VALUECALL

MONTHLYREVIEWANDOUTLOOK

Index

TheMarket OneYearPerformance
Volume

13,000

Index

Volume
(m)
400
300

11,000

200

31May2011

9,000

TheMarket

7,000

100
0

1Jun

31Aug

30Nov

1Mar

31May

Themarketwasrangeboundcoupledwiththinvolumes
for most of the month under review before activity
TheMarket May2011
Index
Volume(m)
Turnover
Index
picked up over the final 10 days. The KSE100 Index 12,300
140
12,200
120
posted a minor gain of 65 points or 0.5% during May 12,100
100
12,000
2011tocloseat12,123whiletheKSE30Indeximproved 11,900
80
by only 46 points or 0.4% to 11,762. The average daily 11,800
60
11,700
turnoverduringMay2011was71.39msharescompared 11,600
40
11,500
20
to 75.52m shares during April 2011. The net inflow of 11,400
11,300
foreign funds according to NCCPL figures during the
2-May 5-May 10-May 13-May 18-May 23-May 26-May 31-May
monthunderreviewwasUS$26.36mwhilethefiscalyear
todate net inflow was US$321.39m and the calendar STOCKMARKETDATA
29Apr11
31May11 %Chg.
yeartodatenetinflowwasUS$71.40m.

BankALHabibLtd.(BAHL)

KSE100Index

12,057.54 12,123.15

KSE30Index
SharesTraded

11,716.35 11,762.76

0.4%

1,585.92 1,570.54

1.0%

We are initiating coverage on BAHL, the eight largest ValueTraded PKRm 65,065 51,571
commercial bank operating in Pakistan by asset size.
US$m 762.78 604.58
PKRb
3,207.79 3,217.53
Qualities distinguishing BAHL from other banks include MarketCap.
US$b
37.61 37.72
verylowlevelofloanbookinfectionandhighoperating
efficiency.
PERFORMANCEFORTHEMONTHOFMAY2011
ForFY11,weexpectthebanktopostaPATofPKR4,253
million(EPS:PKR4.84)withagrowthof18.07%YoY.We
alsoexpectittogiveacashdividendofPKR2.50.

0.5%

20.7%
20.7%
0.3%
0.3%

Top5Gainers

31May11 %Chg. Chg.(PKR)

AzgardNineLimited
PakistanTelephoneCables
PakistanReinsurance
JahangirSiddiqui&Co
E.F.U.GeneralInsurance

6.50
3.18
16.96
7.31
38.00

Using the justified pricetobook approach, we are valu

ingBAHLatPKR 32.41.AsofMay31,2011,theBankis
trading at PKR 28.39, with an upside of 14.16% to our Top5Losers
target price; we, therefore, recommend an ACCUMU GharibwalCement
AgritechLimited
LATEstanceonit.

LottePakistanPTALtd.
NetsolTechnologiesLimited
IbrahimFibers

27.7%
27.2%
23.3%
23.3%
22.3%

1.41
0.68
3.21
1.38
6.94

31May11 %Chg. Chg.(PKR)

