro 35,000 80
30,000
Coal Mining declared its COD for phase 1. Once these projects come online, earnings outlook would 60
25,000
be more lucrative. 20,000
40
15,000
• However company is facing short-term cash flow concerns owing to high amount of receivables which
10,000 20
are due by government, and also along with that the company is also seeking to expand their 5,000
0 0
infrastructure by investing in new power projects. Company has cut its dividends in the last fiscal year
30-Jun-19
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31-Mar-19
31-Dec-18
31-Dec-19
30-Nov-19
30-Sep-19
31-Jan-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
and could remain lower ahead or may skip.
• Government has planned to issue another Energy Sukuk of Rs200bn which would improve its cash
flows to some extent.
Key Indicators
• We have a “Buy” stance on the scrip with Dec-20 TP of Rs129.60/share, which implies 32% of upside 52 week High 94.95
(excl. D/Y) from LDCP of Rs93.38/share. The scrip currently trades at FY20 P/E of 6.07x 52 week Low 59.02
Market Cap (000) 121,128,241
Key risks to the scrip are: (1) Delays in projects, (2) Expensive fuel, (3) Political risk and (4) Circular debt
EPS 9.71 16.20 20.40
P/E x 9.62 5.76 4.58
B.V 44.27 60.47 80.87
P/B x 2.11 1.54 1.15
Page No. 47
www.JamaPunji.pk
Top Picks (Tariq Glass Limited)
TGL- Silver Lining Current Prise Target Price Stance

107 129.78 BUY
• Tariq glass one of the dominating player’s within the glass industry having a production capacity of KSE-100 TGL
550tpd however company is planning to expand which shall increase its production capacity to 45,000 120
40,000
1,050tpd. The new line is expected to commence operations by Mar’20. 100
35,000
30,000 80
• Despite economic slowdown, TGL was not affected much due to diversified products and strong
25,000
60
pricing power. 20,000
15,000 40
• Recently, TGL has shifted its energy mix to FO partially from RLNG as FO prices are declining globally.
10,000
20
This could result in cost savings of around 15-20%. 5,000
0 0
• The company increased their product portfolio by adding a dinner ware line which is considered an
30-Jun-19
30-Apr-19
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31-Mar-19
31-Dec-18
31-Dec-19
31-Jan-19
30-Nov-19
30-Sep-19
28-Feb-19
31-May-19
31-Oct-19
31-Aug-19
import substitute, thus enhancing the company’s revenue and profitability.
• We have a “Buy” recommendation on the scrip with Dec’20 TP of Rs129.78/share, which implies 21%
of upside (excl. D/Y) from LDCP of Rs107/share. The scrip currently trades at FY20 P/E of 7.39x.
Key Indicators
52 week High 116
Key risks to the scrip are: (1) Competition, (2) Slow down in private sector, (3) Increase in raw material 52 week Low 58.75
price and (4) Rise in energy prices
Market Cap (000) 7,860,006

EPS 18.02 14.48 13.01
P/E x 5.94 7.39 8.22
G.M 19.59% 19.91% 18.46%
B.V 83.57 94.04 103.84
P/B x 1.28 1.14 1.03
Page No. 48
www.JamaPunji.pk
What Technical
Says?
Technical Snapshots
KSE-100 Yearly 2020 Target 50,000

VOL 21-
Symbol Close 14-MRSI 8-MEMA S2 S1 PIVOT R1 R2
The Benchmark KSE-100 Index face a very volatile year (MN) MEMA
KSE-100 40,735.1 26,459.2 56.9 36,529.4 37,576.5 23,768.9 32,252.0 37,154.1 45,637.2 50,539.2
2019 start with negative sentiments touched a low of
KSE-100 (39,521.18, 42,056.14, 39,313.04, 40,735.08, +1,447.43)
70000
28671 then reversed from 50% Fibonacci level of the range 60000
0.0%
50000
4782 low of 2009 to 53127 high of 2017 currently hovering 23.6%

40000
38.2%
near 23.6% Fibonacci level, bourse finally mange to close 50.0% 30000
61.8%
positive after two years negative sentiment and yearly 20000
candle form Hammer which is a bullish indication it is likely

next year trading range would be 34,700 to 50,325 trading 10000
below 34,700 would be matter of concern for bulls.

