By: BMA Capital Management Limited
LUCK: 1HFY16 EPS estimated at PKR19.9; Lucky Cement Company Limited (LUCK) is scheduled to hold its board meeting on 20 th Feb’16 to consider financial results for 1HFY16. We expect the company to post earnings of PKR6.4bn (EPS: PKR19.9) in 1HFY16 compared to PKR5.6bn (EPS: PKR17.3) in 1HFY15, up 15%YoY. The growth in earnings can be primarily attributed to 450bpsYoY higher margins amid i) increased share of high margin local dispatches in the sales mix and ii) lower fuel and power costs. On a sequential basis, earnings are expected to clock in at PKR3.5bn (EPS: PKR10.7) in 2QFY16, representing a growth of 17%QoQ compared to PKR3.0bn (EPS: PKR9.2) reported in 1QFY16. The QoQ growth in earnings is due to i) 7% growth in revenue backed by 6% uptick in dispatches and ii) 350bps further expansion in margins due to 6%QoQ and 14%QoQ fall in average coal and FO prices, respectively. At our current target price of PKR491/sh, LUCK offers a total return of 45%.
NBP: CY15 EPS estimated at PKR7.6; The board meeting of National Bank of Pakistan (NBP) is scheduled on 19th Feb‘16 to declare CY15 financial results. We expect the bank to post NPAT of PKR16.1bn (EPS: PKR7.6) in CY15 compared to PKR15.0bn (EPS: PKR7.1) in CY14, up 7%YoY. The result expected to accompany a cash dividend of PKR5.5/sh. A 17%YoY increase in Net Interest Income after provisions to PKR38.9bn can be cited as the prime reason for growth in earnings while 4%YoY growth in Non Funded Income (NFI) to PKR32.6bn is also expected to support earnings. On the flipside, increase in effective tax rate to ~43% will likely serve to contain the growth in earnings. In 4QCY15 alone, NPAT is expected to clock at PKR4.0bn (EPS: PKR1.87), down 12%QoQ. The decline in earnings comes amid 2%QoQ decline in NII after provision to PKR10.7bn where we expect the provisioning expenses to remain mounted due to i) asset quality concerns and ii) likely impairment on its equity portfolio. The NFI is also expected to decline 3%QoQ to PKR6.6bn as a result of high base effect, with the bank realizing capital gains of ~PKR2.29bn during 3QCY15. At the last closing, the stock was trading at CY16E P/B and P/E of 0.7x and 6.1x, respectively and offers a total return of 23% on our TP of PKR61/sh plus an attractive dividend yield of 10%.