Morning Call July 27, 2010 Tuesday

Market Review Market Today KSE-100 Index 10,297.68 The market is expected to remain range bound today. This is on account of lack Change (In Points) 1.64 of both foreign and local interest in the market. We believe that market DoD Change (In %) 0.02 participants are waiting for the leverage product and will make their investment High CY2010 (15-Apr-10) 10,677.47 decision once the product launches. Our top picks include POL, PPL, UBL, NBP, Low CY2010 (14-Jun-10) 9,229.60 HUBC, KAPCO, FFBL, LUCK and ACPL. Turnover (Shares in mil) 40.21 DoD Change (Shares in mil) 27.19 Engro Corporation expects to earn PKR 10.53/share for 1H-CY2010 Gainers/Losers 125/242 Engro Corporation is expected to announce its consolidated financial result for 6 Months KIBOR (In %) 12.39 1H-CY2010 on June 28, 2010. We expect the Company to post a consolidated T-Bills 12 Months (In %) 12.44 net profit of PKR 3,451 million (EPS: PKR 10.53), showing an enormous rise of PIB 10 Years (In %) 12.97 177% YOY. The jump in 1H-CY2010E Engro Corporation profitability is on the Gold per 10gm 33,000.00 back 93% jump in fertilizer earnings and expected surge in Engro Eximp’s KCA Spot Rate 6,000 profits. FIPI (in mil) $1.92 Forex Market Currency Inter-Bank Open market Net earnings (PKR mn) 1H-CY2010E 1H-CY2009A YoY EPS- impact Dollar 85.51/85.70 85.70/86.0 Fertilizer* 2,012 1,044 93% 6.14 Euro 110.30/111.60 Eximp 1,219 199 513% 3.72 Pound 131.80/133.30 News Highlights Polymer* (305) 13 N/A -0.93 Economy: Food (31) 292 N/A -0.09  The IMF has asked the government to Pow er 167 (105) N/A 0.51 curtail its expenditure and increase revenue for repayment of its loan given to Vopak 519 195 166% 1.58 under Stand-by-arrangement Avanceon (130) (195) -33% -0.40 (Business Recorder) Total 3,451 1,247 177% 10.53 EPS-PKR 10.53 3.81 Investments: * Actual results  The board of directors of Stock Exchange on Monday approved the Source:AHL estimates & Company accounts concept paper of margin trading (Business Recorder) In 2Q-CY2010E alone, the Company is expected to book profit after tax of PKR 1,646 million (EPS: PKR 5.28), a decline of 9% on a QoQ. The main reason for Electricity: this decline is on account of expected drop in Engro Eximp’s net income to PKR  The National Electric Power Regulatory 322 million in (2Q-CY2010E) compared to PKR 897 million in 1Q-CY2010. This Authority (Nepra) has increased power phenomenal decline in earnings from Eximp will be mitigated by surge in net tariff by 64 paisa per unit earnings of Engro Fertilizer to PKR 1,239 million, recording a rise of 60% QoQ. (Business Recorder) This on the back of other income which exponentially improved from mere PKR 5 million in 1Q-CY2010 to PKR 302 million in 2Q-CY2010. In addition to rising Textile: other income, the company was able to improve its gross margin in 2Q-CY2010  The Cabinet Committee on Textile has to 49% compared 46% 1Q-CY2010A, which further boosted the profitability. abolished 15% regulatory duty on export The reason behind increase in margins was surge in urea prices of around PKR of yarn from 26 July 2010 75/bag to PKR 875/bag when compared to 1Q-CY2010. (Business Recorder) The company is expected to declare an interim cash dividend of PKR 3/share in Oil and Gas: 1H-CY2010E.  Pakistan is considering generating $1.6 billion internally to fund the Iran-Pakistan Engro Fertilizer (PKR mn) 2Q-CY2010A 1Q-CY2010A QoQ 1H-CY2010 gas pipeline project Net sales 4,795 4,620 3.8% 9,415 (Business Recorder) Cost of sales 2,429 2,489 -2.4% 4,918 Board Meetings Gross profit 2,366 2,131 11.0% 4,497 Fauji Fertilizer Bin 27-Jul-10 10:00 AM Operating profit 1,926 1,714 12.3% 3,640 Dawood Hercules 27-Jul-10 3:30 PM Other income 302 5 59x 307 Habib Bank 28-Jul-10 9:15 AM Engro Corporation 28-Jul-10 9:30 AM Financial and other charges 489 515 -5.1% 1,004 Pakistan 29-Jul-10 3:00 PM Profit before taxation 1,739 1,204 44.4% 2,943 Fauji Fertilizer 29-Jul-10 11:00 AM Profit after taxation 1,239 773 60.2% 2,012 Atlas Honda 29-Jul-10 12:00 PM Earnings per share PKR 3.78 2.36 60.2% 6.14 Crescent Steel 29-Jul-10 2:00 PM Clariant Pakistan 30-Jul-10 10:30 AM Source:Company accounts United Bank 30-Jul-10 2:00 PM 2-Aug-10 2:00 PM Lakson Tobacco 2-Aug-10 11:00 AM

Important notice: The information contained herein is compiled from sources AHL believes to be reliable, but we do not accept responsibility for its accuracy or completeness. It is not intended to be an offer or a solicitation to buy or sell any securities. AHL and its officers or employees may or may not have a position in or with respect to the securities mentioned herein and they do not accept any liability whatsoever for any direct or consequential loss arising from the use of this publication and its contents. AHL may, from time to time, have a consulting relationship with a company being reported upon. All opinions and estimates contained herein constitute our judgment as of the date mentioned in the report and are subject to change without notice. AHL (Equities Research Dept.): Phone: 2415213-15 Fax: 2429653

Morning Call July 27, 2010 Tuesday

Arif Habib Invest. 4-Aug-10 10:00 AM Outlook Int. Industries 5-Aug-10 10:00 AM Engro’s Investments are expected to bear fruits as urea expansion and VCM 6-Aug-10 11:00 AM (Vinyl Chloride Monomer) commercial production for Polymer coming online in BOC Pakistan 12-Aug-10 10:00 AM 3Q-CY2010. Commercial start up of in March 2010 future 17-Aug-10 10:00 AM fortifies our confidence in the Company’s ability to deliver, despite mountainous 19-Aug-10 10:30 AM financial leverage. Indus Motors 27-Aug-10 10:00 AM Kot Addu Power 1-Sep-10 11:30 AM At current level, scrip offers an upside potential of 12% based on our December Upcoming Events 2010 target price of PKR 211/share. Thus, we recommend a BUY. In addition to T-Bills Auction 28-Ju1-10 upside potential the company is trading at a PER and dividend yield of 10.7 and NCCPL meeting on 28-Ju1-10 3.2%, respectively based on our CY2010E earnings estimates. leveraged product Monetary Policy 30-Jul-10 Shahbaz Ashraf [email protected]

Important notice: The information contained herein is compiled from sources AHL believes to be reliable, but we do not accept responsibility for its accuracy or completeness. It is not intended to be an offer or a solicitation to buy or sell any securities. AHL and its officers or employees may or may not have a position in or with respect to the securities mentioned herein and they do not accept any liability whatsoever for any direct or consequential loss arising from the use of this publication and its contents. AHL may, from time to time, have a consulting relationship with a company being reported upon. All opinions and estimates contained herein constitute our judgment as of the date mentioned in the report and are subject to change without notice. AHL (Equities Research Dept.): Phone: 2415213-15 Fax: 2429653