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KSE-100 Profitability 1

KSE-100 Index ProfitabilityProfitability down by 15% during Jan-Mar quarter

May 15, 2020

AHL Research

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Earnings of the KSE-100 index depicted a dip of 15% YoY during Jan-Mar quarter which is primarily owed to

dismal earnings posted by cyclical sectors. Cement, Oil & Gas Marketing and Steel posted losses during the

quarter worth PKR 3bn, PKR 4.1bn and PKR 149mn, respectively. Moreover, Fertilizers, Food and Personal

Care, Automobile Assemblers and Chemicals profitability declined by 58%, 16%, 31% and 46% YoY,

respectively. On the other hand, sectors that remained top performers were Commercial Banks (+26%

YoY), Oil & Gas Exploration & Production (+14% YoY) and Power Generation & Distribution (+83% YoY)

During 9MFY20 earnings dropped by 7% YoY amid fall in profitability of Cements (loss of PKR 3.4bn

against a profit of PKR 30bn SPLY), Fertilizers (-24% YoY), and OMC’s (-53% YoY). Meanwhile surge in

profitability was witnessed in Commercial Banks (+40% YoY), and Power (+80% YoY). On a sequential

basis, KSE-100 Index’s bottom-line witnessed a decline of 17%, which was led by Banks (-17% QoQ),

Fertilizers (-62% QoQ), Chemicals (-39% QoQ) and losses posted by Cement and OMC’s.

Sectors leading the profitability chart during 9MFY20 were Miscellaneous (+412% YoY), Investment Banks

(+91% YoY), and Power (+80% YoY). During 3QFY20, Investment Banks (+730% YoY), Tobacco sector

(+109% YoY) and Power (+83% YoY) led the earnings chart of the index.

During 3QFY20, the KSE-100 index fell by a massive 11,503 points (-28.2% QoQ) as the COVID-19

pandemic unfolded wiping off equity market sentiment. The decline was led by Commercial Banks (-3,202

points), E&P (-2,527 points), and Fertilizers (-1,295 points).

During 9MFY20, the KSE-100 index declined by 4,670 points (-13.8% YoY) majorly owed to Commercial

Banks (-1,611 points), E&P (-1,577 points), and OMC’s (-512 points). On the other hand, positive

contributions to the index came from Fertilizers (+276 points) and Cement (+224 points).

We have based our analysis on the KSE-100 index companies. We have included the result of 79

companies while the remaining 21 companies have not disclosed their results. The companies which have

been included in our analysis represent almost ~90% of the market capitalization of the benchmark bourse.

KSE-100 Index Profitability

Profitability down by 15% YoY/17% QoQ during 3QFY20



KSE-100 Profitability witnessed a decline of 7% YoY

Exhibit: Sector Wise KSE-100 Index Profitability

Source (s): Company Financials, AHL Research

(PKR mn) Weight 3QFY20 3QFY19 YoY 2QFY20 QoQ 9MFY20 9MFY19 YoY

KSE100 Index 115,742 135,847 -14.8% 138,627 -16.5% 386,860 416,660 -7.2%

Commercial Banks 22.3% 33,663 26,791 25.6% 40,611 -17.1% 106,211 75,817 40.1%

Fertilizer 17.4% 4,819 11,447 -57.9% 12,735 -62.2% 31,837 41,996 -24.2%

Oil & Gas Exploration 13.1% 58,990 51,808 13.9% 48,031 22.8% 160,046 158,551 0.9%

Cement 8.5% (3,035) 9,673 nm 948 nm (3,384) 30,036 nm

Power Generation 6.6% 15,449 8,439 83.1% 14,158 9.1% 42,320 23,547 79.7%

Oil & Gas Marketing 5.0% (4,137) 1,962 nm 3,262 nm 3,879 8,314 -53.3%

Food & Personal Care 3.4% 2,394 2,834 -15.5% 1,966 21.8% 5,453 9,015 -39.5%

Pharmaceuticals 3.2% 1,037 1,051 -1.3% 990 4.7% 2,896 3,037 -4.6%

Automobile Assembler 2.8% 2,291 3,314 -30.9% 1,204 90.3% 4,008 12,052 -66.7%

Chemicals 2.5% 2,554 4,692 -45.6% 4,174 -38.8% 12,309 13,273 -7.3%

Insurance 2.0% 1,066 901 18.3% 1,383 -22.9% 3,071 2,128 44.3%

Miscellaneous 1.9% (215) 215 nm 396 nm 492 96 412.4%

Textile Composite 1.8% 2,037 4,100 -50.3% 3,722 -45.3% 8,515 14,606 -41.7%

Tobacco 1.8% 3,182 1,526 108.5% 2,298 38.5% 7,630 5,339 42.9%

Technology & Comm. 1.7% (2,155) 602 nm (844) nm (4,212) 3,424 nm

Automobile Parts 0.9% 818 1,257 -34.9% 747 9.6% 1,757 3,250 -45.9%

Engineering 0.8% (149) 1,048 nm 115 -229.3% 195 3,717 -94.8%

Transport 0.5% (189) 468 nm 386 nm 676 (991) nm

Paper & Board 0.5% 199 1,076 -81.5% (73) nm 294 1,732 -83.0%

Refinery 0.5% (3,775) 525 nm (1,907) nm (4,443) (2,356) nm

Real Estate Investment 0.4% 840 797 5.4% 3,224 -73.9% 4,860 5,140 -5.4%

Cable & Electrical 0.4% (557) 416 nm 8 nm (487) 572 nm

Investment Banks 0.3% 61 7 729.6% 89 -31.6% 181 95 91.3%

Vanaspati & Allied 0.2% (333) 40 nm 282 nm 42 187 -77.5%

Leasing Companies 0.1% 180 257 -29.8% 272 -33.8% 683 764 -10.6%

Modarabas 0.1% 92 90 2.3% 87 5.0% 266 239 11.3%

Synthetic & Rayon 0.1% 52 (199) nm 57 nm 254 589 -56.9%

Glass & Ceramics 0.0% 568 686 -17.2% 248 128.8% 1,458 2,403 -39.3%

Textile Weaving 0.0% 46 45 2.7% 39 17.5% 110 97 12.5%

Woollen 0.0% (26) (24) nm 19 nm (31) (9) nm


Exhibit: Sector Wise Profitability Contribution (3QFY20)

Source (s): Company Financials, AHL Research,


KSE-100 Index Profitability Contributions (Graphs)

Exhibit: Sector Wise Profitability Contribution (9MFY20)


160

106

42

32 12 9 8 5 5 4 15

-

50

100

150

200

250

300

350

400

450

E&

P

Banks

Pow

er

Fe

rtili

zer

Chem

ical

Te

xtile

Co

mpo

site

To

bacco

Fo

od

RE

IT

Auto

s A

ssem

.