100.0%
Resistances: 43,900, 47,200 & 50,325

Supports: 38,900, 35,250 & 34,700
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 50
www.JamaPunji.pk
Technical Snapshots
Habib Bank Limited (HBL)

VOL 21-
Chart depicting price exited from descending wedge Symbol Close 14-MRSI 8-MEMA S2 S1 PIVOT R1 R2
(MN) MEMA
Habib Bank Ltd. 157.4 277.3 55.4 135.3 140.4 76.2 116.8 142.6 183.2 209.0
formation and also breach 23.6% Fibonacci level 152.35 in
HBL (159.000, 164.200, 158.750, 162.920, +5.50000)
350
congestion with multi month resistance consolidation 100.0%
300
above said level will lead price move towards 183, 191 &
250
61.8%
203 (50% Fibonacci Level) of recent bearish impulse 50.0%
200
38.2%
23.6% 150
0.0%
100
50
1.RSI (53.5533)
50
Volume (675,200) 5000

x10000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 51
www.JamaPunji.pk
Technical Snapshots
United Bank Limited (UBL)

VOL 21-
Monthly chart showing an exit from multi months down Symbol Close 14-MRSI 8-MEMA S2 S1 PIVOT R1 R2
(MN) MEMA
trend line and consolidating above 23.6% Fibonacci level United Bank Ltd. 164.5 279.2 52.1 150.5 154.1 93.5 129.0 153.5 189.0 213.5
UBL (165.980, 172.700, 163.110, 171.240, +6.74001)
157 if price successfully consolidate above said level then 300
100.0%
we may price will move towards 181, 200 where 50% 250
61.8%
50.0% 200
Fibonacci level lies upon successful breach next target 38.2%
23.6%
would be golden ratio 61.8% at 220 with stop below 136.5 150
0.0%
100
50
1.RSI (54.0547)
50
Volume (572,600)
5000
x10000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 52
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Technical Snapshots
Bank Al-Habib Limited (BAHL)

VOL 21-
Price is moving within an multiyear ascending channel Symbol Close 14-MRSI 8-MEMA S2 S1 PIVOT R1 R2
(MN) MEMA
Bank Al-Habib Ltd. 76.2 119.5 58.2 73.9 73.5 50.6 63.4 75.8 88.6 101.1
signaling bullish sentiment and likely to test 85.5 where we
BAHL (76.0000, 77.9800, 76.0000, 77.3300, +1.17000)
95
may see selling pressure if breach and consolidate above 0.0% 100.0% 90
85
said level then 161.8% Fibonacci level would be the target 61.8% 80
75
23.6% 38.2%
70
near 103.25 on flip side 73 would be strong support below 38.2% 65
60
this 69 last resort for bulls. 50.0%
55
50
61.8%
45
40
35
30
25
100.0%
20
1.RSI (55.5499)
50
Volume (257,500) 3000

2000
1000
x10000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 53
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Technical Snapshots
Oil & Gas Development Company (OGDC)

VOL 21-
During the year 2019 stock mange to close above its 23.6% Symbol Close 14-MRSI 8-MEMA S2 S1 PIVOT R1 R2
(MN) MEMA
Oil & Gas Dev. Company
Fibonacci level of bearish impulsive move occurred during Ltd. 142.3 640.9 52.6 132.5 138.5 78.6 110.4 133.0 164.8 187.4
the period 2014 to 2015 currently price behavior is in OGDC (142.500, 143.750, 141.300, 142.920, 161.8%
+0.59999)
300
correction projected target of this correction would be the 100.0%

250
multiyear supply zone which lies with range from 185 to 61.8%
200
50.0%
197.85 with the condition that price would not penetrate 38.2%
23.6% 150
below 120 keep this level as stop loss for long positions.
0.0%
100
Supports: 137 & 121.5
Resistances: 154, 165, 179 & 193
50
1.RSI (50.4900)
50
Volume (784,400) 2000

1000
x1000000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 54
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Technical Snapshots
Pakistan Petroleum Limited (PPL)