6.15
18.84
14.92
21.23
45.53

35.1%
14.4%
7.6%
7.1%
6.6%

3.33
3.16
1.22
1.63
3.20

TaurusSecuritiesLimitedValueCall:May2011

TableofContents

MarketOutlook3

CompanyReport:
BankAlHabibLtd.(BAHL)@PKR28.397

RatingsGuide

17
KSE100KeyIndicators

18
KSE100Statistics

20
EconomicIndicators

22

TaurusSecuritiesLimitedValueCall:May2011

MarketOutlook
MarketReviewMay2011
Themarketwasrangeboundcoupledwiththinvolumesformostofthemonthunder
reviewbeforeactivitypickedupoverthefinal10days.TheKSE100Indexposteda
Analyst:
minorgainof65pointsor0.5%duringMay2011tocloseat12,123whiletheKSE30
SalmanRasheed
Indeximprovedbyonly46pointsor0.4%to11,762.Theaveragedailyturnoverdur
salman@taurus.com.pk
ingMay2011was71.39msharescomparedto75.52msharesduringApril2011.The
netinflowofforeignfundsaccordingtoNCCPLfiguresduringthemonthunderreview
wasUS$26.36mwhilethefiscalyeartodatenetinflowwasUS$321.39mandthecal
endaryeartodatenetinflowwasUS$71.40m.
The market was mainly affected by the political events during the first week of the
month.TheKSE100Indexbegantheweekonabearishnoteshedding385pointsdur
ingthefirstthreedaystocloseat11,672onMay4.ThecaptureandkillingofOsama
BinLadenduringaU.S.operationinAbbottabadintheweehoursofMondaymorning
alongwiththetargetkillingofaprominentMQMleaderinKarachilaterthatsameday
caused nervousness among most local and foreign investors leading to some panic
selling.MostinvestorswereconcernedthatthecaptureofBinLadenonPakistanisoil
wouldcausesomeblowbackbyotherextremistsgrouptoseekrevengeonthePaki
stanistateandmilitary.Inaddition,therewasfearthattheU.S.Congresswouldcut
offeconomicaidtothecountryassomemembersofCongresswerethreateningthis
action, as they felt that the Pakistani security establishment was playing a double
gamebyhidingBinLadenorgenerallyincompetent.ThereleaseoftheApril2011in
flationdatashowedthatinflationwasslowlycreepingupagain.Fortunately,themar
ket rebounded on May 5 on the back of good news that Moodys maintained Paki
stanssovereigncreditratingandstatedthatPakistandidnotfaceanimmediaterisk
ofawithdrawalofforeignaiddespiteaccusationsthatitshelteredBinLaden.There
was renewed buying activity in oil stocks such as OGDC, PPL and PSO as there were
reports in the market thatOGDCs production overthe next 23 years will be higher
ComparativePerformance (May2011)
20%

15%

10%

5%

0%

5%

10%

15%

20%

25%
21.81%
20.28%
20.05%

17.32%
10.93%
3.85%
2.77%
2.62%
2.56%
1.92%
1.54%
1.15%
0.99%
0.52%
0.00%
0.04%
0.04%

Underperformers

0.23%
0.85%
1.18%
1.55%
2%
2.10%
2.14%
2.44%
2.63%
3.70%
4.37%

4.43%
6.06%
12.67%

Outperformers

B.O.Punjab
JSCL
ANL
EFUGeneralIns
AHL
P.T.C.L.A
OGDC
P.S.O.
ATRL
PKGS
BAFL
UBL
POL
FFBL
KSE100
Kapco
AKBL
PPL
NBP
Hubco
MCB
FFC
AHCL
EngroCorp.
APL
AICL
LUCK
DGKC
HBL
NML
NIBBank

