AKD Quotidian about —: BAFL: 9MCY11 Result Preview

Karachi: Bank Alfalah Ltd (BAFL) is scheduled to finalize its 9MCY1I result on Oct 24’ll. On an unconsolidated basis, AKD expects BAFL to post NPAT of PkR2.50bn (EPS: PkR1.85) in 9MCY11 against NPAT of PkR1.50bn (EPS: PkR1.11) in 9MCY10, translating into exceptional 66%YoY growth.

According to AKD Securities, this growth is primarily expected to emanate from strong 34%YoY Nll growth. On a sequential basis however, AKD expects earnings to drop by 40%QoQ to PkR588mn (EPS: PkR0.44) in 3QCY11 as AKD conservatively incorporates full provisions/impairment on Agritech exposure. However, if provisions/impairment for Agritech are excluded, BAFL is expected to post unconsolidated NPAT of PkR2.94bn (EPS: PkR2.18) in 9MCY11, up 96%YoY. BAFL trades at a CYI1F P/B of O.61x and PER of 5.6x where AKD Securities’ target price of PkR12.0/share offers an upside of 7%. That said, AKD Securities will look to revisit its investment case post release of detailed 9MCYI1 accounts (its current full-year CVII F EPS projection of PkR2.00 looks likely to be exceeded).

PPL: 1QFY12 Result Preview
Pakistan Petroleum is scheduled to announce its 1QFYI2 result on 24th October, 2011. AKD Securities expects the company to post NPAT of PkR9.58bn versus NPAT of PkR7.79bn in the corresponding period last year. The result translates into earnings of PkR7.29/share against PkR5.93/share posted last year, a growth of 23%Y0Y. AKD expects top line growth of 24%YoY to PkR22.Sbn to lead overall earnings growth. High wellhead prices (up 8%-17%) and increasing oil revenues (up 61%YoY to PkR6.O3bn due to higher oil prices and expanding asset monetization up 11% to 7.7kbpd) should further top up revenues. PPL’s stock price has declined 8.7% over the past two weeks on concerns of a discounted secondary offering. AKD Securities believes market may have overplayed discount concerns where undemanding valuations (near the lower end of the valuation range) and upcoming well head gas price revision should provide room for positive price performance going forward.

LUCK: 1QFY12 Result Preview
Lucky Cement Limited (LUCK) is scheduled to announce its IQFYI2 financial results on Oct 24,’ll. AKD Securities expects the company to report NPAT of PkR1,816.5mn (EPS: PkR5.62) in the review period, against NPAT of PkR726.7mn (EPS: PkR2.25) in the same period last year, an outstanding growth of 2.5xYoY. Growth is expected to stem from 1) 32%YoY surge in local volumes, 2) ~50%YoY higher cement prices and 3) lower finance cost (down ~43%YoY). Higher cement prices should offset the surge in coal rates (up 32%YoY) to report gross margin of 38.7% in 1QFY12 (against 31.0% in 1QFY11). Consequently, the operating margin should also increase to 26.6% in the review period (against 17.6% in the same period last year.) Going forward, while AKD Securities expects cement prices to remain high at-least till end-Nov’11, LUCK should post improved earnings in overall 1HFY12. A seasonal dip in Dec’11 (if any) should be compensated by the expected commencement of the TDF plant. At current price level AKD has a Buy stance on LUCK, which trades at FYI2F PER of 6.4x and offers an upside of 22% to AKD’s target price of PkR101/share.

DGKC: 1QFY12 Result Preview
D.G Khan Cement Company Limited (DGKC) is scheduled to consider its 1QFYI2 financial results tomorrow (Oct 22,’11). AKD Securities expects the company to report NPAT of PkR114.4mn in the review period, against NPAT of PkR22.1mn in the same period last year, a growth of 5.2xYoY. The result translates into EPS of PkRO.26 in 1QFY12 against EPS of PkRO.05 in 1QFY11. Growth is expected to stem from higher top line (up 39%YoY) on the back of higher export volumes (mainly to Afghanistan) and surge in local cement prices, besides higher other income (up 47%YoY). Consequently the gross margin should increase to 24.3% in 1QFY12 (against 19.2% in the same period last year). Going forward, AKD Securities expects cement prices to remain on the higher side at-least till Nov’11, before taking a seasonal dip in Dec’11 (winter- effect). This along with increased exports to Afghanistan should lead to improved earnings in 1HFY12. At current price level, AKD has a Buy stance on DGKC, which trades at FY12F PER of 10.0x and offers an upside of 56% to AKD’s target price of PkR34/share.