Oth

ers

(PKR bn)

59

34

15 5 3 3 2 2 2 1 4

-

20

40

60

80

100

120

140

E&

P

Banks

Pow

er

Fe

rtili

zer

To

bacco

Chem

ical

Fo

od

Auto

s A

ssem

.

Te

xtile

Co

mpo

site

Insura

nce

Oth

ers

(PKR bn)


Exhibit: KSE-100 Profitability and Free-Float Market Capitalization Trend

Source (s): Company Financials, PSX, AHL Research


KSE-100 Profitability and Free-Float

Exhibit: KSE-100 Profitability and Free-Float Market Capitalization Trend

Source (s): Company Financials, PSX, AHL Research

137 136

145

136

142

132

139

116

1,000

1,200

1,400

1,600

1,800

2,000

2,200

100

105

110

115

120

125

130

135

140

145

150

2QCY18 3QCY18 4QCY18 1QCY19 2QCY19 3QCY19 4QCY19 1QCY20

Profit after tax Free-float Market Cap (RHS)

(PKR bn) (PKR bn)

333

380

422 417

387

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

-

50

100

150

200

250

300

350

400

450

9MFY16 9MFY17 9MFY18 9MFY19 9MFY20

Profit after tax Free-float Market Cap (RHS)

(PKR bn) (PKR bn)


Commercial Banks

Provisioning Expenses Suppress Earnings

KSE-100 Banking profitability is down 17% QoQ and up 26% YoY during 1QCY20. The jump in earnings on a

yearly basis is primarily attributable to a higher effective tax rate last year of 50% due to an additional super

tax being booked. Normalising the tax rate, earnings are actually stagnant YoY.

Net Interest Income for the sector is up 20% YoY / 1% QoQ with higher interest rates ensuring higher NIMs

for the sector. Non-Funded Income is up 8% YoY primarily owing to hefty capital gains booked this quarter

(PKR 4.9bn against losses of PKR 365mn SPLY) majorly on federal government securities. The SBP had

reduced the policy rate by 225bps in March in the wake of the COVID-19 pandemic. On a quarterly basis,

NFI is down 11% owing to starkly low income from FX operations / derivatives (down 48% QoQ) and 39%

lower dividend income.

Provisioning of the KSE-100 banking sector posted a mammoth ~10x surge YoY during 1QCY20 and 11%

QoQ rise, on account of NPL accretion as well as impairment charges on equity portfolios due to dismal

stock market performance in 1QCY20 owing to the outbreak of the COVID-19 pandemic which sent

shockwaves across the world.

In spite of inflationary pressure in the economy (10MFY20 inflation stands at 11.2%), new initiatives on the

technology / financial inclusion front, regulatory costs, and branch expansion mode in some banks, Cost /

Income of the KSE-100 Banking sector settled at 56.1% in 1QCY20 vis-à-vis 56.6% SPLY. OPEX posted a

16% YoY / 3% QoQ jump during 1QCY20.

Notable profitability trends during 1QCY20 include MEBL (+66% YoY), BAHL (+39% YoY) and HBL (+34%

YoY). On a sequential basis HBL posted a 39% downturn in earnings primarily on account of a hefty

revaluation loss on its open FX position while BAHL and AKBL’s earnings were down 32% and 30%,

respectively.

Exhibit: Banking Sector Profitability

Source (s): Company Financial AHL Research, Ex. BOP, FABL, NBP and SCBPL

PKR mn 1QCY20 1QCY19 YoY 4QCY19 QoQ

ABL 3,890 3,094 26% 4,852 -20%

AKBL 1,864 1,836 2% 2,647 -30%

BAFL 2,892 3,182 -9% 3,312 -13%

BAHL 2,841 2,051 39% 4,192 -32%

HBL 4,096 3,054 34% 6,696 -39%

HMB 1,553 1,520 2% 1,603 -3%

MCB 6,624 4,986 33% 7,715 -14%

MEBL 5,024 3,025 66% 4,727 6%

UBL 4,878 4,043 21% 4,867 0%

Total 33,663 26,791 26% 40,611 -17%


Exhibit: Historical Net Interest Income and PAT of Banking Sector


Exhibit: Banking Industry IDR and ADR

Source (s): SBP, AHL Research

Commercial Banks


20.0

25.0

30.0

35.0

40.0

45.0

70

78

85

93

100

108

115

123

130

Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Net Interest Income PAT (RHS)

(PKR bn)(PKR bn)

52.5%

55.0%

57.5%

60.0%

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%


IDR (LHS) ADR (RHS)


Exhibit: Discount Rate Trend


Exhibit: Banking Sector Spreads


Commercial Banks


6.7%

7.7%

9.5%

10.7%

11.8%

13.4%13.8%

12.3%

-

100

200

300

400

500

600

700

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%


Average Discount Rate bps YoY

4.9% 4.9%

5.1%

5.5%

5.6%

6.0%6.1%

5.4%

(20)

-

20

40

60

80

100

120

140

4.6%

4.8%

5.0%

5.2%

5.4%

5.6%

5.8%

6.0%

6.2%


Average Spreads bps YoY


Fertilizer

Seasonality Hurts Profitability Fertilizer sector witnessed a 48% YoY decline in profitability during 1QCY20 to PKR 5 ,102mn.

Likewise, on a QoQ basis, the sector posted a 54% decline.

Sector topline dropped by 14% YoY during 1QCY20 given 25% YoY decline in urea offtake

tagged with lower urea and DAP prices during the period under review.

Sector gross margins declined by 1.35ppt YoY to 25.8% during 1QCY20. The weakening of gross

margins was primarily on account of lower urea prices as companies (including operational on

concessionary gas agreement) passed on the benefit of GIDC to end consumers.

FFC posted 15% YoY growth in 1QCY20 amid higher urea offtake by 3% YoY tagged with

improved gross margins owed to lower effective gas prices during the period.

While EFERT’s profitability during 1QCY20 plunged by 86% YoY as company’s urea offtake

dropped by 55% YoY (due to price differential with peers) along with a 50% YoY decline in DAP

offtake.