TaurusSecuritiesLimitedValueCall:May2011

thanoriginallyanticipatedandthatPSOreceivedPKR89.1bnfromHubcoandKapco
andthus,wasabletopayoffsomemoneyowedtorefineriesandtheFBRwhichledto
the unfreezing of its bank accounts. The KSE100 Index shed 177 points during the
weektocloseat11,879onMay6.
Themarketwasmainlyupbeatbutdullintermsofturnoverduringthesecondweek.
The KSE100 Index started the week on a bullish note as it gained 156 points in the
first 3 trading days to close at 12,036 on May 11. Despite the continuing concerns
overtheAbbottabadincident,themarketwaspositiveduetovariousnewsreportson
theweekendregardingrecommendedbudgetarymeasuressuchasalowercorporate
tax rate for listed companies and to not introduce further tax measures on existing
taxpayers.Inaddition,theWorldBankdecidedtovisitPakistanneartheendofthe
week.TherewasrenewedinvestorinterestinENGROasitisexpectedtolaunchan
IPOforEngroFoods,whichrecentlyacquiredaHalalfoodcompanyintheUSA.There
wasaslightreboundininternationalcrudeoilpricesduringmidweekandnewsthat
productionfromMaramzaifieldwasabouttorestartsoon(approximately2,000bpd
crude oil and 40 mmcfd gas) that led to buying interest in oil stocks such as OGDC,
POL,PPLandPSO.Fertilizerstockshadagoodweekbasedonnewsreportsthaturea
pricesmayhikebyanotherPKR105perbagasaresultofgovernment'sagreementto
divert40mmcfdgasfromIndependentPowerProducers(IPPs)tofertiliserplants.In
addition,therewerepositivedevelopmentsonthemacroeconomicfrontwithremit
tances during 10mFY11 reaching US$ 9bn and the trade deficit during April 2011
shrinkingby33%YoYtoUS$870m.TheKSE100IndexdippedonMay12overcon
cernsregardingtheuncertaintyoftheoutcomeofthemeetingsduringtheweekwith
theIMFandsomeprofittakingactivityandwassubduedonMay13duetothebomb
blastinfrontofparamilitarytrainingcentreinCharsadda.TheKSE100postedamar
ginalgainof87pointsduringtheweektocloseat11,967onMay13.
Theactivitywasdullwiththinningvolumesduringthethirdweek,asactivitywasfo
cusedonlowertierstocks.TheKSE100Indexdippedby65pointsonMonday,May
16tocloseat11,902.Themainreasonforthedeclinewasthefearamonginvestors
regardingthesouringU.S.Pakistanrelationsandimpositionofnewtaxes.Therewere
warnings from members of the U.S. Congress to cutoff aid and restrict trade with
Pakistanifterrorismandmilitancywerenotcurbed.Inaddition,itwasreportedover
the weekend that the FBR has only accepted less than half of the budget proposals
forwardedbytheSECP.TheIndexstagedaslightrecoveryonTuesday,May17toend
thedayat11,930onthebackofU.S.SenatorJohnKerrysstatementthattherewas
no immediate threat to the aid to Pakistan. The KSE100 Index dipped again on
Wednesday, May 18 to 11,884 because of realization among investors that the next
IMF tranche remained uncertain. In addition, the MSCI review led to lowering the
weightage of Pakistani stocks in the MSCI Frontier Market Index. Despite positive
newsonthemacroeconomicfrontaboutthe10MFY11currentaccountsurplusofUS$
748m, the market sentiments remained bearish. The Tbill auction held on May 18
resultedinaslightincreaseincutoffyieldsacrossalltenorswhichledtofurtherap
prehensionthattherewasaslightpossibilitythattheSBPcouldraisethediscountrate
in the upcoming Monetary Policy Statement on May 21. There was positive move
mentinthesharepriceofBAFLonthebackofnewsthatitwasplanningtoopen20
newbranchesbyAugust2011.OnThursday,May19,theKSE100Indexwaslackluster
asitshed5pointstocloseat11,878,asmostinvestorsdecidedtositonthesidelines
ahead of the Monetary Policy Statement scheduled for Saturday. ENGRO witnessed
sellingpressureasitreportedthatSNGPcutthegassupplytoitsnewunitincontra
vention of the Sindh High Court decision and thus will take the matter back to the
court.OMCstockssuchasPSOexperiencedariseinsharepriceduetonewsreports
4

TaurusSecuritiesLimitedValueCall:May2011

that the margins on regulated products such as HSD and Motor Spirit might rise. The
fallingcottonpriceshadanegativeimpactonthesharepriceofLOTPTA.TheKSE100
endedtheweekonaslightpositivenoteduetospeculationregardingtheCapitalGains
TaxonsharesintermsofeitherthecentralcollectionofCGTorpossibleremovalcou
pled with a hike in CVT. The KSE100 Index gained only 6 points to end the week at
11,973onMay20.
ThefourthweekofMaysawthemarketbecomebullishwithimprovementinturnover
fromthepreviousweekonthebackofnewsflowonthepossibilityofrelaxationinCGT
andotherbudgetarymeasures.ItwasreportedthatthePakistanBusinessCounciland
prominentmembersoftheKSEmetwiththeFederalFinanceMinisterinIslamabadon
May23and24todiscussbudgetproposalsanditwasalsoreportedthattheGoPwould
furtherconsidertheseproposals.Inaddition,theSBPkeptthepolicyrateunchangedat
14%forthenext2monthsonthebackofimprovedexternalaccountpositionandstable
pricesandthevisitofUSSecretaryofStateHillaryClintontoIslamabadonMay27was
seenasapositivedevelopment,indicatingrestorationofsomenormalcytoPakUSrela
tions.Thelast2sessionsofthemonthsawslightprofittakingwithactivityconcentrated
inlowertierstocks.TheKSE100Indexsurgedby149pointsoverthefinal7tradingdays
toendthemonthat12,123onMay31.