VOL 21-
Monthly chart formation seems like right angle descending Symbol Close 14-MRSI 8-MEMA S2 S1 PIVOT R1 R2
(MN) MEMA
triangle currently price reversed after third test of support Pakistan Petroleum Ltd. 137.1 438.3 44.3 135.6 157.2 49.5 93.3 144.0 187.8 238.5
PPL (137.240, 138.800, 137.000, 138.270, +1.13000) 350
line lies on 98.5 and retraces till 38.2% Fibonacci level 147.8
161.8% 300
it is likely price will move towards its projected target of
61.8% Fibonacci level 177.35 if consolidate above this level 250
195 & 215 would be next destination, 112 exit point for 100.0%
bulls. 200
61.8%
50.0%
38.2% 150
23.6%
0.0% 100
1.RSI (44.1126)
50
Volume (1,287,600) 4000

1000
x100000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 55
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Technical Snapshots
Lucky Cement Limited (LUCK)

VOL 21-
A descending wedge pattern seen on weekly chart price has Symbol Close 14-MRSI 8-MEMA S2 S1 PIVOT R1 R2
(MN) MEMA
Lucky Cement Ltd. 428.4 196.9 49.5 399.5 435.9 227.7 328.1 420.5 520.9 613.3
exited from the pattern and consolidating above 23.6%
LUCK (430.000, 440.000, 426.000, 436.980, +8.58002) 261.8%
Fibonacci level it is likely price will move towards 476 161.8% 1000
100.0%
(38.2%) & 527 (50%) Fibonacci levels on flip side below 61.8%
50.0%
38.2% 500
23.6%
23.6% level supports would be 390, 373 an exit stop for 0.0%
long positions would be below 365
1.RSI (46.1534)
50
Volume (461,600)
10000
x10000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 56
www.JamaPunji.pk
Technical Snapshots
Attock Cement Pakistan Limited (ACPL)

VOL 8- 21-
Symbol Close S2 S1 PIVOT R1 R2 14-RSI
Price exited from multi month down trend line and (MN) DEMA DEMA
Attock Cement Pak Ltd. 103.4 11.2 42.9 90.4 108.6 38.7 71.0 96.5 128.9 154.3
currently moving in ascending channel consolidating above
ACPL (103.370, 104.000, 101.820, 103.280, -0.09000) 500
450
100% of Fibonacci projection level in coming months price 100.0% 400
350
targets would be 111.85, 122.3 & 136.85 where 23.6% 61.8%

300
250
50.0%
Fibonacci level lies of range from 383 high to 64 low on flip 38.2%
200
150
side supports would be 91 & 85.5 23.6% 261.8%
161.8%
100.0% 100
61.8%
38.2%
0.0%
50
1.RSI (41.4970)
50
Volume (58,000)
50000
x100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 57
www.JamaPunji.pk
Technical Snapshots
Kohat Cement Limited (KOHC)

VOL 8- 21-
On weekly chart price exited from bearish trend line and Symbol Close S2 S1 PIVOT R1 R2 14-RSI
(MN) DEMA DEMA
Kohat Cement Co. Ltd. 77.4 51.5 42.8 67.5 85.1 15.7 46.6 71.0 101.8 126.2
forming a bullish flag upon breach of 84 price move
KOHC (77.5300, 78.8800, 77.0000, 77.9900, +0.59000)
400
towards 90 then 104.9 where two Fibonacci level lies from 100.0%
261.8%
350
300
161.8% 250
different point it could be strong resistance level on flip side 61.8%
50.0%
200
100.0%
38.2% 150
if 71 would be support, if price penetrate below trend line 23.6%

61.8%
50.0%
100
38.2%
then 64 to 61 would be support zone below 61 exit long 23.6%
50
positions. 0.0% 0.0%
1.RSI (40.8911)
50
Volume (144,000) 3000

1000
x10000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 58
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Technical Snapshots
Mughal Steel & Iron Limited (MUGHAL)

VOL 21-
Currently price is moving in ascending channel and angle of (MN) MEMA
Mughal Iron & Steels Ind
move is steeper exited from medium term descending Ltd. 41.0 222.4 48.5 35.3 40.9 6.3 23.6 35.4 52.7 64.5
trend line & consolidating above line it is likely we may see 261.8%
MUGHAL (41.0000, 41.9000, 41.0000, 41.8200, +0.85000)
150
an upward move upon completion of sideways move