Whereas FFBL unveiled a loss after tax (LAT) of PKR 3.0bn as compared to a LAT of PKR 1.9bn

during same period last year. Major reason for subdued result was higher financial charges (high

DR during the period) along with lower other operating income (absence of dividend income from

associates).

Exhibit: Fertilizer Sector Profitability

Source (s): Company Financial AHL Research, *Ex. FATIMA and DAWH, **Ex. FATIMA, ENGRO and DAWH

PKR mn 1QCY20 1QCY19 YoY 4QCY19 QoQ

EFERT 571 4,007 -86% 6,361 -91%

ENGRO 3,317 4,010 -17% 3,507 -5%

FFBL (3,048) (1,867) nm (3,503) nm

FFC 4,262 3,696 15% 4,643 -8%

Total* 5,102 9,846 -48% 11,007 -54%

Total** 1,785 5,836 -69% 7,500 -76%


Exhibit: Historical Profitability and GMs of Fertilizer Sector


Fertilizer

Seasonality Hurts Profitability

Exhibit: Urea and DAP Prices Trend

Source (s): NFDC AHL Research

5.2

9.7

12.7

5.8

8.3

6.4

7.5

1.8

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

-

2.5

5.0

7.5

10.0

12.5

15.0

17.5


Profit after tax Gross Margins (RHS)(PKR mn)

1,491 1,641

1,752 1,813 1,841 1,924

2,006

1,837

3,199

3,362

3,590 3,562 3,557 3,635 3,692

3,510

-10%

0%

10%

20%

30%

40%

50%

60%

1,250

1,750

2,250

2,750

3,250

3,750

4,250


Urea Price DAP Price Change YoY (Urea) Change YoY (DAP)(PKR/bag)


Exhibit: DAP Off-take increased by 11% YoY during 1QCY20

Source (s): NFDC, AHL Research

Fertilizer

Seasonality Hurts Profitability

Exhibit: Urea Off-take registered a decline of 25% YoY during 1QCY20

Source (s): NFDC, AHL Research

318

580

975

189

457

517

868

211

-60%

-40%

-20%

0%

20%

40%

60%

50

150

250

350

450

550

650

750

850

950

1,050


DAP Offtake Change YoY(000 tons)

1,477 1,410

1,673

1,360

1,528 1,495

1,845

1,025

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

700

900

1,100

1,300

1,500

1,700

1,900

2,100


Urea Offtake Change YoY(000 tons)


Exploration and Production

Earnings grow by 14% YoY in 3QFY20

Sector profitability jumped up by 14% YoY to PKR 59bn in 3QFY20 attributable to Pak Rupee depreciation by

11% YoY against USD. Earnings of PPL, OGDC, MARI and POL witnessed a growth of 3%, 7%, 47% and

64% YoY, respectively.

OGDC’s bottom-line witnessed a growth of 7% YoY in 3QFY20, clocking-in at PKR 30.5bn (EPS: PKR 7.08)

against PKR 28.6bn (EPS: PKR 6.64) in 3QFY19. Revenue portrayed a meagre decline, settling at PKR

65.0bn amid 6% and 8% YoY drop in oil and gas production, respectively, followed by 16% YoY fall in oil

prices. Furthermore, exploration costs clocked-in at PKR 3.1bn during the quarter, up by 51% YoY, owed to

three dry wells (Katiar-01, Rangunwari-01 and Nashpa-5A). Meanwhile, other income climbed up by 46%

YoY in 3QFY20 given exchange gain on foreign currency account.

PPL posted a profit after tax of PKR 14.7bn (EPS: PKR 5.40) in 3QFY20 compared to PKR 14.2bn (EPS:

PKR 5.22) in 3QFY19, up by 3% YoY. Net Sales witnessed a minute growth of 1% YoY, arriving at PKR

40.8bn in 3QFY20 in contrast to PKR 40.4bn in SPLY, which is attributable to 11% YoY Pak Rupee

devaluation against greenback. However, wellhead price of Sui plummeted by 5% YoY, followed by a drop in

oil and gas production by 7% and 9% YoY, respectively. Whereas, exploration expense declined by 55% YoY

in 3QFY20 settling at PKR 2.0bn. As per latest accounts, the company incurred two dry wells (Zarbab X-1

and Nashpa-5A) during the quarter. Furthermore, other income jumped up by 26% YoY in 3QFY20 on the

back of a gain on exchange amid Pak Rupee depreciation against USD.

POL’s earnings surged by a massive 64% YoY, arriving at PKR 5.4bn (EPS: PKR 18.95) in 3QFY20 versus

PKR 3.3bn (EPS: PKR 11.58) in 3QFY19. Topline remained stable at PKR 10.7bn during 3QFY20 on

account of 1% YoY uptick in gas production tagged with Pak Rupee depreciation against greenback.

Whereas, oil production portrayed a decline of 6% YoY along with 14% YoY fall in realized oil price.

Whereas, exploration cost arrived at PKR 0.4bn in 3QFY20 against PKR 1.1bn, stumbling by 67% YoY owed

to absence of dry well during the quarter against dry well in SPLY. Moreover, other income swelled up 2x

YoY in 3QFY20 due to exchange gains on foreign currency accounts.

MARI’s earnings significantly jumped up by 47% YoY in 3QFY20, settling at PKR 8.5bn (EPS: PKR 63.54)

during 3QFY20 in contrast to PKR 5.8bn (EPS: PKR 43.11) in SPLY. Net Sales depicted a growth 31% YoY,

clocking-in at PKR 19.0bn vis-à-vis PKR 14.5bn in SPLY amid 11% YoY hike in wellhead price of Mari gas

field tagged with 9% YoY uptick in gas production. On the other hand, oil production dipped by 4% YoY.

Meanwhile, finance income showcased a substantial growth of 2x YoY due to interest income from short term

investments and bank deposits. Furthermore, exploration cost witnessed a hefty jump of 107% YoY owed to

higher prospecting expenditure incurred during the quarter.