RegionalValuation
ThePakistanmarketPEat6.92xistradingata44.8%discounttotheregionalaverageof
12.54x.Basedondividendyield,Pakistanisthemostattractiveat5.98%ascomparedto
theregionalaverageof2.49%,followedbyTaiwan(3.48%)andThailand(3.24%).
RegionalValuationComparison
12mF
PEx

12mF
Div.Yield(%)

Chi na
HongKong
Indi a

13.83
12.03
12.03

1.35
2.64
1.48

Indones i a
Ma l a ys i a
Pakistan
Phi l i ppi nes
Si nga pore
SouthKorea

14.03
13.60
6.92
12.88
12.36
9.68

2.30
3.21
5.98
2.67
3.15
1.37

Ta i wa n
Tha i l a nd

13.03
11.96

3.48
3.24

Country

Source:ThomsonOneAnalytics
Date:May19,2011

TaurusSecuritiesLimitedValueCall:May2011

Lookingahead
WeexpectthemarkettoreactimmediatelytothefederalbudgetforFY12expectedto
bepresentedintheNationalAssemblyonJune3.Anotherkeydriverthatwouldinflu
encethemarketdirectionduringthenext6weekswouldbethedecisionbytheIMFto
continuetheSBAornot.
Given the security situation in the wake of the Abbottabad incident and the attack on
PNSMehrannavalbaseinKarachiandtheirimplicationsonPakUSrelations,anymore
such incidents could have negative repercussions on the bourses if it leads to further
diplomaticisolationofPakistananddomesticunrest.
Domestic politics may play a greater role on the direction of the bourses in the after
mathofthebudget.IfthePMLN,PTIandotheroppositionpartiesplantoturnonthe
heatonthegovernmentandrallypublicsupportforearlyelections,thiscouldleadto
instability.
Werecommendinvestorstoholdontotheirpositions;anysharpspikewouldbeanop
portunitytobookprofits.

TaurusSecuritiesLimitedValueCall:May2011

ACCUMULATE

BankALHabibLtd.(BAHL)
DeepWithinitsShell

FairValue

32.41

12monthTradingdata
PriceofMa y31'11(PKR)
Hi gh(PKR)
Low(PKR)
Avgda i l yvol ume('000)
Avgva luetra ded(PKRm)
Sha res outs ta nding(m)
Freefloa t
Ma rketCa pita l is a tion(PKRm)
Ma rketCa pita l is a tion(US$m)
52weekga in
52weekga i n(i ndex)
Beta
KATSCode

28.39
38.83
27.03
273.88
7.94
878.60
86.9%
24,943
298
14.5%
30.4%
1.22
BAHL

PricePerformance (12months)
36

BAHL

Rel.KSE100

34
32

WeareinitiatingcoverageofBankALHabibLtd(BAHL),witha
targetpriceofPKR32.41for2011,derivedfromjustifiedprice
tobook value methodology. As of May 31, 2011, the Bank is
trading at PKR 28.39, with an upside of 14.16% to our target
price.WehaveanACCUMULATEstanceonthestock.
WelikeBAHLbecauseofitsoperationalefficiency:itscapability
to keep its administrative costs under control while going for
branch network expansion at the same time. BAHL is in fact
betterthanthetopfourprivatebanksinthisarea.
BankALHabibstandsoutfromtheotherbanksalsobecauseof
its inordinate operational model of extra riskaversion. The
Bankstactfulnessindolingoutloansandadvanceshasleditto
have a remarkably low level of nonperforming loans (NPLs)
compared to its gross advances. This conservatism is aug
mentedbyliberalprovisioningforthoseNPLs.
However,BAHLsprudencehascomeattheexpenseofhigher
interest income forgone. Since 2009, BAHL has kept more in
vestments than advances, the only bank in our coverage uni
versetodoso.Thissituationbegstoaskthequestion:Whyso
shy?