161.8%
targets 49, 55.5 & 66 on flip side supports are 37.65 32.35 100
& 27 100.0%
78.6%
61.8%
50.0% 50
38.2%
23.6%
0.0%
1.RSI (47.7550)
50
Volume (437,000) 3000

1000
x10000
2015 J J A S O N D 2016 M A M J J A S O N D 2017 M A M J J A S O N D 2018 M A M J J A S O N D 2019 M A M J J A S O N D 2020 M A M J J A S O N D
Page No. 59
www.JamaPunji.pk
Technical Snapshots
HUB Power Company Limited (HUBC)

VOL 21-
On monthly chart price exited from descending channel and (MN) MEMA
Hub Power Company Ltd. 93.4 362.2 53.5 81.6 84.7 46.5 69.9 82.4 105.9 118.4
hovering near 38.2% Fibonacci retracement it is likely price
HUBC (93.4500, 93.4500, 91.5200, 92.9300, -0.42000)
would retest 23.6% Fibonacci level near 80 upon successful 100.0% 150
test we may see move towards 92, 102.9 & 113 stop loss 61.8%
50.0%
100
38.2%
for long position would be 69.9 23.6%
0.0%
50
1.RSI (53.3250)
50
Volume (555,500)
1000
x1000000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 60
www.JamaPunji.pk
Technical Snapshots
Tariq Glass Limited (TGL)

VOL 21-
On monthly chart consolidation above trend line would (MN) MEMA
Tariq Glass. 107.0 34.4 56.8 85.7 89.5 36.7 71.8 93.9 129.1 151.2
initiate bullish fifth cyclic wave first target would be 131
161.8%
TGL (107.650, 107.650, 106.210, 107.070, +0.07000)
and upon successful breach of this level next target would 123.6%
100.0%
150
be 148 & 175 on flip side supports would be 103 & 85 61.8%
38.2%
100
0.0%
50
1.RSI (56.9434)
50
Volume (8,500) 3000

1000
x10000
2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Page No. 61
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Stock Screen
Last Day EPS P/E

