To Be the Nation's Leading Bank Enabling Sustainable Growth And
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To be the nation’s leading bank enabling sustainable growth and inclusive development We will achieve our vision by subscribing to the qualities captured by the word IMAGINE Integrity is the cornerstone of everything we do Market leadership is what we aim across all our target sectors Agility and strategic nimbleness will help us adapt to changing market conditions Good governance and transparency Innovation to provide the customer needs of tomorrow Nation building remains our priority Employee engagement through a merit-based culture 1/260 INDUSTRY & ECONOMIC BULLETIN - 2020 QUARTERLY ECONOMIC UPDATE FOLLOWED BY COMPARATIVE SECTORAL RESEARCH & RATINGS TO RANK INDUSTRY PERFORMANCE, OPPORTUNITIES & RISKS WITH RECOMMENDATIONS ON STRATEGIC SECTORAL POSTURING Q1- 2020 A strategic tool to preempt increases in risk and proactive identification of opportunities. RESEARCH & BUSINESS ANALYTICS DIVISION STRATEGY & BUSINESS ANALYTICS GROUP (SBAG), NBP 2/260 CONTENTS ECONOMIC OUTLOOK 06 The World in 2020 (Annual Forecast) 07 Impact of COVID-19 on Economy 17 World Economic Outlook-June2020 18 Pakistan’s Economic Outlook 20 INDUSTRY RATINGS & ANALYSIS 22 SCOPE & METHODOLGY OF SECTORAL RATINGS 23 Industry Rating Criteria &Scorecard 23 Industry Ratings & Classification 24 Key Points Regarding the Use of Ratings 24 Key Assumptions 25 Data/Information Sources &Sector List 25 Industries included 26 INDUSTRY SYNOPSIS: FINANCIALS, OPPORTUNITIES, THREATS/ISSUES AND OUTLOOK 27 (SME Sectors shown in bold) 1. Agro-Chemicals 28 2. Automotive - Assemblers/Manufacturers 32 3. Automotive - Parts & Accessories 37 4. Carpets & Rugs 41 5. Cement 44 6. Chemicals (inc. Plastic & Rubber Products) 50 7. Construction 53 8. Edible Oil 57 9. Energy - Gas Generation & Distribution 62 10. Energy - Oil & Gas Exploration & Production 66 11. Energy - Oil (Petroleum Distribution/Marketing) 70 12. Energy - Oil (Petroleum Refining) 75 13. Energy – Power Generation & Distribution (IPPs) 80 14. Fertilizers 84 15. Financial Institutions 89 16. Food, Beverages & Consumer Products 93 17. Glass & Ceramics 97 18. Information Technology 100 19. Leather Products 104 20. Machinery & Equipment 110 21. Metallic Products (Iron & Steel) 111 22. Pharmaceuticals 114 23. Sports Products 118 24. Sugar 121 25. Surgical, Precision, Optical Equipment 124 26. Telecommunications 128 27. Textiles – Composite 133 Textile Industry- An Analysis 134 3/260 28. Textiles - Fabrics (Weaving) 140 29. Textiles - Knits & Knit Apparel 141 30. Textiles - Woven Apparel 142 31. Textiles – Spinning 143 32. Textiles - Synthetic Fibers/Polyester 144 33. Tobacco Products 145 34. Transport – Air 149 INDUSTRIES RATED 154 RANKING BY BUSINESS ENVIRONMENT 155 By Demand Volatility 155 By Supply Volatility 156 By Corporate Governance & Control Structure 157 By Strength of Competition 158 By Barriers to Entry 159 By Litigations 160 By Price Elasticity 161 By Exposure (Foreign Exchange Risk) 162 By Exposure (Interest Rate Risk) 163 COMPOSITE RANKING BY BUSINESS ENVIRONMENT 164 RANKING BY PROFITABILITY & FINANCIAL STRENGTH 165 By Interest Coverage 165 By Debt Coverage 166 By Debt/Equity 167 By Current Ratio 168 By Quick Ratio 169 By Cash Ratio 170 By Net Profit Margin 171 By Total Assets Turnover 172 By ROA & ROE 173 By Solvency 175 COMPOSITE RANKING BY PROFITABILITY/FINANCIAL STRENGTH 176 RANKING BY BUINESS OUTLOOK & MACRO ENVIRONMENT 177 By Business Outlook 177 By Industry/Business Life Cycle 178 By Correlation with GDP Growth 179 By Regulatory/Govt. Support-Future Expectations 180 COMPOSITE RANKING BY BUSINESS OUTLOOK & MACRO ENVIRONMENT 181 COMPOSITE INDUSTRY RANKINGS 2020 182 SMEDA MICRO-SECTOR RATINGS METHODOLOGY 183 SME/Micro Sector Rankings 184 Rating Criteria & Scorecard 184 The Sector Scoring Formula 184 Industry Rating Classification 185 4/260 SMEDA MICRO SECTORS 1. Beauty Clinic 187 2. Florist Shop 189 3. Boutique - Women Designer Wear 192 4. Shrimp/ Inland Fish Farming 195 5. Cut Flower Farm 197 6. Gems Stone Lapidary 200 7. Animal Fattening Farm 203 8. Stone Crushing 206 9. Salt Products Manufacturing Unit 208 10. Restaurant Cum Fast Food - Take Away 211 11. Steel Products Welding 213 12. Spices Processing, Packing & Marketing 216 13. Veterinary Clinic 219 14. Poultry Farm 221 15. Fruit Grading & Packing 224 16. Fodder Production & Trading Company 227 17. Dairy Farming 229 18. Day Care Center 232 19. Distribution Agency 235 20. Bakery & Confectionery 237 21. Marble & Onyx Products/ Marble Mosaic Development Center 239 22. Direct Marketing 241 SMEDA MICRO SECTOR RATINGS 244 (Based on feasibility study financials) RANKING BY BUSINESS ENVIRONMENT 244 By Demand Volatility 244 By Supply Volatility 245 By Strength of Competition 246 By Barriers to Entry 247 By Price Elasticity 248 COMPOSITE RANKING BY BUSINESS ENVIRONMENT 249 RANKING BY PROFITABILITY & FINANCIAL STRENGTH 250 By Interest Coverage 250 By Debt/Equity 251 By Current Ratio 252 By Quick Ratio 253 By Cash Ratio 254 By Net Profit Margin 255 By Total Assets Turnover 256 By ROA & ROE 257 COMPOSITE RANKING BY PROFITABILITY/FINANCIAL