Pakistan Equities Monthly Commentary
A solid relief rally; 5 May 2020 breather can be forgiven
. Interestingly, the local stock market and crude oil (WTI) both happened to Syed Hussain Haider, CFA, CIPM close the month at key resistance levels. Both have already gone through [email protected] a commendable relief rally; WTI has doubled and the KSE-100 has posted +9221 111-574-111 Ext: 3118
25% returns. Hence, any breather during May should not be concerning. Ali H. Zaidi [email protected] . Looking at the decent stock market performance in the ongoing holy +9221 111-574-111 Ext: 3103 month, it might just be the best one in a decade. However, empirical evidence suggests May has historically been relatively tamer. Perhaps this Ahmed Lakhani time, we could be in for something different? [email protected] +9221 111-574-111 Ext: 3035 . Presently, the market is basking in the glory of sympathetic measures (and potential budgetary relief around the corner) in lieu of Covid-19 – both local and foreign. Also, even with the back-to-back policy-rate cuts already announced by the central bank, a further cumulative 200bps cut (at least 100 bps in coming MPC meeting) should not be too surprising.
. With the market trading at forward P/E of 6.2x and a forward P/B of 1.03x (10-yr average of 8.2x and 1.6x) as per Bloomberg, there is no denying that valuations are more than attractive from a longer term perspective, even though the near-term earnings outlook remains hazy.
. The elephant in the room is the pandemic, which is still a developing story. In the absence of scientific evidence of a flattening out infection curve, easing lockdown remains a major risk that could potentially make the situation extremely challenging.
JS Research is available on Bloomberg, Thomson Reuters, CapitalIQ and www.jsgcl.com Research Entity Notification Number: REP-084 Please refer to the important disclosures and disclaimer on the last page A solid relief rally; breather can be forgiven
First the good news! The dark clouds of Covid-19 finally gave way to a ray of hope in Apr-2020. As global Coronavirus infections crossed 3.5mn, clinical trials of Remdesivir, an experimental drug by Gilead Sciences, may have given the world a whiff of optimism. For once, despite all differences, the world seems to truly be united by a single goal: survival. Each country is facing this challenge with its own unique skill set with varying degrees of success. For instance, while developed nations such as Germany and UK have been looking to conduct human trials for their drugs, Pakistan has been looking to enhance its testing capacity and domestically manufacture ventilators. Any success story regarding a cure would be great news indeed and we, as much as anyone, pray for one.
Hoping for the right decision Pakistan seems to be charging headlong towards a cliff, at least if statistics are to be believed. The infection tally has been growing rapidly on a weekly basis and even though testing capacity is said to be on the rise, it remains woefully insufficient. Moreover, considering the sheer size of its population, Pakistan is grossly under-equipped in terms of testing capacity. Such statistics alone make a strong case against easing lockdowns. But, suppose if we do decide to follow in the footsteps of some European nations – as suggested by some corners in our society – shouldn’t we at least follow them wholeheartedly rather than selectively and wait for the rate of new cases to subside? Premature easing of lockdowns could lead to consequences that Pakistan (or any other country in our situation) is just not ready for.
Focus on Covid-19! Downward revisions to growth forecasts have recently come to light with the ongoing pandemic. For instance, according to its latest Staff Report, the IMF expects Pakistan’s GDP to contract by 1.5% in FY20 (+2.4% previously) and grow by 2.0% in FY21 (3.0% previously). Needless to say, the Coronavirus is still a developing situation and these forecasts are not etched in stone. While the Staff Report did share other projections, SBP’s Deputy Governor highlighted in the latest analyst briefing that the overall impact on Pakistan was relatively modest vis-à-vis some other EM economies due to the former’s limited trade openness and low levels of existing FDI. A special word of thanks is due to IMF, which has generously released US$1.4bn to Pakistan under the RFI, effectively triggering PKR appreciation. Meanwhile, the EFF
| 1 A solid relief rally; breather can be forgiven
has been temporarily put off and is expected to be revisited later. We reiterate that the feared frontloaded-ness should not return upon resumption of the program. Furthermore, the G-20 has offered to defer loan repayments due from a list of developing countries that (thankfully) includes Pakistan.