Exhibit: Exploration and Production Sector Profitability

Source (s): Company Financial AHL Research

PKR mn 9MFY20 9MFY19 YoY 3QFY20 3QFY19 YoY 2QFY20 QoQ

MARI 23,225 16,809 38% 8,477 5,751 47% 7,285 16%

OGDC 83,645 85,312 -2% 30,460 28,556 7% 25,868 18%

POL 13,947 11,176 25% 5,379 3,287 64% 4,560 18%

PPL 39,229 45,254 -13% 14,674 14,214 3% 10,317 42%

Total 160,046 158,550 1% 58,990 51,808 14% 48,031 23%


Exhibit: Historical Profitability and GMs of E&P Sector




Exhibit: Pakistan’s Oil and Gas Production

Source (s): PPIS, AHL Research

42.5

49.9

56.8

51.8

62.7

53.0

48.0

59.0

55.0%

57.0%

59.0%

61.0%

63.0%

65.0%

67.0%

15.0

25.0

35.0

45.0

55.0

65.0

75.0


Profit after tax Gross Margins (RHS)(PKR bn)

3,300

3,400

3,500

3,600

3,700

3,800

3,900

4,000

4,100

72,000

74,000

76,000

78,000

80,000

82,000

84,000

86,000

88,000

90,000

92,000

94,000

4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20

Oil Prodcution (LHS) Gas Prodcution (RHS)(BOPD)

(MMCFD)


Exhibit: 11% YoY PKR depreciation during 3QFY20




Exhibit: Oil Prices dropped by 15% YoY during 3QFY20

Source (s): Bloomberg, AHL Research

117

124

134

139

147

158 156 156

-25%

-20%

-15%

-10%

-5%

0%

100

110

120

130

140

150

160

170


PKR/USD PKR Depreciation YoY

73

76

69

64

69

63 65

54

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

35

40

45

50

55

60

65

70

75

80


Arab Light Arab Light YoY(USD/bbl)


Cements

Losses Make a Comeback

Following a temporary breather in 2QFY20, cumulative bottom-line of the KSE-100 cement sector once again

turned red in the outgoing quarter at PKR 3,035mn vs. earnings of PKR 9,673mn in 3QFY19. Barring LUCK,

all players posted hefty losses with BWCL, DGKC and CHCC recording the largest absolute declines YoY.

Revenue of the sector underwent a dip of 16% YoY to PKR 48.9bn in 3QFY20 primarily led by weaker

retention prices since dispatches grew by 7% YoY 12.14mn tons (local offtake depicted a minor growth of 4%

YoY to 10.13mn tons whereas exports augmented by a robust 28% YoY to 2.01mn tons in 3QFY20).

As a result of weakness in retention prices, PKR depreciation against the US Dollar (~12% YoY), higher

electricity and gas tariff as well as incremental costs associated with new capacities, sector-wide gross

margins displayed a retraction of 20% YoY to 5.8% during the period under review (3QFY19: 26.1%).

Margins of BWCL in 3QFY20 battered down to -1.1% from 29.0% in SPLY owed to a 33% decline in topline

(dispatches growth of 3% YoY to 1.93mn tons was offset by massive price cuts in North), tagged with PKR

depreciation and higher input costs (raw material packaging and energy tariffs).

DGKC and CHCC witnessed a similar fate (margins recoiled to 0.6% and 0.2% in 3QFY20 from 16.8% and

20.6%) as revenues dipped by 9% and 4% YoY amid weakness in retention prices which eroded the impact

of 4% and 35% YoY jump in total dispatches, respectively alongside PKR depreciation and higher energy

costs. In addition, hefty finance costs (+32% and 81% YoY, respectively) given augmented borrowing and

interest rate hikes also axed earnings.

On the flipside, LUCK announced a profitability of PKR 999mn in 3QFY20. Earnings shrunk by 64% YoY

owed to margin attrition to 11.6% from 30.5% on account of lower retention prices, PKR depreciation, higher

fuel and packaging costs and augmented depreciation charge post COD of the new line in Jan’20. Albeit, a

noteworthy 72% YoY surge in other income amid recognition of dividend income from ICI, cushioned the

bottom-line.

On a QoQ basis, gross margins of the sector observed a decline of 7ppts to 1.9% (2QFY20: 9.1%) given an

8% dip in total offtake due to implementation of lockdown post spread of corona virus in Mar’20 and higher

average coal prices.

Exhibit: Cement Sector Profitability



BWCL (20) 9,538 nm (441) 2,657 nm 120 nm

CHCC (1,187) 2,250 nm (627) 1,223 nm (222) nm

DGKC (1,850) 2,625 nm (1,003) 883 nm 581 nm

FCCL 272 2,440 -89% (210) 616 nm 189 nm

KOHC (283) 2,171 nm (381) 644 nm 10 nm

LUCK 2,935 8,294 -65% 999 2,793 -64% 981 2%

MLCF (2,727) 1,893 nm (960) 558 nm (785) nm

PIOC (523) 825 nm (412) 298 nm 74 nm

Total (3,384) 30,036 nm (3,035) 9,673 nm 948 nm


Exhibit: Historical Profitability and GMs of Cement Sector


Cements


Exhibit: Industry Cement Dispatches

Source (s): APCMA, AHL Research

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

24.0%

28.0%

32.0%

(1.5)

0.5

2.5

4.5

6.5

8.5

10.5

12.5

14.5

16.5


Profit after tax Gross Margins (RHS)(PKR bn)

11%

5%4%

-9%

10%

3%

10%8%

-15%

-10%

-5%

0%

5%

10%

15%

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0


Local Exports Change(Mn Tons)


Exhibit: Average Cement Prices decreased by 9% YoY in 3QFY20

Source (s): PBS, AHL Research

Cements


Exhibit: Average Coal Prices decreased by 8% YoY during 3QFY20


555

577

602 605

571

586

576

549

-15%

-10%

-5%

0%

5%

10%

15%

20%

520

530

540

550

560

570

580

590

600

610


Cement Cement YoY(PKR/bag)

100 103

97

85

67

62

73

79

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50

60

70

80

90

100

110


Coal Coal YoY(USD/ton)


Power Generation and Distribution

Coal Plants and True-up Income Jack up the Profitability

Profitability of the Power Generation and Distribution sector jumped up by 83% YoY to PKR 15.4bn during

3QFY20. On a QoQ basis, it increased by 9%. This takes the profitability in 9MFY20 to PKR 42.3bn, up by

80% YoY. The uptick in profitability was witnessed due to higher dollar indexation, other income and

recognition of profit from coal-based power plants.

Net sales of the sector witnessed a decrease of 4% YoY due to decline in dispatches. Availability of relatively

cheaper sources of power generation (Coal, Hydel and RLNG) was the primary reason behind the decline in

generation from furnace oil based power plants.