PKR

30

FinancialHighlights

28
26

NetInterestIncome

InPKRmunlessmentioned
CY10A

CY11E

CY12F

CY13F

CY14F

10,797

11,591

12,836

14,492

16,214
1,161

24

ProvisionsCharge

946

1,126

1,164

1,124

22

NonInterestIncome

2,130

2,808

3,131

3,467

3,828

NonInterestExpense

6,324

6,731

7,283

7,839

8,398

20
01Jun10

26Nov10

30May11

Analyst:

ShumailaBadar
shumaila.badar@taurus.com.pk

ProfitAfterTax

3,602

4,253

4,888

5,848

6,813

Investments

137,168

157,340

176,394

195,970

215,567

Advances

125,773

136,149

152,322

172,221

192,832

TotalAssets

301,552

338,630

378,560

425,264

472,334

Deposits

249,774

280,964

314,989

353,099

391,940

Equity

14,706

17,527

20,249

4.84

DividendsPerShare(PKR)

2.00

2.50

2.50

3.00

3.00

BookValuePerShare(PKR)

16.74

19.95

23.05

27.24

32.03

PricetoEarnings(x)

6.92

5.86

5.10

4.27

3.66

PricetoBookValue(x)

7.04%
1.70

8.81%
1.42

8.81%
1.23

6.66

28,139

4.10

DividendYield(%)

5.56

23,931

EarningsPerShare(PKR)

10.57%
1.04

7.75

10.57%
0.89

NetInterestMargin(%)

4.46%

4.14%

4.11%

4.14%

4.15%

ReturnonAssets(%)

1.31%

1.33%

1.36%

1.45%

1.52%

ReturnonEquity(%)

26.69%

26.39%

25.88%

26.47%

26.17%

Source:CompanyReports,TSLResearch

TaurusSecuritiesLimitedValueCall:May2011

Valuation
Using a variation of the Gordon growth model, the justified pricetobook value ap
proach, we have come up with a valueof PKR 32.41/share for BAHL. The table below
shows how we have arrived at our justified P/BV multiple (of 1.16x) and multiplied it
withtheforecastedaveragebookvaluepershareforthenextfiveyearstoarriveatour
targetprice.

Valuation

Riskfreerate

14.00%

MarketRiskPremium

6.00%

Beta

CostofEquity

21.29%

SustainableROE

24.13%

1.22

Growth

3.00%

JustifiedP/B

1.16

Avg.BVPS

28.06

TargetPrice

32.41

Source:TSLResearch

ThetargetpriceofPKR32.41givesthescripanupsideof14.16%fromitsMay31st2011
closingpriceofPKR28.39.WethereforerecommendanACCUMULATEstanceonBAHL.

TargetPriceSensitivityAnalysis
Growth

CostofEquity

19.29%
20.29%
21.29%
22.29%
23.29%

2.0%

2.5%

3.0%

3.5%

4.0%

35.91
33.95
32.19
30.60
29.16

36.15
34.11
32.30
30.67
29.19

36.39
34.29
32.41
30.73
29.22

36.66
34.47
32.54
30.80
29.25

36.94
34.67
32.67
30.88
29.28

Source:TSLResearch

Riskstoourthesis
Persistence of high inflation: Continuationofinflationarypressurebeyondourex
pectationswillraiseoperatingexpenditure.Atthemoment,weareexpectinginflation
toremainaround15%forFY11andtoeasebeyondthat.

Change in monetary policy stance: Weareexpectingthepolicyratetobemain

tainedforthisyear.IfSBPgoesforatightenedstancethenwecanexpectfurtherrisein
interestincomeandviceversa.

Changesinregulations:Risksontheregulatoryfrontremaintoo.
Low economic growth: Aslowerthanexpectedrecoveryintherealsectorwillculmi
nateinabuildupofevenmorenonperformingloans.

TaurusSecuritiesLimitedValueCall:May2011

BAHL's PricetoBookValueBand
90
80
70
60
50
40
30
20
10
0

5.0x
4.0x
3x
2x
1x

11Nov10

29Jul10

16Apr10

29Dec09

03Sep09

20May09

28Jan09

06Oct08

16Jun08

28Feb08

06Nov07

17Jul07

02Apr07

07Dec06

15Aug06

28Apr06

02Jan06

Price

Source:Company Reports,TSLResearch

BAHL's PricetoEarningsBand
80
70
60
50
40
30
20
10
0

20x
17x
14x
11x
8x

02Jan06
07Apr06
07Jul06
04Oct06
12Jan07
16Apr07
12Jul07
09Oct07
16Jan08
16Apr08
14Jul08
15Oct08
20Jan09
22Apr09
20Jul09
20Oct09
22Jan10
22Apr10
16Jul10
11Oct10