Closing Target Upside FY20E/ FY21E/ Last FY20E/ FY21E/ Book Price to Dividend Dividend
Last Year TTM TTM
SECTOR S.No SYMBOL Price Price (%) Rating CY19E CY20E Year CY19E CY20E Value Book (LY) Yield (LY) ROE
E&P 1 OGDC * 149.48 199.29 33% BUY 27.53 27.66 28.47 32.86 5.43 5.40 5.25 4.55 151.75 0.99 11.00 7.36% 18.93%
2 POL * 473.43 547.83 16% BUY 59.44 59.93 64.45 68.54 7.96 7.90 7.35 6.91 118.24 4.00 50.00 10.56% 44.32%
3 PPL * 143.20 184.03 29% BUY 22.65 22.67 26.29 29.01 6.32 6.32 5.45 4.94 114.98 1.25 2.00 1.40% 20.64%
OMCs & Lubricants 4 APL * 374.73 373.86 0% SELL 39.79 36.55 42.61 46.82 9.42 10.25 8.79 8.00 192.48 1.95 20.00 5.34% 20.93%
5 PSO * 207.17 250.08 21% BUY 22.55 21.16 25.13 26.62 9.19 9.79 8.24 7.78 263.97 0.78 10.00 4.83% 8.88%
Banks 6 ABL ** 100.10 116.82 17% BUY 11.38 10.97 11.70 15.36 8.80 9.12 8.56 6.52 95.91 1.04 8.00 7.99% 15.20%
7 AKBL ** 18.93 24.47 29% BUY 3.52 4.12 4.29 4.89 5.38 4.59 4.41 3.87 30.13 0.63 1.00 5.28% 13.87%
8 BAFL * 48.29 65.32 35% BUY 5.72 6.07 7.73 10.91 8.44 7.96 6.25 4.43 46.59 1.04 2.50 5.18% 14.87%
9 BAHL ** 81.75 106.38 30% BUY 7.61 8.56 9.70 14.84 10.74 9.55 8.43 5.51 49.94 1.64 2.50 3.06% 18.13%
10 BOP ** 11.85 16.02 35% BUY 2.88 3.13 3.15 3.85 4.11 3.79 3.76 3.08 16.16 0.73 0.75 6.33% 22.02%
11 FABL * 20.04 20.58 3% HOLD 3.19 3.74 3.67 4.73 4.85 5.36 5.46 4.24 31.52 0.64 - 0.00% 12.60%
12 HBL ** 163.30 202.57 24% BUY 8.22 7.54 10.84 25.09 19.87 21.66 15.06 6.51 145.5 1.12 4.25 2.60% 6.50%
13 HMB ** 37.98 48.97 29% BUY 5.90 6.37 7.37 9.15 6.44 5.96 5.15 4.15 42.29 0.90 2.00 5.27% 17.70%
14 MCB ** 216.18 234.29 8% HOLD 17.17 19.35 19.69 25.09 12.59 11.17 10.98 8.62 131.29 1.65 16.00 7.40% 14.52%
15 NBP ** 44.41 67.82 53% BUY 9.42 9.60 10.13 15.52 4.71 4.63 4.38 2.86 106.44 0.42 - 0.00% 13.20%
16 UBL ** 175.28 213.52 22% BUY 12.65 16.35 16.54 23.96 13.86 10.72 10.60 7.32 151.46 1.16 11.00 6.28% 10.60%
Fertilizer 17 EFERT * 73.57 86.07 17% BUY 12.48 13.00 12.46 11.25 5.90 5.66 5.90 6.54 34.1 2.16 11.00 14.95% 38.77%
18 ENGRO ** 355.48 397.00 12% HOLD 22.06 27.40 34.15 39.70 16.11 12.97 10.41 8.95 338.27 1.05 21.00 5.91% 12.73%
19 FATIMA * 27.14 32.86 21% BUY 6.32 7.22 7.60 9.47 4.29 3.76 3.57 2.87 33.29 0.82 1.75 6.45% 21.32%
20 FFBL * 20.76 34.25 65% BUY 1.54 (1.97) (2.60) 1.20 13.48 (10.54) (7.98) 17.30 11.29 1.84 1.00 4.82% 10.34%
21 FFC * 102.12 127.40 25% BUY 11.35 14.45 14.67 18.36 9.00 7.07 6.96 5.56 26.75 3.82 8.85 8.67% 43.25%
Cement 22 ACPL * 104.12 126.67 22% BUY 15.09 14.61 10.10 12.34 6.90 7.13 10.31 8.44 115.75 0.90 4.00 3.84% 12.88%
23 CHCC * 54.29 56.68 4% HOLD 9.98 5.62 (3.83) 1.30 5.44 9.66 (14.17) 41.76 64.4 0.84 1.00 1.84% 6.48%
24 DGKC * 76.63 71.20 -7% SELL 3.67 (0.54) (4.13) 4.48 20.88 N/M (18.55) 17.10 156.35 0.49 1.00 1.30% 2.20%
25 FCCL * 16.38 15.81 -3% SELL 2.05 1.68 0.85 1.59 7.99 9.75 19.27 10.30 14.61 1.12 1.50 9.16% 13.50%
26 KOHC * 78.39 111.44 42% BUY 12.29 10.10 8.90 11.05 6.38 7.76 8.81 7.09 98.38 0.80 2.25 2.87% 12.54%
27 LUCK * 463.46 543.27 17% BUY 32.44 27.69 23.03 27.37 14.29 16.74 20.12 16.93 385.05 1.20 6.50 1.40% 11.12%
28 MLCF * 24.25 29.16 20% BUY 2.47 (0.31) (3.55) 1.12 9.82 (78.23) (6.83) 21.65 49.1 0.49 0.50 2.06% 5.50%
29 PIOC * 31.22 39.81 28% BUY 3.48 1.53 (0.20) 4.60 8.97 20.41 (156.10) 6.79 57.83 0.54 - 0.00% 5.90%
*Unconsolidated **Consolidated^BV Including Surplus ^^ ROE exlcuding Surplus TTM= Trailing Twelve Months
Page No. 62
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Stock Screen
Last Day EPS P/E