HUBC: During 3QFY20, net sales witnessed a decline of 12% YoY to PKR 11,820mn due to lower

dispatches (-54% YoY to 163GWh). Due to lower demand of electricity and availability of relative cheaper

sources of power (coal and hydel), the load factor of FO based plants remained very low. During 3QFY20,

gross margins of the company increased by 19pps YoY to 63% due to 10.5% PKR depreciation coupled with

lower load factor. In addition, the company recognized a share of profit form CPHGC of PKR 3,807mn (PKR

2.93/share), the main reason in the rise of company’s profitability. Finance costs increased by 55% YoY to

PKR 3,106mn due to higher interest rates coupled with higher financing (to fund the equity portion of coal

plants).

KAPCO: During 3QFY20, sales increased by 11% YoY to PKR 11.9bn. The rise in sales was owed to higher

capacity payments, however the dispatches remained low (down by 10% YoY to 346GWh). Other income

witnessed an increase of 34% YoY to PKR 5,323mn due to tariff true-up (3QFY20: PKR 1,916mn, 9MFY20:

PKR 6,441mn) along with higher interest rates compared to same period last year. However, overdue

receivables decreased by 5% YoY to PKR 101bn (Dec’19: PKR 101bn, Mar’20: PKR 112bn). Finance cost

increased by 3% YoY to PKR 2,179mn due to higher interest rates. The company also announced a cash

dividend of PKR 1.50/share.

NCPL: During 3QFY20, net sales witnessed a decline of 1% YoY to PKR 2,807mn due to lower dispatches.

During 9MFY20, the same trend in sales was observed - down by 6% YoY. During 3QFY20, gross margins of

the company increased by 20pps YoY to 66% due to 10.5% YoY PKR depreciation along with lower load

factor. Finance costs increased by 37% YoY to PKR 510mn, due to 37% YoY rise in short term borrowings

(Dec’19: 12.3bn) along with higher interest rates.

SPWL: During 1QCY20, net sales witnessed a decline of 30% YoY to PKR 1,684mn due to lower dispatches.

10.5% PKR depreciation along with lower dispatches led the 28pps increase in gross margins of the

company to 76% during 1QCY20. Finance cost of the company increased by 29% YoY during 1QCY20 amid

higher interest rates compared to last year.

Exhibit: Power Sector Profitability

Source (s): Company Financials, AHL Research, *Consolidated


HUBC* 18,253 8,568 113% 7,201 3,161 128% 5,484 31%

KAPCO 17,774 9,992 78% 6,047 3,670 65% 6,694 -10%

NCPL 3,402 2,606 31% 1,304 751 74% 1,030 27%

SPWL 2,891 2,381 21% 897 857 5% 950 -6%

Total 42,320 23,547 80% 15,449 8,439 83% 14,158 9%


Exhibit: Historical Profitability and GMs of Power Sector


Power Generation and Distribution

Coal Plants and True-up Income Jack up the Profitability

Exhibit: Receivable and Overdue Receivables of AHL Power Universe


8,382

7,396 7,712

8,439

7,393

12,713

14,158

15,449

12.0%

22.0%

32.0%

42.0%

52.0%

62.0%

72.0%

-

1,500

3,000

4,500

6,000

7,500

9,000

10,500

12,000

13,500

15,000

16,500



198

214 208

187 192

213 211

230

238

256

247

217

233

262

244

260

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

140

160

180

200

220

240

260

280


Overdue Receivables Receivables Overdue Receivables (YoY) Receivables (YoY)

(PKR bn)


Oil & Gas Marketing Companies

Declining Oil Prices Lead to Inventory Losses

The outbreak of Coronavirus and sudden change in global dynamics affected oil industry in an

unprecedented manner. As a result, oil marketing companies reported massive losses during 3QFY20 on the

back of i) slowdown in sales on account of enforcement of lockdown which resulted in double digit decline in

sales volumes, and ii) Massive inventory losses in the period under review amid nosediving prices of

international crude oil. During 9MFY20, bottom-line dropped by 53% YoY to PKR 3.9bn compared to PKR

8.3bn in same period last year.

During 3QFY20, PSO reported a loss after tax of PKR 3.4bn (LPS: PKR 7.30) compared to profit of PKR

1.7bn (EPS: PKR 3.57) in 3QFY19. Despite decline in sales volume by 26% YoY, topline of the company

remained flat and settled at PKR 286bn in 3QFY20, given higher prices of products. Gross margins

decreased due to higher inventory losses of ~PKR 4.5bn compared to meager inventory gains in same

period last year. The significant decline in profitability is a combination of huge drop in international oil prices

(Arab light dipped from USD 68.83/bl on 31st Dec’19 to USD 26.26/bl on 31st Mar’20) along with decrease in

consumption of petroleum products amid country-wide lockdown announced by federal and provincial

governments. Due to higher finance cost and inventory losses, bottom-line of the company settled at PKR

3,008mn in 9MFY20, down by 49% YoY compared to PKR 5,926mn in SPLY.

APL’s profitability turned negative at PKR 710mn in 3QFY20 on account of volumetric decline (-13% YoY;

volumes of Mogas and HSD dropped by -9% and -25%, respectively) and higher inventory losses. Company

registered negative gross margins which settled at -0.69% in 3QFY20 against 1.80% in 3QFY19. Decline in

gross margins can be attributable to the company realizing inventory losses.

Exhibit: Oil and Gas Marketing Sector Profitability

Source (s): Company Financials, AHL Research, *Ex. HASCOL and SHEL


APL 870 2,388 -64% (710) 284 nm 355 nm

PSO 3,008 5,926 -49% (3,426) 1,677 nm 2,906 nm

Total* 3,878 8,314 -53% (4,137) 1,962 nm 3,262 nm


Exhibit: Historical Profitability and GMs of Oil and Gas Marketing Sector




Exhibit: Monthly Volume and Price Trend

Source (s): OGRA, AHL Research

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

(4,500)

(2,700)

(900)

900

2,700

4,500

6,300

8,100


Profit after tax Gross Margins (RHS)

(PKR mn)

0.9

1.0

1.0

1.1

1.1

1.2

1.2

1.3

1.3

1.4

1.4

60

70

80

90

100

110

120

130

140

Apr-

19

May-1

9

Jun-1

9

Jul-19

Aug-1

9

Sep-1

9

Oct-

19

Nov-1

9

Dec-1

9

Jan-2

0

Fe

b-2

0

Mar-

20

MoGas HSD Retail Volumes (RHS)