On the fiscal side, after announcing the largest stimulus package in the country’s history earlier in Mar-2020, we saw the Prime Minister announcing a specific package for the construction industry. And this when Pakistan’s social safety net is being stretched to record levels. The SBP has also provided much needed support through back-to-back cuts in the policy rate and announced numerous other packages in its efforts to cushion the impact of the pandemic. With regards to the upcoming budget, we believe that the government will aim to provide as much leeway as possible to sustain the economy. However, for a change our economic woes should not be our greatest concern; we will rise again as we always have. What matters more is how successfully and quickly we can overcome the Coronavirus challenge.
What else is going on? Apart from Coronavirus, the matter of the 18th Amendment received much attention during Apr-2020, portrayed as a tug-of-war between the provinces and the center with the prize being control and power. However, a less-talked-about area of the amendment is the Council of Common Interests (CCI). The council that is supposed to meet every quarter to ensure inter-provincial harmony has remained somewhat inactive. Side by side, there were countless debates on how the government and IPPs have locked horns. On top of that, there were further reshuffles in the cabinet (Special Assistant to Prime Minister on Information and Minister for Economic Affairs) and top administration (Federal Secretary for Commerce). Obviously that is now water under the bridge. What matters now is how the government plays its cards on debt relief and further potential funding. In this regard, a ‘slimmer’ cabinet could go a long way in sending across a message of fiscal prudence.
Oil – is the relief rally sustainable? Apr-2020 was a historic month for the oil industry. A combination of contracting demand, insufficient supply cuts and depleting storages threw US oil contracts into negative territory for the very first time. Domestically, investors opted for a typical ‘buying the dips’ strategy as they took the
| 2 A solid relief rally; breather can be forgiven
opportunity to accumulate E&P stocks. For instance, OGDC did not revisit its recent low of ~Rs75 and instead recovered from Rs83.80 in intra-day trading. From an economic perspective, lower oil prices are, as a rule of thumb, cause for rejoice for oil importing countries. Considering the substantial cuts in domestic retail prices of oil products, we believe CPI during 4QFY20 will average at ~8%, limiting the full year average to under 11%. The oil future curve is currently in Contango (Jun-2021 Brent and WTI trading at ~US$36 and ~US$32, respectively) indicating the broader expectation that oil prices will eventually normalize as the Corona-effect wears off. It remains to be seen how much steam is left in the current relief rally with resistance (WTI) at US$19-21 followed by US$28-29.
Domestic institutions on a shopping spree! Four general observations can be made regarding flows. Firstly, the trend of foreign selling continued during Apr-2020, with considerable offloading in Banks, E&Ps and Cements. Secondly, institutions, particularly Insurance Cos., have domestically led buying activity CYTD which is in contrast to what happened last year, when individuals were at the forefront. In fact, this time slightly over half of the selling by foreigners in the aforementioned 3 sectors was absorbed by insurance cos. Interestingly Banks/DFIs followed Insurance cos. as they rebuilt positions in Banking, Fertilizer and E&P stocks during 1QCY20, while they were firmly on the fence during April. Thirdly, individuals who have been relatively noncommittal for the majority of the year sprang to life in April, with most of their buying activity targeted towards Cements. However, note that during the latest major bearish spell (13’Jan to 25’Mar), E&Ps remained their preferred sector. Finally, mutual funds which were among major net sellers in 1QCY20, emerged as the major net buyers in Apr- 2020, covering back in E&Ps and Fertilizers while also building fresh positions in other sectors.
Hazy outlook but a brilliant opportunity! The ongoing result season has not been surprising so far. While some corners were not as bad as others, earnings erosion was not hard to spot. But then what else can be expected at the very beginning of economic recovery? Now, as Coronavirus infects businesses, the earnings outlook becomes hazier, not just for the coming quarter but possibly for the remainder of CY20. During the current season, we witnessed two major events: (1) monetary easing well ahead of broader expectations and (2) Oil prices crashing down to make
| 3 A solid relief rally; breather can be forgiven
history. Both these events directly impacted index heavyweights on the PSX as inflection points were seen in the Banking and E&P sectors. With regards to valuations, it seems as though investors have expanded their investment horizons and are looking beyond near term results. And rightly so! There is no denying that valuations have become more than attractive. Adjusting for the aforementioned events, the expected earnings yield of the JS Universe comes at 15% - twice as much as the current yield on 12-m bond. On top of that, Pakistan’s discount to MSCI EM is at ~40%! Undoubtedly, this is not the worst time to invest!
