K & I Global Capital - Pvt Ltd

K & I Global Capital - Pvt Ltd Our approach to stock brokerage is driven by our belief that each investor is unique. Their age brac

03/06/2016

CGT on shares increase for non filers from current 15% to 18%, where holding period is less than 12 months, for more thsn 12 months but less than 24 months increase to 16% from current 12.5%, for more than 24 months but less than 48 months it is now 11% instead of 7.5%. For holdings that are more than 48 months there is no tax. Pls be reminded these changes are only applicable for non filers, whereas for filers everything is the same including the exemption from CGT for more than 48 months holding period

30/03/2016

AKD Daily
Pakistan Cements: Demand headed for double digit growth
According to the latest provisional dispatches data, cement demand remained less than impressive relative to last month declining by 2%MoM while depicting growth of 12%YoY in Mar'16 against +24.6%YoY/+11.4%MoM in Feb'16. Contrary to the prevailing trend, export dispatches posted the best month of the year so far with domestic demand remaining flat. On a cumulative basis, dispatches reached a record high level of +9.0%YoY in 9MFY16 vs. +8.6%YoY in 8MFY16. Companies outperforming the industry during the month included DGKC (+27.7%YoY), ACPL (+27.1%YoY), MLCF (+26.1%YoY) and PIOC (+17.2%YoY) while KOHC (+1.5%YoY), FCCL (+7.6%YoY), FECTC (+9.4%YoY) and LUCK (+9.9%YoY) were underperformers. On cumulative basis, KOHC (+19.7%YoY), PIOC (+12.8%YoY), FCCL (+11.4%YoY), DGKC (+9.2%YoY) and MLCF (+9.1%YoY) continued to outpace the industry while LUCK (-2.5%YoY), ACPL (+0.9%YoY), CHCC (+4.5%YoY) and FECTC (+5.5%YoY) were laggards on account of loss of exports to some markets (South Africa/Iraq). While Mar'16 failed to keep up with the momentum, we expect domestic demand to pick up pace going forward on the back of higher construction activity in summers where additional positive surprise can come from any aggressive utilization of remaining PSDP funds (unutilized FY16 federal PSDP: 50%). While exports continue to decline, we believe the recent uptick in dispatches (17%YoY/11%MoM in Mar'16) is encouraging. With demand expected to remain robust alongwith lower operating costs, we maintain an Overweight stance on the sector where our top picks include LUCK (TP: PkR785/share; FY16E/FY17F PE: 10.8x/9.5x) and DGKC (TP: PkR237/share; FY16E/FY17F PE: 8.9x/9.2x) due to their ability (on account of expansion) to catch up with anticipated rising domestic demand.
Dispatches Review: According to the latest provisional data release of APCMA, cement dispatches slowed down during the month, registering growth of +12.2%YoY/-2.0%MoM in Mar'16 vs. +24.6%YoY/+11.4%MoM in Feb'16. The slowdown was attributable to relatively weaker domestic demand (local dispatches: +11.4%YoY/-0.4%MoM in Mar'16 vs. +17.3%YoY/+29.2%MoM in Feb'16) which was partially offset by uptick in exports (export dispatches: +17.2%YoY/+11.0%MoM in Mar'16 vs. +1.7%YoY/+21.2%MoM in Feb'16). This took cumulative dispatches growth rate to +9.0%YoY in 9MFY16 from +8.6%YoY in 8MFY16, where domestic demand growth remained the key growth avenue (local dispatches: +16.6%YoY in 9MFY16). Also, pick up in exports during the month is also encouraging particularly in the backdrop of earlier declines post imposition of import restrictions in certain export markets (South Africa/Iraq). Companies outperforming the industry during the month included DGKC (+27.7%YoY), ACPL (+27.1%YoY), MLCF (+26.1%YoY) and PIOC (+17.2%YoY) while KOHC (+1.5%YoY), FCCL (+7.6%YoY), FECTC (+9.4%YoY) and LUCK (+9.9%YoY) remained underperformers. On cumulative basis, KOHC (+19.7%YoY), PIOC (+12.8%YoY), FCCL (+11.4%YoY), DGKC (+9.2%YoY) and MLCF (+9.1%YoY) continued to outpace the industry while LUCK (-2.5%YoY), ACPL (+0.9%YoY), CHCC (+4.5%YoY) and FECTC (+5.5%YoY) continued to face problems on account of failure to make up for lost exports (South Africa/Iraq) to other markets.
Demand Outlook: While a reversal of trend in exports is a good sign, sustainability of the same remains to be seen where any further decline is likely to be offset by anticipated robust domestic demand growth. In this regard, we expect domestic demand to continue growing at a healthy pace (+16.6%YoY in 9MFY16) at least during the remainder of current fiscal year on account of enormous increase in PDSP spending (federal PSDP: +41%YoY in 9MFY16) and record high growth in construction related private sector credit (+38.4%YoY in Feb'16).
Investment Perspective: With domestic demand theme in play combined with continued low energy cost outlook, we maintain our Overweight stance on the sector. Our top picks in the sector include LUCK (TP: PkR785/share; FY16E/FY17F PE: 10.8x/9.5x) and DGKC (TP: PkR237/share; FY16E/FY17F PE: 8.9x/9.2x) due to their ability (on account of expansion) to catch up with anticipated rising domestic demand.