(mn Tons)(PKR/Liter)


Exhibit: Industry Quarterly Volumes

Source (s): OCAC, AHL Research,



Exhibit: MS Price Break up

Source (s): OGRA, AHL Research

1.90 1.92 1.76 1.87 1.85 1.95 1.90 1.71

2.25 1.83 1.89 1.70 1.80 1.54 1.82

1.24

1.87

0.85 0.60 0.72 0.85

0.72 0.46

0.43

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0


MS HSD FO(mn tons)

40

50

60

70

80

90

100

110

120

130

Apr'19 May'19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov'19 Dec'19 Jan'20 Feb'20 Mar'20

Sales Tax Petroleum levy Dealer Margin

OMC Margins IFEM Ex-Refinery(PKR/Liter)


Automobile Assembler

Tough Economic Conditions Resulted in Lower Demand

Topline of the sector dropped by 30% YoY to PKR 64bn during 3QFY20 compared to PKR 92bn in SPLY.

Despite increase in vehicle prices by an average of 25% YoY, topline plunged due to change in sales mix

and massive volumetric decline of 53% YoY to 30,935 units compared to 65,265 units in preceding period

last year. Likewise, sales volume of two wheelers (ATLH) decreased by 9% YoY to 253,801 units compared

to 280,057 units in 3QFY19.

Albeit, profitability of the Automobile sector (Assemblers & Parts) fell drastically due to receding margins of

all listed players given imposition of additional custom duties from 2%-7% on imported raw materials along

with slowdown in automobile sales volumes.

PSMC remained the worst performing company incurring a net loss of PKR 941mn compared to PKR 981mn

in same period last year. Topline of the company decreased by 48% YoY due to drastic decline in sales

volumes by 63% YoY to 13,605 units against 36,412 units in preceding period. On the other hand, finance

cost increased by 223% YoY to PKR 1,055mn on account of higher reliance on borrowing to meet working

capital requirements along with higher interest rates.

INDU’s bottom-line recorded a decline of 20% to PKR 2,679mn in 3QFY20 vs PKR 3,345mn in preceding

period last year. The decline in profitability is on account of slowdown in sales volumes by 35% YoY to

11,209 units in 3QFY20 compared to 17,094 units in 3QFY19. Despite closure of plant which should have

increased fixed cost per unit, company’s gross margin increased to 12.1% (up by 41bps YoY) due to

increase in vehicle prices and change in sales mix.

MTL’s earnings settled at PKR 720mn, down by 25% YoY compared to PKR 963mn in 3QFY19. During the

period under review, volumes slumped by 28% YoY to 5,383 units due to slowdown in tractors’ demand on

account of lower farmer yields on agriculture products along with higher interest rates.

Exhibit: Auto Sector Profitability

Source (s): Company Financial AHL Research, * Ex. HCAR, ATLH


INDU 4,984 10,257 -51% 2,679 3,345 -20% 986 172%

MTL 1,361 2,775 -51% 553 950 -42% 452 22%

PSMC (2,336) (980) nm (941) (981) nm (234) nm

AGIL 97 794 -88% 98 294 -67% 1 nm

THALL 1,660 2,456 -32% 720 963 -25% 746 -3%

Total* 5,765 15,302 -62% 3,109 4,571 -32.0% 1,951 59%


Exhibit: Historical Profitability and GMs of Auto Sector




Exhibit: Auto Sales down by 53% YoY during 3QFY20

Source (s): PAMA, AHL Research

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

-

1,200

2,400

3,600

4,800

6,000

7,200

8,400

9,600

Jun-1

8

Sep-1

8

Dec-1

8

Mar-

19

Jun-1

9

Sep-1

9

Dec-1

9

Mar-

20


65,898

58,556

61,886

65,315

54,889

34,635 32,875

31,009

-57%

-47%

-37%

-27%

-17%

-7%

3%

13%

23%

25,000

32,000

39,000

46,000

53,000

60,000

67,000

74,000


Total Passenger Cars and LCV Unit Sales YoY Change (RHS)

(Units)


Exhibit: CRC Prices went down by 4% YoY during 3QFY20

Source (s): Bloomberg, AHL Research,



Exhibit: 11% YoY PKR depreciation witnessed in 3QFY20


721

704

659

638 635

612 611 613

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

550

570

590

610

630

650

670

690

710

730

750


CRC CRC YoY(USD/ton)

117

124

134

139

147

158 156 156

109 112 113

110 110 107

109 109

-25%

-20%

-15%

-10%

-5%

0%

95

105

115

125

135

145

155

165


PKR/USD JPY/USD PKR Depreciation YoY JPY Depreciation YoY


Chemicals

Lower Margins and Exchange Losses dented the Profitability

Chemical sector’s profitability witnessed a decline of 46% YoY during 3QFY20. Four out of five companies

registered a decline in profitability. However, COLG witnessed an increase of 48% YoY.

LOTCHEM: The company posted a profit after tax (PAT) of PKR 58mn (EPS: PKR 0.04) during 1QCY20

(3QFY20), down by 95% YoY compared to PKR 1,286mn (EPS: PKR 0.85) during SPLY. On a QoQ basis,

earnings went down by 93% QoQ. Revenue during 1QCY20 went down by 27% YoY to PKR 11,712mn. The

decline in sales was due to lower volumetric sales (-6.4% YoY to 115K tons compared with 123K tons during

1QCY19) coupled with 31% YoY decline in PTA prices. However, PKR witnessed a depreciation of 11% YoY

during the period. On the back of 29% YoY decline in international PTA margins and inventory losses of PKR

280mn (PKR 0.18/share), the company posted a gross loss of PKR 113mn during 1QCY20. On the other

hand, other income went up by 106% YoY to PKR 343mn during 1QCY20 due to higher income from short-

term deposits.