5.0x

Source:Company Reports,TSLResearch

Price

TaurusSecuritiesLimitedValueCall:May2011

Earningsoutlook
We are projecting BAHLs earnings to grow by a 4year CAGR of 17.3%; from PKR
3.6bn(EPS:PKR4.10)in2010toPKR6.8bn(EPS:PKR7.75)in2014.
Interestincomehasgrownsubstantiallyinpreviousyears,withthegrowthin2010
reaching24.2%.Wedonot,however,expectBAHLstoplinetodepictsimilarrobust
growthinCY11andCY12,aswearenotexpectinganyfurthermonetarypolicyrate
hikesthisyear.
Similarly,interestexpensewilllikelydiscontinuerisingatthehighrateseeninprevi
ousyears.Apartfromahigherbasetakingeffect,thisslowdownwillalsobeattrib
utabletoabuildupofcheapcurrentandsavingsaccount(CASA)deposits.
In an attempt to decrease the cost of funds, BAHL will most likely continue to in
crease its branch network. We expect the network to expand at a 4year CAGR of
7.3%,from303in2010to385officesin2014.
Weexpectprovisionstoriseslightly(ata4yearCAGRof5.3%,fromPKR946min
2010toPKR1,161min2014)duetoincreaseinadvancesandminorriseininfection
ratio.
Noninterestincomewill,accordingtoourforecast,riseata4yearCAGRof15.8%,
fromPKR2,130min2010toPKR3,828min2014.
Weareexpectingnoninterestexpensetoriseata4yearCAGRof7.4%fromPKR
6,324min2010toPKR8,398min2014.Thisrateislowkeepinginmindthatweex
pectBAHLtoundergosubstantialbranchnetworkexpansion.

BAHL's Returns
ReturnonEquity(LHS)

ReturnonAssets(RHS)
1.8%
1.7%
1.6%
1.5%
1.4%
1.3%
1.2%
1.1%
1.0%

32.0%
30.0%
28.0%
26.0%
24.0%
CY07A CY08A CY09A CY10A CY11E CY12F CY13F CY14F CY15F

Source:CompanyReports,TSLResearch

10

TaurusSecuritiesLimitedValueCall:May2011

BAHL's InterestBasedEarnings
YieldonEarningAssets

CostofFunds

NetInterestMargin

14.0%

12.0%
10.0%

8.0%
6.0%

4.0%

2.0%
0.0%
CY07A

CY08A

CY09A

CY10A

CY11E

CY12F

CY13F

CY14F

Source:CompanyReports,TSLResearch

KeyInvestmentConsiderations
Provisioning:Partlyanillusionofextraprudence
Bank AlHabib allocates general provision (for NPLs) over and above the SBP require
mentseveryyear.Whilethisgivesanimpressionofconservatismandprudence,itmust
be borne in mind that BAHL has not reversed any of these charges since 2007, which
showsthattheywereneededandnotinexcess.
BAHLhas,however,reversedsubstantialamountsofspecificprovisionsovertheyears,
muchmorethantheothertopprivatebanks,asshownbelow.

Portion ofProvisionsforNPLsReversedDuringtheYear*
CY07

CY08

CY09

CY10

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
BAHL

HBL

UBL

MCB

ABL

BAFL

FABL

Source:CompanyReports,TSLResearch

*CalculatedastotalreversalsduringtheyeardividedbytheopeningbalanceforNPLprovisions
WehavevaluedBAHLwiththeassumptionthatitwillcontinuetoputasidePKR450m
(inpracticesinceCY09)everyyearingeneralprovisionsoverandabovetheSBPrequire
ment. Thereis,however,aslightchancethatthiswillnotbethecase.Thetablebelow
gives the earnings expectations if BAHL unexpectedly discontinues this prudent prac
11

TaurusSecuritiesLimitedValueCall:May2011

tice.