16/03/2016

MCB-NIB merger; a win-win
proposition
Merger of NIB & MCB-what to play
The consolidation of Pakistan’s banking industry has received yet another shot in the arm with
the announcement of preliminary, non-binding discussion on merger of NIB Bank, Pakistan’s
12th largest bank by market cap, into MCB Bank Limited (MCB). We believe the merger will
likely create synergies for both entities. For MCB, the key rationale is NIB’s branch network
while NIB’s shareholders can count on potential price discovery via the merger. That said,
precedents suggest MCB is not known for paying up for acquisition and NIB deal, if comes
through, will be first such deal since its privatization. We maintain our Neutral rating on MCB.
Financial and Strategic rationale for MCB
MCB bank has been on a lookout for the acquisition target among local banks for quite some
time and the current discussion for merger marks 3rd such attempt in the past three years.
Adequate liquidity and capital buffer (CAR of 19%) provides financial muscle to the bank to
grow its risk asset. Strategically, we see two reasons for the bank: (1) competition in the
number of branches, a key source of low-cost deposits for MCB, is heating up as mid-sized
banks have rolled out aggressive branch expansion plans, and (2) the need for buying growth
for MCB’s Islamic banking arm, MCB Islamic, which is yet to start operation. Acquisition of NIB
branch network will surely give MCB a major head start. In the past five years, MCB has been a
laggard in branch expansion and has opened only 125 branches since 2010 or cumulative 11%
growth in branch network. Acquisition of NIB offers MCB a chance to grow its network by 14%.
NIB Bank-many reasons for merger
The rationale of merger for NIB Bank is much more convincing and include financial (low capital
adequacy of 12.5%, high cost to income of 95% in CY15 adjusted with capital gains) and
strategic perspectives (small fish in an industry which has high concentration). With 21% of
total loan book currently classified, heavy cost structure, low interest rate environment and
adverse changes in the minimum deposit rate last year, the bank’s earnings and business
turnaround looks stretched. Apart from branches, NIB can offer many areas for potential value
creation in the merger talks, in our view, including: (1) cost rationalization whereby most of the
head office cost will be slashed in the merged entity, (2) recovery of loans (65% of classified
loans are in textile, engineering and commercial segments). Interestingly, NIB’s coverage ratio
is comfortable at 86% with 95% loan under loss category, (3) optimization of branch deposit
generation (current deposit structure is heavily tilted towards fixed rate deposits with CASA of
70% for NIB vs 95% for MCB), and (4) tax assets (upto PRs9-10bn Implying tangible book
value of 2.28/share)
Exchange ratio of 120-131; likely to be more in favor of NIB
Current market cap and book value for the two banks suggest the exchange ratio is likely to fall
between 120-131 shares of NIB for each share of MCB Bank. However, we believe the final
ratio, if the deal is concluded, is likely to tilt more in favor of NIB bank as it will likely incorporate
areas of synergies that NIB offers in a merged entity. In absence of any reliable earnings
history for NIB, we believe the net asset value of merger will likely be the determinant of merger
ratio. NIB’s book value of PRs18.7bn, adjusted up for future capital gains on sale of bank’s
asset management arm - PICIC Asset Management, is 13% of MCB’s book value. Following
the announcement of merger, both NIB and MCB Bank will likely seek approval from the central
bank to initiate the due diligence process.

Courtesy. KASB Securites.