ICI: Revenue during 3QFY20 went down by 5% YoY to PKR 14,801mn. The decline in sales was attributable

to lower revenues of Polyester (-18% YoY, 12% YoY volumetric decline), Soda Ash (-1% YoY) and

Chemicals & Agri Sciences (-11% YoY). However, this decline was partially offset by higher revenues of the

Pharma (+3% YoY) and Animal Health (+8% YoY) businesses. Operating profit for 3QFY20 clocked-in at

PKR 1,546mn, 1% higher as compared to the SPLY, due to higher operating profit of Polyester and Pharma

businesses by 110% YoY and 61% YoY, respectively. Gross margins of the company increased by 331bps

YoY to 21% during 3QFY20 due to improved performance of PSF (given improved margins, product

diversification and cost optimization initiatives) and Soda Ash segments (due to better prices and

optimization of energy cost). Finance cost of the company increased by 37% YoY to PKR 486mn due to

higher interest rates compared to last year. Moreover, given the 7.1% PKR depreciation against dollar the

company booked an exchange loss of PKR 373mn (PKR 4.04/share before tax) during 3QFY20.

Profitability of COLG also went up by 48% YoY led by a 284bps YoY improvement in gross margins to 30%.

ARPL’s earnings declined by 4% during 3QFY20.

Exhibit: Chemical Sector Profitability



ARPL 1,396 1,301 7% 449 470 -4% 333 35%

EPCL 2,356 3,236 -27% 193 1,092 -82% 865 -78%

COLG 3,623 2,599 39% 1,322 895 48% 1,149 15%

ICI 2,384 1,764 35% 532 948 -44% 1,016 -48%

LOTCHEM 2,550 4,372 -42% 58 1,286 -95% 809 -93%

Total 12,309 13,273 -7% 2,554 4,692 -46% 4,174 -39%


Exhibit: Historical Profitability and GMs of Chemical Sector


Chemicals


Exhibit: PKR Depreciated 11% YoY during 1QCY20


117

124

134

139

147

158 156 156

-25%

-20%

-15%

-10%

-5%

0%

100

110

120

130

140

150

160

170



4,088

4,984

3,596

4,692

4,191

5,581

4,174

2,548

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

1,500

2,250

3,000

3,750

4,500

5,250

6,000


Profit after Tax Gross Margins

(PKR mn)


Exhibit: International PVC margins witnessed an increase of 26% YoY in 1QCY20


Chemicals


Exhibit: International PTA margins witnessed a decline of 26% YoY in 1QCY20


312 313

404 405 422

477

452

509

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

50

100

150

200

250

300

350

400

450

500

550


International PVC Margins PVC Margins YoY(USD/ton)

175 178

169

130

200

169

103 96

-60%

-40%

-20%

0%

20%

40%

60%

80%

50

70

90

110

130

150

170

190

210


International PTA Margins PTA Margins YoY(USD/ton)


Textile

Slowdown in Demand Depressed Bottomline

The quarter under review was depressing for majority of the textile companies as their customer base mainly

in Europe and USA started seeking more discounts after outbreak of novel Coronavirus. Additionally, delay in

orders and reduction in order quantity also caused lower sales and surge in inventory levels. Despite PKR

depreciation of 12% YoY against USD, topline of the listed textile entities increased by 6% YoY to PKR

61.8bn due to lower exports and local sales in the month of Mar’20. Meanwhile, earnings declined by 50%

YoY during 3QFY20 due to slowdown in sales and meager exchange gains compared to significant

exchange gains in same period last year.

During 3QFY20, NCL reported a loss after tax of PKR 170mn due to substantial increase in cost of raw

cotton on account of shortage of local cotton, increase in labor cost, energy cost, exchange loss compared to

exchange gains last year and lower dividend income from subsidy (NCPL). On the other hand, rise in interest

rates impacted profitability as company has a high reliance on borrowing to meet working capital

requirement.

NML’s profitability increased by 5% YoY to PKR 1,024mn during 3QFY20 compared to PKR 973mn in same

period last year. Topline of the company witnessed a meager increase of 4% to PKR 17.2bn due to

slowdown in demand. The increase in profitability was due to higher dividend income from MCB, NPL and

significant exchange gains.

FML registered a jump in sales of 13% YoY during 3QFY20 to PKR 9.6bn amid higher demand. However,

profitability remained weak due to lower gross margins (down by 391bps YoY) and meager exchange gains

compared to significant exchange gains booked in same period last year.

Exhibit: Textile Sector Profitability

Source (s): Company Financial AHL Research, * Ex, IDYM


ANL 261 26 903% (52) 39 nm 182 nm

FML 2,818 3,953 -29% 1,165 1,695 -31% 910 28%

GATM 700 2,697 -74% (370) 645 nm 705 nm

KTML 1,469 1,421 3% 440 326 35% 609 -28%

NCL 352 2,441 -86% (170) 423 nm 349 nm

NML 2,915 4,137 -30% 1,024 973 5% 968 6%

STJT 110 97 12% 46 45 3% 39 18%

Total* 8,624 14,772 -42% 2,083 4,145 -50% 3,761 -45%


Exhibit: Historical Profitability and GMs of Textile Sector (Composite)


Textile


Exhibit: Textile Exports went up by 5% YoY during 3QFY20


4,842

3,649

6,925

4,100

6,007

2,756

3,722

2,037

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

19.0%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000



(PKR mn)

3.55

3.29

3.37

3.35 3.34

3.37

3.53

3.51

-9%

-6%

-3%

0%

3%

6%

9%

12%

15%

3.15

3.20

3.25

3.30

3.35

3.40

3.45

3.50

3.55

3.60


Textile Exports YoY Change

(USD bn)


Exhibit: Primary Yarn Margins

Source (s): PBS, AHL Research,

Textile


Exhibit: 11 % YoY PKR depreciation during 3QFY20


(0.10)

(0.05)

-

0.05

0.10

0.15

0.20

0.25

1.30

1.40

1.50

1.60

1.70

1.80

1.90

Jan-1

9

Fe

b-1

9

Mar-

19

Apr-

19

May-1

9

Jun-1

9

Jul-19

Aug-1

9

Sep-1

9

Oct-

19

Nov-1

9

Dec-1

9

Jan-2

0

Fe

b-2

0

Mar-

20

Yarn Price Cotton Price Primary Margins (RHS)(USD/kg) (USD/kg)

117

124

134

139

147

158 156 156

-25%

-20%

-15%

-10%

-5%

0%

100

110

120

130

140

150

160

170




Engineering

Dipping into Losses

Steel sector (under the head of Engineering) of the KSE-100 index succumbed to COVID-19 pressures and

posted a negative bottom-line of PKR 149mn in 3QFY20 compared to earnings of PKR 1,048mn in SPLY.