25% returns in the latest rally! The long bearish spell that started mid-Jan-2020 finally broke towards the last week of Mar-2020. The strong momentum that ensued lasted throughout the following month and the stock market has recovered by ~25% since. In the latest rally, while Commercial Banks were obvious laggards, Cement and Engineering sectors clearly outperformed with Energy stocks following suit. With respect to the recently raised matter of increase in cement bag prices, we believe that a logical solution which ensures sustainability of the industry is slashing taxes on cement bags.
In the last 10 years, while stock market performance during Ramadan has not been too shabby, a key observation is that when the market has fallen, it has fallen hard (case in point, 2011 and 2017). On the other hand, with some exceptions, stock market performance during May has generally been tame as compared to April. Interestingly, the KSE-100’s monthly trend this time is reminiscent of 2015 when the market became sticky around the 34k level. It remains to be seen if history repeats itself. We would caution that 2015 also saw the market take a breather in May. In the current environment, on one hand we have seen some earlier-than-expected monetary easing while on the other hand there is high uncertainty with regards to earnings outlook in the coming quarters. Presently, the market is basking in the glory of supportive measures (and potential budgetary relief around the corner) in lieu of Covid-19 – both local and foreign. This scenario could sustain unless – God forbid – the Covid-19 scenario takes a turn for the worse. The direction of the market would then depend upon how soon we would overcome the challenge. In the event of any major correction, we stand by a ‘Buy on Weakness’ strategy with a bare minimum 1 year investment horizon.
| 4 A solid relief rally; breather can be forgiven
Covid-19 Cases: Weekly Trend New Cases (LHS) 8,000 Confirmed Cases as % of Tests 11.1% 12.0%
7,000 10.6% 11.0%
6,000 858 10.0%
, 6
8.8%
5,000 9.0%
7.9% 7.8% 908 908
4,000 7.1% , 8.0%
4
3,000 7.0%
046 046
2,000 , 6.0%
3
087 087 ,
1,000 662 5.0%
2
,
1
822 822
- 4.0% 29-Mar 5-Apr 12-Apr 19-Apr 26-Apr 3-May
Covid-19 Cases: Provincial breakdown
9,000 882 882
Confirmed Cases Active Cases 646
, ,
7 7
8,000
190 190
,
7,000 6
853 853
6,000 ,
4
5,000
288 288
, 3
4,000
247 247
,
3,000 2
218 218
,
000 000
,
2,000 1
1
464 464
404 404
372 372
1,000 109
71 71
27 27
-
GB
AJK
KPK
Sindh
n
Punjab
Islamabad Balochista
Source: www.covid.gov.pk
| 5 A solid relief rally; breather can be forgiven
