AKD Quotidian about — UBL: CY12 EPS can cross PKR 15.5

Karachi, January 31, 2013 (PPI-OT): With MCB scheduled to announce its CY12 result next week, AKD Securities expects UBL to follow suit shortly (last year UBL announced its full-year result on Feb21`12).

According to AKD Securities, in this regard, AKD Securities expects UBL to post NPAT of PKR 19.03 billion (EPS: PKR 15.55) in CY12 vs. NPAT of PKR 14.86 billion (EPS: PKR 12.13) in CY11, translating into robust 41%YoY growth. Alongside the result, AKD Securities expects UBL to announce a final cash dividend of PKR 3/share to bring full-year CY12 dividend to PKR 8/share (payout ratio: 51%), while AKD Securities does not rule out the possibility of an accompanying 10% bonus. While AKD Securities expects Nil to post a slight decline in CY12, earnings growth should be driven by lower provisions and higher non-interest income (fee income and derivative gains). In 4QCY12, AKD Securities expects UBL to post NPAT of PKR 4.09 billion (EPS: PKR 3.34), down by 5%YoY and a steep 26%QoQ. The latter is expected to emanate from lower Nil due to likely NIM contraction and normalized `other income’ after hefty one-off derivate gains in the previous quarter. Going forward, if the interest rate environment remains soft, AKD Securities believes UBL will likely post an earnings decline CY13F (flattish earnings if CY12 is adjusted for one-offs). At current levels, UBL trades at a CY13F P/B of 1.2x and P/E of 6.4x, valuations that are by no means stretched despite share price gains of 55% across the last 1yr. While AKD Securities may look to revise AKD Securities’ investment case post CY12 results, at present AKD Securities remains very comfortable with AKD Securities’ target price of PKR 100/share (upside:12%).

EPCL: Result Preview CY12

EPCL will be announcing its CY12 results on Feb 04’13. AKD Securities expects the company to post NPAT of PKR 99 million in CY12 (EPS: PKR 0.15) compared with NLAT of PKR 706 million (LPS: PKR 1.06) last year. Net revenues for the year are forecast to rise by 23%YoY to PKR 21 billion on higher PVC sales as well as elevated caustic prices. Similarly, GMs are also expected to improve to 17.5% compared with 12.7% last year on robust caustic margins and improvement in VCM production. However, sharp PKR depreciation against the US$ (average of 8% in CY12) will eat into profitability in the form of higher currency translation losses. The company also benefited from a PKR 391 million insurance claim (EPS impact of PKR 0.35) recorded in 1QCY12, where excluding the insurance one-off, the company will slip back into loss of PKR 134 million (LPS: PKR 0.20), although still better than CY11’s performance. For 4QCY12, AKD Securities forecast EPCL to post NPAT of PKR 15 million (EPS: PKR 0.02) down sequentially by 37% on lower PVC offtake as well as higher currency translation losses. At current levels, AKD Securities has an `Accumulate’ stance on EPCL which provides an upside of 15% to AKD Securities’ Dec’13 end TP of PKR 11.4/share.