STRENGTH 258 RANKING BY BUINESS OUTLOOK & MACRO ENVIRONMENT 259 COMPOSITE SMEDA MICRO-SECTOR RANKINGS 2020 260 5/260 ECONOMIC OUTLOOK 6/260 THE WORLD IN 2020 Americas North America United States of America (USA) TWO SUBJECTS hogged the headlines around the world in Pre-COVID19 scenario in 2020: America’s presidential-election campaign and the weakness of the global economy. Both will induce anxiety and each will influence the other. It was already predicted that it will be a volatile year, characterized by unstable, angry and polarized politics, and an enfeebled economic outlook for the world, triggered by the policies and tactics employed by the Trump led Government in USA. But in post COVID19 scenario, it is the impact of this pandemic which has turned the whole world upside down. All the economic and political events have been impacted with this crisis like situation for all countries of the world and on top of it is USA. The recent trend of Black Lives Matter (BLM) movement caused turmoil in most of the states in USA and brought a new trend in socio-economic arena as well as the business ethics employed by the free economies. Canada The stability of Canada’s housing market and the dangerous levels of household debt remain an obvious concern, even if there’s less focus now on rising interest rates. Canada’s weak climate for business investment and the risk from global trade tensions are also top of mind among the experts. So too are environmental and energy issues. Canada’s waning competitiveness is holding the economy back, and even how a deficit of amorousness could lead to a slowdown down the road. Mexico Mexico and the United States will continue to cooperate on curbing the northward flow of Central American migrants in 2020. The decline or stabilization of monthly flows across the southern U.S. border will satisfy U.S. President Donald Trump ahead of the November U.S. presidential election. Mexican President, meanwhile, will continue to work closely with the United States on security measures, in large part to avoid U.S. pressure on other matters. He will also face criticism over rampant cartel violence and the damage it’s doing to Mexico’s economic, but given U.S. demands on immigration, he may have to keep troops deployed to deter immigration from Central America rather than shifting them to the cartel fight. South America Argentina Argentina may default on much of its debt in 2020. The country is unlikely to reach a deal with the International Monetary Fund or private creditors. While the government may use public spending to try to keep social unrest within tolerable margins, the ground will remain fertile for sporadic protests. 7/260 In distancing himself from his predecessor’s policies and solidifying his populist credentials — thus avoiding the bulk of the popular backlash that has plagued other Latin American countries — the President may increase public spending so much that fiscal deficits could become un-financeable without a default. Meanwhile, capital flight and the dollarization of a growing informal economy may threaten Argentina’s formal economy, especially if the government converts dollars into pesos to pay its bills. As Argentina’s trade policies become more protectionists under Fernandez, frictions within the Common Market of the South (Mercosur) may likely escalate, putting the already- troubled customs union and trade bloc at risk of collapse. Venezuela Though ultimately unsustainable, Venezuela’s status quo may not crack in 2020. Venezuelan President Nicolas Maduro largely maintaining his grip on the country. The United States may expand its sanctions against the country, adding wide-ranging secondary sanctions to limit China and Russia’s ability to prop up Maduro. Still, Maduro’s government may maintain its near monopoly on the country’s economic resources as Venezuelan oil exports stabilize, while the military will remain united enough to keep Maduro in power. As the government digs in and U.S. sanctions intensify, Venezuela’s oil industry will suffer, resulting in further drops in oil exports. Another year of economic crisis may also cause more Venezuelans to flee to neighbors like Brazil and Colombia, fueling a migrant crisis. Unrest in South America Social and political unrest will continue in many countries as Latin American economic growth lags. Income disparity and corruption that citizens might otherwise tolerate during times of greater prosperity will continue to fuel anti-government protests throughout the region in 2020. Economic stagnation may also exacerbate existing polarization in the region. Brazil and perhaps Uruguay will pursue pro-business governments looking to deregulate, but in Argentina, Fernandez will pursue state intervention and protectionism. Ultimately — and perhaps as soon as 2020 — these divergent paths will lead to the neutralization and eventual collapse of Mercosur (common market of the South).This will likely scuttle a Mercosur-EU trade deal, although that will have only a minor impact on global trade since Mercosur is a comparatively small player in the global economic system 2019 2020 2021 2.3 -8.0 4.8 KEY DATES TO WATCH Jan.