Real GDP growth – IMF projections
6.0%
5.0%
4.0%
3.0%
2.0% Previous 1.0% Current 0.0% 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 -1.0%
-2.0%
FBR Revenues (Rs trn) – IMF projections
12.0 Previous Current 10.2 10.0 9.2 8.5 8.1 7.7 8.0 6.8 7.0 6.1 6.0 5.2 5.1 3.9 4.0
2.0
- 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25
Source: IMF Staff Report, April 17, 2020
| 6 A solid relief rally; breather can be forgiven
Pak Rupee vs. EM Currencies – YTD CY20
Chile Greece Brazil S.Africa Mexico Colombia Russia Turkey Argentina Poland Republic Czech Hungary Thailand Indonesia India Malaysia S.Korea Pakistan Peru China Qatar KSA UAE Philippines Taiwan Egypt
%
% %
5% 2
% % %
1
0
0 0 0
0%
%
% %
-5%
1
2
%
-
3
-
%
%
-
4
%
-
5
5
5
%
- -
-10% -
%
7
%
%
%
-
8
9
9
9
%
-
-
- -
-15% %
10
-
12
%
- %
-20% %
15
-
16
16
-
-
-25% %
% %
21
-
26 24 - -30% -
PKR / USD parity
170.00
165.00
160.00
155.00
150.00
11-… 18-… 25-…
1-Jan 8-Jan
1-Apr 8-Apr
5-Feb
4-Mar
29-Jan 15-Jan 22-Jan
15-Apr 22-Apr 29-Apr
12-Feb 19-Feb 26-Feb
Source: Bloomberg
| 7 A solid relief rally; breather can be forgiven
Yield Curves (%)
14.0
13.0
12.0
11.0 31-Dec-19
10.0 31-Mar-20 9.0
8.0 30-Apr-20
7.0
6.0 3M 6M 12M 3Y 5Y 10Y
Yield Spreads (5yr-3m) (%) 31-Dec-19 19-Mar-20 26-Mar-20 20-Apr-20 30-Apr-20 0.0
(0.5) (0.3) (0.7) (1.0)
(1.5) (1.5) (2.0)
(2.5) (2.3) (2.5) (3.0)
Source: JS Research
| 8 A solid relief rally; breather can be forgiven
KSE 100 monthly chart
Sectors’ Performance 2020 – Bears vs. Bulls
55% % 13-Jan to 25-Mar
50% 49
25-Mar to 30-Apr
%
%
%
%
%
%
%
31
30
29
%
27
27
27 25
30%
%
23
%
%
17
13
11
10% %
1
% % % % % % % % % % % % %
-10% %
28 31 27 38 45 48 44 28 41 37 20 30 40 18
------
E&Ps Engg.
-30% Autos
Banks
Power
OGMCs
Textiles
Pharma
Cement
Refinery
Fertilizer Chemical
-50% Food&Pers. KSE-100Index
Source: PSX, JS research
| 9 A solid relief rally; breather can be forgiven
Mutual Funds flows 2020 – Sector breakdown ($mn)
13-Jan to 25-Mar 25-Mar to 30-Apr
18
8
12.3 12.3
3.1 3.1
10.6 10.6
8.7 8.7
15.3 15.3 19.5
4.9 4.9
) ) ) ) ) ) )
(2) )
)
6.0 1.2 0.1 0.9 0.6
( ( ( ( (
30.6 22.5 12.3
4.0
( ( ( (
(12)
E&Ps
Banks
OGMCs
Textiles
Cement
Telecom Others* (22) Fertilizer
(32)
Cement sector flows 2020 – Investor breakdown ($mn)
13-Jan to 25-Mar 25-Mar to 30-Apr
18.0
8.0
14.5 14.5 2.9 11.3 0.3 0.2 1.6 19.5 30.3
) ) )
) ) )
(2.0)
) )
0.5 0.1 1.6
( ( (
4.0 4.0
14.2 40.6 15.6
( (
( ( (
(12.0)
Brokers
Ins. Ins. Cos.
M M Funds
Others** Foreigners
(22.0) Individuals
Banks/DFIs Companies
(32.0)
Source: NCCPL; * Others incl. Power and Food & Personal; ** Others incl. NBFCs and Other Orgs.