Although ISL booked a weak quarter (depicting a profitability decline of 69% YoY), it was negative earnings

of INIL that eroded the sectoral bottom-line.

INIL not only suffered from the existing slowdown in the economy translating into volumetric decline in sales

to automotive, construction and other capital-intensive industries, but exports (already under pressure post

imposition of anti-dumping duty by importing countries) plunged further amid global lockdown. Therefore,

visibly lower gross margins (7.9% vs. 11.0% in 3QFY19) tagged with shrunk other income (-90% YoY amid

lack of dividend payout from subsidiary – ISL), and higher financial charges (+47% YoY given augmented

borrowing and interest rate hikes), turned the bottom-line red at PKR 339mn vis-à-vis a PAT of PKR 437mn

in 3QFY19.

Meanwhile ISL underwent a 69% decline in PAT to 190mn from PKR 611mn in 3QFY19. Main culprit behind

the performance was weaker margins, recoiling to 9.0% from 9.4% in SPLY on account of augmenting

competition as new capacity of CRC came online (volumetric decline in domestic offtake; revenue down by

21% YoY) together with inability to pass on the impact of Pak Rupee depreciation.

Exhibit: Steel Sector Profitability



INIL (461) 1,358 nm (339) 437 nm (3) nm

ISL 656 2,360 -72% 190 611 -69% 118 61%

Total 195 3,717 -95% (149) 1,048 -114% 115 -229%


Exhibit: Historical Profitability and GMs of Cement Sector


Engineering

Dipping into Losses

Exhibit: Steel Products Production


5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

(200)

300

800

1,300

1,800

2,300

Jun-1

8

Sep-1

8

Dec-1

8

Mar-

19

Jun-1

9

Sep-1

9

Dec-1

9

Mar-

20


(PKR mn)

1.2 1.3

0.9 0.8 0.9 0.8 0.8 0.7

1.1 1.1

1.1 1.1

1.1 1.1 1.1

0.7

-30%

-20%

-10%

0%

10%

20%

-

0.5

1.0

1.5

2.0

2.5

4Q

FY

18

1Q

FY

19

2Q

FY

19

3Q

FY

19

4Q

FY

19

1Q

FY

20

2Q

FY

20

Jan'2

0-F

eb'2

0

Billets | Ingots H/C.R.Sheets | Strips | Coils YoY Change

(Mn tons)


Exhibit: Average CRC Prices decreased by 4% YoY in 3QFY20

Source (s): Bloomberg, AHL Research,

Engineering

Dipping into Losses

Exhibit: Average HRC Prices decreased by 2% YoY in 3QFY20


721 704

659

638 635

612 611 613

-21%

-14%

-7%

0%

7%

14%

21%

28%

35%

350

400

450

500

550

600

650

700

750


CRC CRC YoY(USD/ton)

652

632

571 563

580

540 528

550

-20%

-10%

0%

10%

20%

30%

40%

50%

350

400

450

500

550

600

650

700


HRC HRC YoY(USD/ton)


Disclaimer

Analyst Certification: The research analyst(s) is (are) principally responsible for preparation of this report. The views expressed in thisresearch report accurately reflect the personal views of the analyst(s) about the subject security (ies) or sector (or economy), and nopart of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendationsand views expressed by research analyst(s) in this report. In addition, we currently do not have any interest (financial or otherwise) inthe subject security (ies). Furthermore, compensation of the Analyst(s) is not determined nor based on any other service(s) that AHLis offering. Analyst(s) are not subject to the supervision or control of any employee of AHL’s non-research departments, and nopersonal engaged in providing non-research services have any influence or control over the compensatory evaluation of theAnalyst(s).

Equity Research RatingsArif Habib Limited (AHL) uses three rating categories, depending upon return form current market price, with Target period as Dec’20for Target Price. In addition, return excludes all type of taxes. For more details kindly refer the following table;

Rating Description

BUY Upside* of subject security(ies) is more than +10% from last closing of market price(s)

HOLD Upside* of subject security(ies) is between -10% and +10% from last closing of market price(s)

SELL Upside* of subject security(ies) is less than -10% from last closing of market price(s)

Equity Valuation Methodology

AHL Research uses the following valuation technique(s) to arrive at the period end target prices;

Discounted Cash Flow (DCF)

Dividend Discounted Model (DDM)

Sum of the Parts (SoTP)

Justified Price to Book (JPTB)

Reserved Base Valuation (RBV)

Risks

The following risks may potentially impact our valuations of subject security (ies);

Market risk

Interest Rate Risk

Exchange Rate (Currency) Risk

This document has been prepared by Research analysts at Arif Habib Limited (AHL). This document does not constitute an offer orsolicitation for the purchase or sale of any security. This publication is intended only for distribution to the clients of the Companywho are assumed to be reasonably sophisticated investors that understand the risks involved in investing in equity securities. Theinformation contained herein is based upon publicly available data and sources believed to be reliable. While every care was taken toensure accuracy and objectivity, AHL does not represent that it is accurate or complete and it should not be relied on as such. Inparticular, the report takes no account of the investment objectives, financial situation and particular needs of investors. Theinformation given in this document is as of the date of this report and there can be no assurance that future results or events will beconsistent with this information. This information is subject to change without any prior notice. AHL reserves the right to makemodifications and alterations to this statement as may be required from time to time. However, AHL is under no obligation to updateor keep the information current. AHL is committed to providing independent and transparent recommendation to its client andwould be happy to provide any information in response to specific client queries. Past performance is not necessarily a guide tofuture performance. This document is provided for assistance only and is not intended to be and must not alone be taken as the basisfor any investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this documentshould make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities ofcompanies referred to in this document (including the merits and risks involved), and should consult his or her own advisors todetermine the merits and risks of such investment. AHL or any of its affiliates shall not be in any way responsible for any loss ordamage that may be arise to any person from any inadvertent error in the information contained in this report.

© 2020 Arif Habib Limited: Corporate Member of the Pakistan Stock Exchanges. No part of this publication may be copied,reproduced, stored or disseminated in any form or by any means without the prior written consent of Arif Habib Limited.Please remove the below footer.

Disclosure required under Research Analyst Regulations, 2015:

In order to avoid any conflict of interest, we hereby disclose that; Arif Habib Limited (AHL) has shareholding in HBL,

DGKC, MLCF, AKBL, NBP, NCL, BOP.

kse-100 index profitability - arif habib limited · kse-100 profitability 3 kse-100 index...

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