Pakistan Stock Exchange (PSX) Weekly Analysis 22 Oct, 2017

BUY recommendations are:  ABL, ACPL, AICL, AKBL, APL, ASL, ASTL, BAFL, BAHL, CHCC, DGKC, EFERT, ENGRO, FATIMA, FCCL, FFBL, FFC, GWLC, HBL, HASCOL, HCAR, HMB, HTL, HUBC, INDU, ISL, KOHC, LPL, LUCK, MARI, MCB, MEBL, MLCF, NBP, NATF, NCL, NCPL, NML, NPL, OGDC, PAEL, PIOC, PKGP, POWER, PPL, PSMC, PSO, PTC, TGL, UBL.

Top gainers of last week were: GHGL, CSAP, SSGC, CHCC, PAEL, KOHC, ATRL, DGKC, LUCK, and ISL.

Top losers of last week were: PAKT, SCBPL, JDWS, SEARL, JGICL, KAPCO, ARM, MTL, FML, and NPL.

Top Volume Leaders of last week: KEL, TRG, PAEL, SNGP, EFERT, BOP, ISL, FCCL, SSGC, and DGKC.

The Pakistan Stock Exchange (PSX) market index staged a strong comeback (up by 5.6%/+2,241pts) during the outgoing week as KSE‐100 managed to close over 42k level zone after a fortnight. KSE-100 index has closed on 42,088 by gaining 2,241 points or 5.62 %. While KSE-30 index closed on 21,417 by gaining 1207 points or 5.97%.

According to experts of http://www.karachistockexchange.org, following news have played vital role in Karachi Stock Market index movement:

• The local bourse slungshot higher, as expectations started to build over a potential Rs20-25bn bailout package by the government for the stock market alongside some tax reliefs, after the Prime Minister met a delegation of PSX officials and brokers over the weekend 
• The government notified imposition/hike in regulatory duties on imports to cut the overall import bill and a revised package to boost country’s exports
• The Foreign Direct Investment (FDI) too was up 56% YoY in 1QFY18 and 7% YoY in Sept-2017, where 65% of the US$662mn FDI during the quarter originated from China compared to 32% in the corresponding period last year 
• Another major highlight during the week was imposition of 5-100% Regulatory Duty (RD) on imported products in a bid to curtail CA deficit by the government. The duty was mainly focused on consumer products, including motor vehicles, mobile phones, home appliances, ceramics and tiles. In our view, the measures are likely to have a modest impact of ~USD400mn on curtailing imports for FY18
• Cement, Oil & Gas and Fertilizer sectors were star performers cumulatively adding ~1150pts (60% contribution). Cement stocks gained on indications of strong offtakes in Oct-17, in addition to hopes of resolution on retail prices by the end of the month
• The government also borrowed US$450mn loan from commercial banks to boost its foreign exchange reserves by a net US$381mn from the previous reported week to US$20.05bn
• The growth outlook received a boost as well as cotton production so far this season registered a growth of 37% YoY
• Banks/DFIs (US$9.2mn), Insurance Companies (US$3.6mn) and Brokers (US$2.6mn) were key net buyers during the week, while Foreigners were net sellers of US$7.3mn
• The cement sector (+11% WoW) led the index rally, even though confusion surrounded the market over potential increase/decrease in discounts offered by the cement manufacturers
• Minister favoring textile industry’s demand of reducing gas and power tariffs
• Sector‐wise Refinery was up 78%; ATRL posted higher than expected 1QFY18 result which boosted sentiments while NRL and APL also rallied post their result announcements, Cement sector rose 11% and contributed 476ppts as concerns of further price dip eases while DGKC’s higher than expected result announcement lifted confidence, OMC’s rose 8%, E&Ps and Ferts were up 6% 
• During the outgoing week Banks bought US$9.2mn, while individuals sold US$5.2mn worth of Pak equities. Foreigners were net sellers of US$7.4mn during the week vs. net buying of US$38.9mn during last week
• International Industries (INIL) disclosed its 1QFY18 earning per share (EPS) of Rs5.5, up 30% YoY. Sales grew by 57% YoY whereas gross profit rose by 38% YoY. Gross Margins also declined by 200bps to 16%. However, the earning fell short of market expectations
• Foreign exchange reserves of the country improved to US$20bn as of Oct 13, 2017 vs. US$19.7bn in the previous week. SBP reserves during the week increased to US$14.1bn vs. US$13.8bn during the last week
• Government of Pakistan hinting towards relief measures to address investor concerns over declining trend in the market
• Government of Pakistan imposing regulatory duty on import of 36 new products and raising its rates on the existing 240 items in a bid to contain rising trade deficit of the country
• Finance Minister Ishaq Dar dispelling the impression that the country is facing an economic emergency and will need to return to the International Monetary Fund (IMF) soon
• LHC suspending a GoP’s notification which seeks NEPRA under the administrative control of cabinet division
• Major news for the week included an increase in DAP fertilizer prices by PKR110/bag to PKR2,620/bag. The manufacturers had already increased DAP prices by PKR60-80/bag during the previous month. Moreover, SSGC has suspended supply to Fatima Fertilizers over a dispute regarding tolling charges
• SSGC stops LNG transmission for fertiliser manufacturer

Following are few BUY recommendations:

Allied Bank Limited (ABL) – BUY 
Current Price: PKR 87.41
Target Price: PKR 132

Attock Cement (ACPL) – BUY 
Current Price: PKR 181.42 
Target Price: PKR 315

Adamjee Insurance (AICL) – BUY 
Current Price: PKR 59.86
Target Price: PKR 90

Askari Bank (AKBL) – BUY 
Current Price: PKR 19.76
Target Price: PKR 25

Attock Petroleum (APL) – BUY 
Current Price: PKR 605.14 
Target Price: PKR 796

Aisha Steels Limited (ASL) – BUY 
Current Price: PKR 19.7
Target Price: PKR 30

Amreli Steels Limited (ASTL) – BUY 
Current Price: PKR 88.32
Target Price: PKR 156

Bank Al-Falah (BAFL) – BUY 
Current Price: PKR 42.30 
Target Price: PKR 50

Bank Al-Habib (BAHL) – BUY 
Current Price: PKR 57.96
Target Price: PKR 72

Cherat Cement Company Limited (CHCC) – BUY 
Current Price: PKR 117.73 
Target Price: PKR 251

Dera Ghazi Khan Cement (DGKC) – BUY 
Current Price: PKR 154.74 
Target Price: PKR 262.0

ENGRO Fertilizer Limited (EFERT) – BUY 
Current Price: PKR 64.39
Target Price: PKR 83

ENGRO Corporations (ENGRO) – BUY 
Current Price: PKR 307.40
Target Price: PKR 400

Fatima Fertilizer (FATIMA) – BUY 
Current Price: PKR 30.95
Target Price: PKR 45.1

Fauji Cement Company Limited (FCCL) – BUY 
Current Price: PKR 31.31 
Target Price: PKR 54

Fauji Fert Bin Qasim (FFBL) – BUY 
Current Price: PKR 35.75
Target Price: PKR 67

Fauji Fertilizer Company (FFC) – BUY 
Current Price: PKR 82.32 
Target Price: PKR 122.0

Gharibwal Cement Ltd. (GWLC) – BUY 
Current Price: PKR 30.00
Target Price: PKR 100.00

Habib Bank Limited (HBL) – BUY 
Current Price: PKR 172.92 
Target Price: PKR 253.08

Hascol Petroleum (HASCOL) – BUY 
Current Price: PKR 296.49 
Target Price: PKR 428

Honda Atlas Cars (Pak) Ltd. (HCAR) – BUY 
Current Price: PKR 571.9
Target Price: PKR 912.2

Habib Metro Bank (HMB) – BUY 
Current Price: PKR 32.75
Target Price: PKR 52

Hi-Tech Lubricants (HTL) – BUY 
Current Price: PKR 93.96
Target Price: PKR 133

HUBCO (HUBC) – BUY 
Current Price: PKR 109.00
Target Price: PKR 144

Indus Motors (INDU) – BUY 
Current Price: PKR 1,785.14 
Target Price: PKR 2,214.3

Inter Steel Limited (ISL) – BUY 
Current Price: PKR 116.9
Target Price: PKR 178

Kohat Cement (KOHC) – BUY
Current Price: PKR 151.00 
Target Price: PKR 353

Lalpir Power (LPL) – BUY 
Current Price: PKR 20.52
Target Price: PKR 32

Lucky Cement (LUCK) – BUY 
Current Price: PKR 547.74 
Target Price: PKR 1,159.0

MARI Petroleum (MARI) – BUY 
Current Price: PKR 1,524.2
Target Price: PKR 2,051

Muslim Commercial Bank (MCB) – BUY 
Current Price: PKR 213.24
Target Price: PKR 250

Meezan Bank (MEBL) – BUY 
Current Price: PKR 69.41
Target Price: PKR 91

Maple Leaf Cement (MLCF) – BUY 
Current Price: PKR 72.99 
Target Price: PKR 179.0

National Bank of Pakistan (NBP) – BUY 
Current Price: PKR 47.52
Target Price: PKR 74

National Foods (NATF) – BUY 
Current Price: PKR 320.00
Target Price: PKR 473

Nishat Chunian (NCL) – BUY 
Current Price: PKR 62.35
Target Price: PKR 74

Nishat Chunian Power (NCPL) – BUY 
Current Price: PKR 39.66 
Target Price: PKR 59

Nishat Mills (NML) – BUY 
Current Price: PKR 143.39
Target Price: PKR 186

Nishat Power (NPL) – BUY 
Current Price: PKR 43.24 
Target Price: PKR 81

Oil & Gas Development Co. (OGDC) – BUY 
Current Price: PKR 152.27 
Target Price: PKR 200

Pak Elektron Ltd. (PAEL) – BUY 
Current Price: PKR 78.0
Target Price: PKR 126.1

Pioneer Cement Limited (PIOC) – BUY 
Current Price: PKR 75.46
Target Price: PKR 161

Pakgen Power Limited (PKGP) – BUY 
Current Price: PKR 20.52
Target Price: PKR 34

Power Cement (POWER) – BUY 
Current Price: PKR 9.79
Target Price: PKR 16

Pakistan Petroleum Limited (PPL) – BUY 
Current Price: PKR 182.1
Target Price: PKR 218

Pak Suzuki Motors (PSMC) – BUY 
Current Price: PKR 509.58
Target Price: PKR 800.7

Pakistan State Oil (PSO) – BUY 
Current Price: PKR 358.86 
Target Price: PKR 490

Pakistan Telecommunication (PTC) – BUY 
Current Price: PKR 13.76
Target Price: PKR 19.00

Tariq Glass (TGL) – BUY 
Current Price: PKR 97.6
Target Price: PKR 128

United Bank Limited (UBL) – BUY 
Current Price: PKR 193.69 
Target Price: PKR 294

Thank you very much for reading this article.

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Written by: Rana Khuram