| 10 A solid relief rally; breather can be forgiven
KSE 100 vs. MSCI Global indices
MTD 20.0% 16.7% YTD CY20 15.0% 13.2% 8.8% 8.9% 10.0% 6.0% 5.0% 0.0% -5.0% -10.0% -9.1% -15.0% -11.9% -20.0% -16.1% -16.3% -19.7% -25.0% USA EMERGING GCC KSE-100 FRONTIER MARKETS COUNTRIES MARKETS
KSE 100 vs. S&P 500
31-Dec 7-Jan 14-Jan 21-Jan 28-Jan 4-Feb 11-Feb 18-Feb 25-Feb 3-Mar 10-Mar 17-Mar 24-Mar 31-Mar 7-Apr 14-Apr 21-Apr 28-Apr 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% -30.0% KSE-100 -35.0% S&P500 -40.0%
Source: MSCI, PSX, Bloomberg
| 11 A solid relief rally; breather can be forgiven
KSE 100 during Ramadan
3.5% 4.0% 3.0% 3.3% 3.3% 1.6% 2.0% 1.1% 0.0% -0.1% -0.3% -2.0%
-4.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 -6.0% -8.0% -10.0% -9.7% -12.0% -12.0%
KSE 100 average monthly returns
20.0% 17% Avg (2010-19) 15.0% 2020
10.0% 4% 5.0% 2% 2% 3% 3% 2% 3% 2% 0% 2% 0.0% -1% 0% -5.0% -4% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec -10.0% -9% -15.0%
-20.0%
-25.0% -23%
Source: PSX, JS Research
| 12 A solid relief rally; breather can be forgiven
P/E Ratio
12.0 P/E Avg P/E
10.0
8.0
6.0
4.0
Jul-13
Jan-10 Jan-17
Jun-16
Oct-11 Oct-18
Apr-15
Feb-14 Sep-14
Dec-12 Dec-19
Aug-10 Aug-17
Nov-15
Mar-11 Mar-18
May-12 May-19
P/B Ratio
2.2 P/B Avg P/B
1.9
1.6
1.3
1.0
0.7
Jul-13
Jan-10 Jan-17
Jun-16
Oct-11 Oct-18
Apr-15
Feb-14 Sep-14
Dec-12 Dec-19
Aug-10 Aug-17
Nov-15
Mar-11 Mar-18
May-12 May-19
Source: Bloomberg
| 13 A solid relief rally; breather can be forgiven
Key macroeconomic indicators FY19A FY20E FY21F FY22F FY23F FY24F FY25F
Nominal GDP US$bn 282 265 274 308 335 361 389
Real GDP Growth % 3.3% -1.5% 2.0% 4.0% 4.5% 5.0% 5.0%
Headline Inflation (Avg.) % 7.3% 10.8% 8.0% 7.0% 6.0% 5.0% 5.0%
C/A Balance % of GDP -4.9% -1.6% -2.4% -2.4% -2.5% -2.7% -2.7%
C/A Balance US$bn (13.8) (4.3) (6.6) (7.4) (8.4) (9.8) (10.5)
SBP FX Reserves US$bn 7.3 12.0 15.6 20.6 24.1 24.8 27.3
Fiscal Balance % of GDP -8.9% -9.3% -6.6% -5.1% -4.1% -3.9% -3.6%
Primary Balance % of GDP -3.5% -2.9% -0.4% 0.7% 1.4% 1.4% 1.5%
Govt. debt % of GDP 83.5% 85.3% 83.4% 79.3% 76.4% 73.1% 68.8% (incl. IMF obligations)
Domestic % of GDP 53.8% 53.8% 51.5% 47.9% 45.1% 44.1% 42.5%
External % of GDP 29.7% 31.5% 31.9% 31.4% 31.3% 29.0% 26.3%
Source: IMF, JS Research
| 14 A solid relief rally; breather can be forgiven
Valuations Summary
Price EPS (Rs) EPS Grow th PER (x) Price/BV (x) D/Y Target Company Name Ticker Rating FY20F/ FY21F/ FY20F/ FY21F/ FY20F/ FY21F/ FY20F/ FY21F/ FY20F/ FY21F/ 4-May Price CY20F CY21F CY20F CY21F CY20F CY21F CY20F CY21F CY20F CY21F -13% 5% 7.04 6.73 0.85 0.80 6% 7% Banks 4% -13% 6.09 6.97 0.74 0.70 8% 7% Habib Bank HBL 99.40 Buy 160 19.69 19.89 88% 1% 5.05 5.00 0.59 0.55 6% 6% United Bank UBL 105.93 Buy 175 16.65 18.54 7% 11% 6.36 5.71 0.66 0.64 11% 10% MCB Bank MCB 163.82 Hold 175 19.52 18.37 -3% -6% 8.39 8.92 1.11 1.08 10% 8% Allied Bank ABL 80.55 Hold 75 14.11 6.44 14% -54% 5.71 12.50 0.75 0.75 10% 5% Bank Al-Falah BAFL 29.84 Buy 35 4.89 4.27 -32% -13% 6.10 6.99 0.59 0.55 6% 7% Bank Al-Habib BAHL 57.06 Buy 95 11.93 10.85 19% -9% 4.78 5.26 0.89 0.80 6% 10% Habib Metro HMB 28.00 Buy 45 7.47 6.81 19% -9% 3.75 4.11 0.59 0.54 9% 10% Askari Bank AKBL 14.02 Hold 13 2.96 2.02 -47% -32% 4.74 6.94 0.40 0.39 7% 7% Faysal Bank FABL 13.33 Sell 