Closing Target Upside FY20E/ FY21E/ Last FY20E/ FY21E/ Book Price to Dividend Dividend
Last Year TTM TTM
SECTOR S.No SYMBOL Price Price (%) Rating CY19E CY20E Year CY19E CY20E Value Book (LY) Yield (LY) ROE
Textile 30 NCL * 43.96 45.25 3% HOLD 13.19 10.36 14.45 17.50 3.33 4.24 3.04 2.51 64.57 0.68 4.00 9.10% 20.65%
31 NML * 107.86 - N/A U/R 16.66 16.46 - - 6.47 6.55 - - 186.30 0.58 4.00 3.71% 8.80%
Chemicals 32 EPCL * 33.06 - N/A U/R 5.42 4.29 - - 6.10 7.71 - - 19.21 1.72 1.10 3.33% 29.35%
33 LOTCHEM * 14.19 22.00 0.55 BUY 2.93 3.80 4.40 5.30 4.84 3.73 3.23 2.68 11.39 1.25 1.50 10.57% 35.39%
Steel & Engineering 34 ASL * 9.99 - N/A U/R 0.33 (0.09) (1.90) (0.20) 30.27 N/M - - 11.60 0.86 - 0.00% 2.90%
35 ASTL * 39.28 43.48 0.107 HOLD 0.11 (1.53) 1.45 3.00 357.09 (25.67) 27.09 13.09 40.95 0.96 - 0.00% 0.27%
36 ISL * 59.39 49.44 -17% SELL 6.12 4.99 9.69 8.24 9.70 11.90 6.13 7.21 25.97 2.29 3.00 5.05% 20.69%
37 MUGHAL * 46.10 61.41 0.332 BUY 5.46 5.10 5.57 7.56 8.44 9.04 8.28 6.10 30.24 1.52 1.20 2.60% 18.30%
Automobiles & Parts 38 HCAR * 216.47 139.10 -36% SELL 26.97 17.66 12.16 17.06 8.03 12.26 17.80 12.69 112.98 1.92 12.15 5.61% 21.85%
39 INDU * 1,189.99 1,117 -6% SELL 174.49 146.63 69.43 86.65 6.82 8.12 17.14 13.73 526.26 2.26 115.00 9.66% 34.25%
40 PSMC * 230.97 154.75 -33% SELL 15.77 (33.79) (40.23) (2.29) 14.65 (6.84) (5.74) (100.86) 318.96 0.72 18.60 8.05% 4.44%
41 AGTL * 368.00 341.11 -7% SELL 42.31 28.15 26.78 32.74 8.70 13.07 13.74 11.24 21.86 16.83 39.00 10.60% 179.09%
42 MTL * 711.35 683.80 -4% SELL 82.14 64.82 42.11 47.41 8.66 10.97 16.89 15.00 116.84 6.09 85.00 11.95% 75.27%
Miscellaneous 43 GHGL * 52.79 63.59 20% BUY 5.80 5.95 5.20 6.36 9.10 8.87 10.15 8.30 29.83 1.77 4.50 8.52% 20.18%
44 PAEL ** 28.99 - N/A U/R 2.45 1.60 - - 11.83 18.12 - - 57.40 0.51 - 0.00% 5.79%
45 TGL * 107.00 129.78 21% BUY 18.02 16.61 14.48 13.01 5.94 6.44 7.39 8.22 86.69 1.23 4.00 3.74% 21.56%
46 UNITY * 16.59 13.34 -20% SELL 0.47 0.43 1.14 1.52 35.30 38.58 14.55 10.91 10.64 1.56 0.10 0.60% 4.48%
Electricity 47 HUBC ** 98.38 129.60 32% BUY 9.71 10.68 16.20 20.40 10.13 9.21 6.07 4.82 48.71 2.02 - 0.00% 19.58%
48 KAPCO * 31.99 37.29 17% BUY 14.90 17.07 10.33 10.69 2.15 1.87 3.10 2.99 52.48 0.61 4.50 14.07% 31.85%
49 NCPL * 19.48 28.20 45% U/R 9.30 9.76 9.40 9.42 2.09 2.00 2.07 2.07 42.00 0.46 - 0.00% 23.79%
50 NPL * 27.50 31.59 15% U/R 10.65 11.65 10.53 10.70 2.58 2.36 2.61 2.57 57.74 0.48 - 0.00% 19.73%
*Unconsolidated **Consolidated^BV Including Surplus ^^ ROE exlcuding Surplus TTM= Trailing Twelve Months
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TREC HOLDR: PAKISTAN STOCK EXCHANGE / PAKISTAN MARCANTILE EXCHANGE LTD.
Contact Details
MANAGEMENT
MR. MALIK DIL AWAYZ AHMED , CFA Chief Executive Officer ceo@darson.com.pk 021-32471083 Ext(130)
RESEARCH
MR. YOUSUF SAEED Head of Research yousuf.saeed@darson.com.pk 021-32467224 Ext(125)
MR. YASIN MUHAMMAD HANIF Research Analyst yasin.hanif@darson.com.pk 021-32467224Ext(125)
MR. MEHROZ KHAN Research Analyst mehroz.khan@darson.com.pk 021-32467224 Ext(125)
MS. MAIMOONA Research Analyst mamoona.asghar@darson.com.pk 021-32467224 Ext(125)
MR. DILAWER JAWED Technical Analyst dilawer@darson.com.pk 021-32467224 Ex t(125)
MR. IMRAN SHAFIQUE Database Officer imran.shafique@darson.com.pk 021-32467224 Ext(125)
EQUITIES SALES
INSTITUTIONAL SALES
MR. MUHAMMAD YOUSUF BAGASRA Head of Corporate Sales muhammad.yousuf@darson.com.pk 021-32469677-680
MR. SANTOSH KUMAR Institutional Corporate Sales santosh.kumar@darson.com.pk 021-32471086-87
RETAIL SALES
MR. IRSHAD ZUBAIR Head of Retail Sales irshad.zubair@darson.com.pk 021-32468915 Ext(231)
COMMODITIES SALES
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Contact Details
OFFICE ADDRESS:
Corporate Office: Branch Office: Branch Office:

Suite No. 808, Office No. 516 Room No. 193-195,
8th Floor, Business & Finance Centre, 5th Floor, PSX Building, 1st Floor, City Mall,
I.I. Chundrigar Road, Stock Exchange Road. Chen One Road,
KARACHI KARACHI. FAISALABAD
111-900-400, 021-32425538
2470755-57 32471088 042-5789705
Branch Office : Branch Office:

Room No. 102, Office No. 404,
1st Floor, LSE Building, 3rd Floor, Liberty Tower,
Aiwan-e-Iqbal Road, Liberty Gulberg.
LAHORE LAHORE.
042-36309842 042-36314293 042-6366263, 6364208 042-5789705
Branch Office : Branch Office:

Office # 3, Office # 3,
Main Block, 1st Floor 1st Floor,
GDA Trust Plaza, G.T. Road, Al-Munir Market, Liaquat Bazar
GUJRANWALA SARGODHA
0553-732963-64, 0321-6449554 0483-701141, 0333-9804899
Branch Office: Branch Office

2nd Floor, 1st Floor,
State Life Building, Metro Trade Centre,
Near Skynet Courier Office Near Shaloom Centre,
Circular Road, Al-Markaz Road
DERA ISMAIL KHAN JHELUM
0966-730906 0544-626087, 832289
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Important disclosures Notified Research Entity
This report has been prepared by Darson Securities (Pvt) Ltd. and is provided for information purposes only. Under no circumstances it is to be used or considered as an offer to sell, or a solicitation of any offer to buy. This
information has been compiled from sources we believe to be reliable, but we do not hold ourselves responsible for its completeness or accuracy. All opinions and estimates expressed in this report constitute our present
judgment only and are subject to change without notice. This report is intended for persons having professional experience in matters relating to investments.
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Darson Securities (Pvt.) Ltd. endeavors to make all rightful efforts to disseminate research to all eligible clients in a timely manner through either electronic or physical distribution such as email, mail and/or fax. However, it is
worth mentioning that, not all clients may receive the material at the same time.
Analyst Certification:
The research analyst(s), if any, denoted by AC on the cover of this report, who exclusively reports to the research department head, primarily involved in the preparation, writing and publication of this report, certifies that the
expressed views in this report are unbiased and independent opinions of the analyst(s). The observations presented also accurately reflect the personal views of the analyst(s) based on the research about the subject
companies/securities and in any case, no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research report. It is also
important to note that the research analyst(s) or any of its close relatives do not have a financial interest in the securities of the subject company aggregating more than 1% of the value of the company. Additionally, the
research analyst or its close relative have neither served as a director/officer in the past 3years nor received any compensation from the subject company in the past 12 months. The Research analyst or its close relatives have
not traded in the subject security in the past 7 days and will not trade in next 5 days.
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Darson Securities (Pvt.) Ltd. or any of its officers and directors does not have a significant financial interest (above 1% of the value of the securities of the subject company). Darson Securities (Pvt.) Ltd., their respective
directors, officers, representatives, employees and/or related persons may have a long or short position in any of the securities or other financial instruments mentioned or issuers described herein at any time and may make a
purchase and/or sale, or offer to make a purchase and/or sale of any such securities or other financial instruments from time to time in the open market or otherwise.
Risk Associated with Target Price:

Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by
competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates,
foreign exchange rates and input prices.
Rating System:
If;
• Expected return >15% - Buy Call
• Expected Return is in between 0% to 15% - Neutral/Hold Call
• Expected Return <0% - Sell Call
Valuation Methodology
To arrive at our period end target prices, DSL uses
different valuation methodologies including:
• Discounted cash flow (DCF, DDM)

• Justified price to book (JPB)
• Relative Valuation (P/E, P/B, P/S etc.)
• Equity & Asset return based methodologies (EVA, Residual Income etc.)
SECP JamaPunji Portal link: www.JamaPunji.pk

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DARSON SECURITIES (PVT) LIMITED

Research Department Notified Research Entity

Contact no: 021-32467224 Ext:125

activity and positively impact the market.

in macros and easing of monetary policy by the SBP.

could result in a further extension granted by FATF.

3. CPI Inflation in FY20 4. KSE 100 Index by Dec-2020

the major reasons for a higher CPI in Nov. 10%

Jun 28, 2018 Pakistan Placed on FATF GrayList again

Pakistan Placed on FATF GrayList for the

Fiscal Year Unit 2016 2017 2018 2019 2020F 2021F

FDI USD in Million 2,305 2,747 3,471 1,667 1,833 2,200

30,000 Decline in CAD Decline in

Nikkei 225 Japan

Source: Bloomberg, Darson Research

economic indicators are turning toward the positive. 40,000

Source: MoF, Darson Research

by the devaluation of local currency. 45,000 170

KSE-100 DAILY AVERAGE MCap (bn) Performance

Source: PSX, Darson Research Source: PSX, Darson Research

PE RATIO DIV YIELD (12M) Vol. (mn) Performance

Source: Bloomberg, Darson Research Source: PSX, Darson Research

Portfolio investments Comparison – Client wise

Portfolio investments Comparison – Sector wise

MAJOR EVENTS IN 2020

Source: Darson Research

Non Performing Loans (Rs in Mn)

(1) Price hike, (2) Unexpected slowdown in economy,

Key Risks to our sector: 250 40%

3) lower pricing power and 4) Delay in infrastructure projects. 300

Key risk to our sector: 5,000

(1) Decline in Cotton production (2) Delay in refunds and

Key risks to our sector:

HBL- Ready to Shine Again Current Prise Target Price Stance

UBL- ROE to Pickup in CY20 Current Prise Target Price Stance

to post a 65% growth of bottom line in 9MCY19. 45,000 200

Valuation Snapshot CY18A CY19E CY20E

BAHL- A Safe Investment Current Prise Target Price Stance

Source: PSX, Darson Research

Valuation Snapshot CY18A CY19E CY20E

OGDC- Titan Will Dominate Current Prise Target Price Stance

D/Y) 45,000 200

LUCK – Acing The Market Current Prise Target Price Stance

KOHC – Unawaken Scrip Current Prise Target Price Stance

FFC - Multifariousness Current Prise Target Price Stance

HUBC- Twin Utilities Current Prise Target Price Stance

2,920 MW. 45,000 100

TGL- Silver Lining Current Prise Target Price Stance

Valuation Snapshot FY19A FY20E FY21E

KSE-100 Yearly 2020 Target 50,000

4782 low of 2009 to 53127 high of 2017 currently hovering 23.6%

positive after two years negative sentiment and yearly 20000

candle form Hammer which is a bullish indication it is likely

below 34,700 would be matter of concern for bulls.

Resistances: 43,900, 47,200 & 50,325

Habib Bank Limited (HBL)

Volume (675,200) 5000

United Bank Limited (UBL)

Bank Al-Habib Limited (BAHL)

Volume (257,500) 3000

Oil & Gas Development Company (OGDC)

correction projected target of this correction would be the 100.0%