Corporate Member: Karachi Stock Exchange (Guarantee) Ltd.

SC SECURITIES (PVT) LTD.

Faysal Bank …. Geared up for the flight
The bank
The bank is expected to post handsome earnings for FY05, one of the major reasons is the spike in interest rates during the year. However, this hike is not expected for the years to come and the banks are not expected to perform with the same velocity, but based on FY05 results expectations, the selected share is trading at an attractive discount from its fair value. The bank’s net interest income to gross income ratio has been improved to 60% (3QFY05) from 42%(3QFY04) which slightly improved in FY04 to 45%. Together with this improved ratio the bank is also expected to post some handsome non interest earnings due to the good investment in equities, we expect FABL to report the PAT of Rs. 3.35 bn translating into an EPS of Rs. 9.1.

SHORT TERM Buy LONG TERM Buy TARGET PRICE RANGE PKR 102 - 108

What lies ahead…Valuations
Current Price : PKR 82 EPS for FY05 : Rs 4.76 EPS for FY06F : Rs 9.1
1 year price performance

12000 10000 8000 6000 4000 2000 0

80 70 60 50 40 30 20 10 0 10/3/2005 11/3/2005 12/3/2005

Based on the earnings forecasted for FY05, the share is trading at the PE multiple of 9 as compared to the sector multiple of 11.03. The price to Book ratio stands at 2.4 as compared to the sector multiple of 3, based on the book value as at September 30, 2005, whereas, based on the prospective book value for the FY05, the share trades at the multiple of 2.44. On account of the fact that the share is trading at the discount to the sector’s multiples in terms of Price to Earnings and Price to Book Value, our target price range for FABL is Rs. 102 – 108.

This attractive discount offers a good opportunity to invest and be part of the rally if you have missed any or increase the gains if you have made any.
Financials
Dividends % Income / Expense Ratio Return on Equity% Return on Assets% Earnings Per Share-PkR Book Value Per Share-Pkr FY01A FY02A FY03A FY04A FY05E 10.00 17.00 45.00 45.00 60.00 2.90 2.98 4.53 3.05 3.66 10.59 16.33 44.22 29.57 35.40 0.96 1.67 5.11 2.78 3.15 1.55 2.48 7.39 6.02 9.10 14.47 19.88 30.13 35.07 33.65

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KSE-100

9/3/2005

FABL

Research Department

SC Securities (Pvt) Ltd.
Tel: 92 21 111 111 721 (Ext 107,108) Email: research@scsecurities.net

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