Research Team, AKD Securities Ltd.
BAFL: 1QCY12 Result Preview
Bank Alfalah Ltd (BAFL) is scheduled is finalize its 1QCY12 result on Apr 22’12. On an unconsolidated basis, we expect BAFL to post NPAT of PkR1,213mn (EPS: PkR0.90) in 1QCY12 vs. NPAT of PkR930mn (EPS: PkR0.69) in 1QCY11, translating into robust growth of 30%YoY. If actual results fall inline with estimates, this will be BAFL’s best quarterly performance since 3QCY07 (when profits contained sizeable one-off gain on sale of Warid stake to Singtel). Key highlights of projected 1QCY12 results are expected to be 1) strong 22%YoY NII growth primarily due to growth in earning assets, 2) a 25%YoY increase in loan provisions as ageing kicks in and FSV benefit partly expires, 3) flattish YoY non-interest income as fee income continues to depict a declining trend and 4) 10%YoY increase in core admin expenses as cost control entrenches. Our liking for BAFL stems from projected above-average earnings growth over the medium-term (5yr NPAT CAGR: 12.5%) coupled with rising ROE (to average ~19% across CY12F-CY16F). We believe this should lead to a round of valuation rerating for the scrip – while projected ROE for BAFL is close to what the larger, private banks are generating, the stock’s valuation multiples (CY12F P/B: 0.74x, P/E: 4.4x) are still close to where medium-sized banks are trading. Our end-Dec’12 target price of PkR20/share offers upside of 25%. Buy!
HMB: 1QCY12 Result Preview
The Board of Directors is scheduled to consider HMB’s 1QCY12 result tomorrow. On an unconsolidated basis, HMB is expected to post NPAT of PkR963mn (fully-diluted EPS: PkR0.92) in 1QCY12 vs. NPAT of PkR757mn (fully-diluted EPS: PkR0.72) in 1QCY11, translating into 27%YoY growth. Key highlights of 1QCY12 results are expected to be 1) 8%YoY NII growth, 2) a contained 3%YoY increase in provisions, 3) double-digit non-interest income growth as dividend income rebounds (the bank has been aggressively investing in mutual fund units) and 4) contained 5%YoY increase in non-interest expenses as the bank looks to consolidate at current size of operations. Growth is likely to be bumped up by potential lower effective tax due to high reliance on dividend income. HMB trades at a CY12F P/B of 0.71x and P/E of 5.2x. While our target price of PkR20/share implies an Accumulate stance, we will look to revisit our investment case for HMB post 1QCY12 results.
EPCL to post NPAT of PkR90mn (EPS: PkR0.14) in 1QCY12
EPCL will be announcing its 1QCY12 results tomorrow. We expect the company to post its first quarterly profit since 2QCY09 and estimate EPCL’s consolidated NPAT to stand at PkR90mn (EPS: PkR0.14). Earnings are expected to rebound strongly in 1QCY12 on the back of improvement in margins following stable operations at the VCM plant and a relatively stable PkR, leading to lower currency translation losses. Although ethylene prices moved up sequentially (+21%), cheaper carryover inventory from last quarter (estimated ethylene inventory of 7k-8k tons) coupled with nil imports of VCM is likely to drive GMs for the quarter upto 22%. We are in the process of revisiting our investment case for EPCL and in this regard will be updating our readers shortly.
EFOODS: 1QCY12 Result Review
EFOODS posted an NPAT of PkR486mn (EPS: PkR0.65), which was slightly above our NPAT expectation of PkR460mn (EPS: PkR0.61), where we attribute the earnings deviation to lower than expected financial charges. EFOODS’ topline clocked in at PkR9.7bn (+21QoQ/+50%YoY), while GMs were also up sequentially by 5bps to 23.3%. Topline growth is likely to be fueled by the recently launched ‘Dairy Omung’ brand.
The scrip presents an upside of 11% to our Target Price of PkR52 and at current levels we recommend ‘Accumulate’ on EFOODS.