10 1.61 0.81 -60% -50% 8.28 16.51 0.35 0.34 0% 0% Meezan Bank MEBL 65.21 Buy 80 9.15 5.72 -25% -37% 7.13 11.39 1.21 1.14 4% 3% Insurance 16% 3% 5.52 5.37 0.60 0.58 13% 13% Adamjee Insurance AICL 33.04 Buy 60 5.98 6.16 16% 3% 5.52 5.37 0.60 0.58 13% 13% Oil & Gas Exploration -7% -24% 4.49 5.89 0.73 0.69 7% 8% Oil & Gas Dev. Co OGDC 105.24 Buy 150 24.19 18.85 -12% -22% 4.35 5.58 0.65 0.61 8% 7% Pakistan Oilfields POL 320.23 Buy 390 57.26 36.69 -4% -36% 5.59 8.73 2.29 2.39 14% 11% Pakistan Petroelum PPL 91.51 Buy 140 20.74 15.85 2% -24% 4.41 5.78 0.73 0.66 2% 7% Oil & Gas Marketing -80% 592% 44.98 6.50 0.81 0.76 1% 8% Pakistan State Oil PSO 157.02 Buy 190 12.00 28.00 -47% 133% 13.09 5.61 0.59 0.56 0% 10% Attock Petroleum APL 270.12 Buy 325 3.87 28.50 -90% 636% 69.80 9.48 1.47 1.35 4% 4% Shell Pakistan SHEL 150.33 Hold 175 -32.00 18.50 131% NM -4.70 8.13 11.14 6.27 0% 5% Pow er Generation 126% 26% 4.13 3.28 1.22 0.91 0% 7% Hub Pow er HUBC 80.69 Buy 130 19.55 24.57 126% 26% 4.13 3.28 1.22 0.91 0% 7% Cement -105% -3092% -258.67 8.65 1.10 1.01 1% 3% Lucky Cement LUCK 461.52 Buy 650 11.37 44.09 -65% 288% 40.60 10.47 1.56 1.38 1% 3% DG Khan Cement DGKC 84.02 Buy 106 -4.97 9.78 NM NM -16.90 8.60 0.51 0.48 0% 5% Fauji Cement FCCL 16.98 Buy 22 0.45 2.48 -78% 449% 37.58 6.85 1.16 1.04 2% 7% Maple Leaf Cement MLCF 27.38 Buy 40 -3.35 3.45 NM NM -8.16 7.95 0.88 1.02 0% 2% Cherat Cement CHCC 88.95 Buy 142 -4.43 14.15 NM NM -20.07 6.28 1.59 1.29 0% 1% Pioneer Cement PIOC 63.54 Hold 72 -2.35 7.47 NM NM -26.99 8.51 1.13 1.00 0% 2% Attock Cement ACPL 131.07 Buy 155 13.17 18.87 -13% 43% 9.95 6.95 1.04 0.93 3% 4% Kohat Cement KOHC 140.87 Hold 165 -0.30 14.11 NM NM -472.17 9.99 1.48 1.23 0% 1% Pow er Cement POWER 6.37 Buy 9 -0.04 1.78 NM NM -149.10 3.58 0.56 0.48 0% 8% Iron & Steel -60% 486% 35.56 6.07 0.73 0.67 1% 8% International Steels ISL 53.78 Buy 66 2.68 9.25 -56% 246% 20.09 5.81 1.93 1.56 1% 8% Aisha Steel ASL 9.98 Hold 11 -0.73 1.04 NM NM -13.60 9.63 0.22 0.22 0% 5% Amreli Steels ASTL 35.74 Buy 52 1.91 6.87 NM 259% 18.67 5.20 1.01 0.85 0% 10% Textile -41% 33% 7.46 5.62 0.47 0.44 4% 4% Nishat Mills NML 79.07 Buy 110 9.90 14.28 -41% 44% 7.98 5.54 0.40 0.38 3% 3% Nishat Chunian NCL 33.00 Buy 40 4.95 6.19 -62% 25% 6.67 5.34 0.49 0.46 5% 6% Kohinoor Textile KTML 38.01 Buy 48 5.50 6.25 -6% 14% 6.92 6.08 0.80 0.74 5% 7% Auto Assemblers/Allied -78% 108% 36.00 17.35 1.45 1.40 2% 3% Indus Motors INDU 1,001.80 Buy 1,100 70.42 82.85 -60% 18% 14.23 12.09 1.89 1.76 3% 5% Pak Suzuki Motors PSMC 171.28 Reduce 165 -43.86 -16.40 24% -63% -3.91 -10.44 0.63 0.67 0% 0% Honda Atlas Cars HCAR 172.78 Hold 195 9.37 11.28 -65% 20% 18.44 15.32 1.46 1.35 1% 1% Fertilizer -17% 13% 9.31 8.22 1.45 1.35 9% 11% Fauji Fertilizer FFC 110.95 Hold 120 11.75 12.69 -7% 8% 9.44 8.74 3.61 3.48 9% 10% Engro Corporation ENGRO 303.60 Buy 375 31.10 33.90 -4% 9% 9.76 8.96 0.95 0.92 9% 9% Engro Fertilizers EFERT 62.70 Hold 60 7.56 9.72 -40% 29% 8.29 6.45 1.57 1.26 11% 14%
| 15 DISCLOSURES
JS Global hereby discloses that all its Research Analysts meet with the qualification criteria as given in the Research Analysts Regulations 2015 (‘Regulations’). Each Analyst reports to the Head of Research and the Head of Research reports directly to the CEO of JS Global only. No person engaged in any non-research department has any influence over the research reports issued by JS Global and/or no person engaged in any non-research department (other than the CEO) has any influence on the performance of the Research Analysts or on their remuneration/compensation matters.