10/03/2016

Pakistan car sales down 27% MoM in Feb 2016; Tractors sales up 29%
q As per the filing by PAMA, Pakistan locally assembled car sales, during
8MFY16, have increased by 46% to 149k units. This improvement came from 71%
& 21% volumetric rise in PSMC & INDU, respectively.
q In Feb 2016, industry car sales declined by 9%/27% YoY/MoM to 15,874
units, jointly because of seasonal decline after higher sales in January and
completion of Taxi scheme sales. PSMC sales nosedived to 8,420 units, down
16%/34% YoY/MoM. INDU and HCAR sales also dipped by 12% & 28% MoM to 5,275
and 2,168 units, respectively.
q Tractor sales, on the other hand, reflected 29% MoM uptick in sales to
3,045 units, where MTL leading with 43% MoM growth to 1,806 units.
q Further, HCV sales have trimmed by 7% MoM to 557 units mainly because of
21% lower HINO sales to 245 units. On the other hand, GHNL volumetric sales
units have recovered by 42% to 102 units in Feb 2016.
q We remain optimistic about auto volumes growth and believe auto sales to
cross 215k units in FY16, thanks to meaningful push by taxi scheme sales by
PSMC, stable Corolla volumes and recovering sales of HCAR. Moreover,
improving GDP outlook, rising income levels and lower interest rates in
addition to banks' focus on high-return auto financing would further improve
consumer automobiles demand.

10/03/2016

The European Central Bank cut its benchmark interest rate in a surprise decision and lowered its deposit rate deeper into negative territory on Thursday, in an effort to boost inflation in the euro region.
The ECB said it was lowering its benchmark interest rate to a record-low 0.0% from 0.05%, surprising market players who were expecting no change.
The central bank also cut its deposit facility rate to -0.4% from -0.3%, in line with market expectations. Meanwhile, the central bank reduced its marginal lending rate to 0.25% from 0.30%.

01/03/2016

Commodities Analysis by Ellen R. Wald, Ph.D. covering: Crude Oil. Read Ellen R. Wald, Ph.D.'s Commodities Analysis on Investing.com

16/02/2016

China Pakistan Economic Corridor (CPEC): Implications for Pakistan’s Economy & Sectors
(Feb 15, 2016)
Please find attached our detailed research presentation on CPEC: Implications for Pakistan’s Economy & Sectors
§ China Pakistan Economic Corridor (CPEC) is part of a much bigger One Belt One Road (OBOR)/Maritime Silk Route initiative of China worth US$900bn. Over 20 countries involved in this grand and ambitious project
§ OBOR/Maritime Silk Road will provide access for China’s domestic overcapacity and capital for regional infrastructure development.
§ CPEC is being touted as game changer for Pakistan. Total size of CPEC is US$45bn, one of the largest mega projects ever undertaken.
o CPEC involves development of Gwadar (US$800mn).
o 24 energy projects (US$34.4bn).
o 4 infrastructure projects (US$9.8bn).
o Formation of over 30 Special Economic Zones (SEZ).
§ Work on projects has already started. Timeline of all projects is 15 years.
§ CPEC likely to result in increased GDP of close to 2% over and above GDP growth expectations of 5% by IMF in coming years.
§ Fiscal deficit expected to be contained as higher revenues from duties/taxes/increased economic activity will offset higher spending on CPEC’s infrastructure projects.
§ CPEC will be balance of payments accretive as higher exports are expected will offset increased debt/equity repayments of CPEC projects.
o Machinery imports will be offset by higher foreign direct investment (FDI) because of extent of localization of materials is expected at 10%.
§ Improving macroeconomic indicators can results in higher Pakistan market multiple.
§ Current market PE multiple of 8.0x can potentially re-rate to double digits as was the case previously when GDP growth reached 7%.
§ Gains will be initially focused on sectors that are expected to benefit the most from CPEC like cement, autos, banks and insurance and will then translate to all sectors.
§ We are ‘Overweight’ on Cements, Autos & Consumers. While banks look attractive on valuations.
§ Risks to CPEC include 1) Political parties’ reservation remain, 2) Geopolitical risks including ISIS and ongoing war in Syria, 3) Global and economic slowdown, and 4) Project delays.

Courtsey

Saad Hashemy

Topline Securities

12/01/2016

Oil prices drop to $30 as collapse continues
Oil prices drop to $30 as collapse continues
INVESTING.COM

Address

Room # 609, L. S. E. Building, 19-Khayaban-e-Aiwan-e-Iqbal
Lahore
54000

Opening Hours

Monday 09:00 - 17:00

Telephone

042-36311781-786

Website

Alerts

Be the first to know and let us send you an email when K & I Global Capital - Pvt Ltd posts news and promotions. Your email address will not be used for any other purpose, and you can unsubscribe at any time.

Contact The Business

Send a message to K & I Global Capital - Pvt Ltd:

Shortcuts

Share