By: InterMarket Securities Limited
Pakistan Power Sector: In our opinion, the sector’s high payout is set to continue being in the limelight with IMS Power Universe FY16F/FY17F dividend yield of 11.5%/12.3%. At current levels, the expected yield offers an attractive 236/316bps spread over 10Yrs PIB which is now close to 9%.
Valued against regional peers, our IMS Power Universe offers the highest yield vs 4.7% average D/Y amongst regional utilities, which against low interest rate backrop provides a strong investment thesis.
IMS Power Universe has gained 21.7%CYTD/5.4%FYTD; +16.7ppt/+6.8ppt relative to Index. Upside risks to our FY16F dividend forecasts would come from higher generation and increased payouts, which could raise universe D/Y to 13%.