The Research Analyst(s), author of this report hereby certify that all of the views expressed in this research report accurately reflect their personal, unbiased and independent views about any and all of the subject issuer(s) or securities, and such views are based on analysis of various information compiled from multiple sources, including (but not limited to) annual reports, newspapers, public disclosures, financial models etc. The given sources appear to be and consequently are deemed to be reliable for forming an opinion and preparation of this report. Such information may not have been independently verified or checked by JS Global or the Research Analyst, and therefore, all such information as given in this report may or may not prove to be correct. It is hereby certified that no part of the compensation of JS Global or the Research Analyst was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Rating System JS Global Capital Limited uses a 3-tier rating system i.e. Buy, Hold and Sell, based on the level of expected return. Time horizon is usually the annual financial reporting period of the company.
‘Buy’: Stock will outperform the average total return of stocks in our universe ‘Hold’: Stock will perform in line with the average total return of stocks in our universe ‘Sell’: Stock will underperform the average total return of stocks in our universe Target price risk Company may not achieve its target price for various reasons including company specific risks, competition risks, sector related risks, change in laws, rules and regulations pertaining to the business of the Company as well as a change in any governmental policy. The results of operations may also be materially affected by global and country-specific economic conditions, including but not limited to commodity prices, prices of similar products internationally and locally, changes in the overall market dynamics, liquidity and financial position of the Company and change in macro-economic indicators. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company may enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. Research Dissemination Policy JS Global Capital Limited endeavours to make all reasonable efforts to disseminate research to all clients (without any preference, prejudice or biasness) in a timely manner through either physical or electronic distribution such as mail, fax and/or email. Disclosure Pertaining To Shareholding/Conflict of Interest The Research Analyst has not directly or indirectly received any compensation from the Subject Company for preparation of this report or for the views expressed herein, and the Subject Company is not associated with the Research Analyst in any way whatsoever.
No other material information (other than the one specifically disclosed in this report) exists (for JS Global as well as the Research Analyst) which could be a cause of conflict of interest in issuing this report.
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