CY11E
BaseCase*
4.84
DiscontinuationinCY11**
5.06
DiscontinuationinCY12
4.84
DiscontinuationinCY13
4.84
DiscontinuationinCY14
4.84

EPS
T.Price

CY12E CY13E CY14E

5.56 6.66 7.75

32.41

5.90 6.99 8.09

34.11

5.90 6.99 8.09

33.82
5.56 6.99 8.09
33.40
5.56 6.66 8.09
33.03

Source:TSLResearch

*AllotmentofPKR450mneveryyear
**AllotmentofPKR150mnin2011(whichhasalreadyhappenedin1Q)and
disconitnuationinsubsequentyears

Assetscompositiontostay
Inlinewithexpectedindustrytrend,BAHLsdecliningadvancestodepositratiowillmost
probablystabilizeinthecomingyears,andgraduallyreverseitsinclination.ForCY11,we
expect advances to rise less than proportionally to deposits as there are still no signs
that the overall economic condition will improve sufficiently for banks to be less risk
aversethantheyareatpresent.

ADRandIDRTrends OvertheYears
AdvancestoDeposits

InvestmentstoDeposits

80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
CY06A CY07A CY08A CY09A CY10A CY11E CY12F CY13F CY14F CY15F

Source:CompanyReports,TSLResearch

Banksassetliabilitycompositionstrategiesrelyheavilyupontheirownsize,assmaller
banksfindithardertogetintolongtermriskyloanswhentheirdepositbaseisrelatively
unstable.However,comparedtoitspeerbanks(thoseranked610byassetsize)BAHLis
muchmoreinclinedtowardsinvestmentsingovernmentsecurities.

12

TaurusSecuritiesLimitedValueCall:May2011

BAHL's HigherDepositsandLowerAdvancesComparedtoPeerBanks

Deposits(inPKRbn)

350
330
310
290
270
250
230
210
190

BAFL

BAHL
AKBL
SCBPL
BOP*

120

140

160

180

200

Advances(inPKRbn)
Source:CompanyReports,TSLResearch

*BOPsfiguresareasofEnd2010,duetounavailabilityofdata.OthersfiguresareasofEndMarch2011.
BAHLsriskaversioncomes atacostofhigherreturnsforgoneasitistheonlybankinour
universetoownmoreinvestmentsthanadvances.Evenitsadvancesearnaloweryieldthan
itsyieldonAFSsecuritiesduetothehighcreditworthinessofborrowersthoseadvancesare
madeto.ItisofinteresttonoteherethatBAHLdoesnotclassifyanyofitsinvestmentsas
heldfortrading.Thismeansthatitsearningsdonotcompriseofanyvolatileunrealizedgains
orlossesrelatedtoHFTsecurities.
WeexpecttheassetqualitytoworsenslightlyforBAHL,butasitsNPLstoGrossLoansare
alreadytoolowcomparedtootherbanks,thisishardlyacauseforconcern.Theinfectionof
BAHLsloanbookwilllikelyreach2.8%byCY14from2.28%inCY10.Themainreasonforthis
expectedincreaseisthatwebelieveBAHLspresentlevelofNPLsisalreadyverylowandalso
becausewehaveanadverseoutlookonthemacroeconomicfront.

BAHL's LowInfectionofLoanPortfolioComparedtoOtherBanks
BAHL

Avg.*

HBL

UBL

MCB

ABL

14.0%
12.0%
10.0%
8.0%

6.0%
4.0%

2.0%
0.0%
CY06A CY07A CY08A CY09A CY10A CY11E CY12F CY13F CY14F CY15F

Source:CompanyReports,SBP,TSLResearch

*averageforlocalprivatebanks

13

TaurusSecuritiesLimitedValueCall:May2011

Continuousimprovementinoperatingefficiency
BAHLhasrecentlyimproveditsoperatingefficiencyandhasmanagedtoreigninitsad
ministrative expenses despite high inflation rate and branch network expansion. By
2010,BAHLhadthelowestadministrativeexpensesasapercentofdepositscompared
tosixofthetoplocalprivatebanks.

BAHL'sAdministrative ExpensestoDeposits Compared withOther Banks

BAHL

HBL

UBL

MCB

ABL

BAFL

FABL

4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
CY07

CY08

CY09

CY10

Source:CompanyReports,TSLResearch

BAHL has been aggressively expanding its branch network. In 2010 alone, it added 22
branchesand25subbranches,tobringupitsnetworkto303from255in2009(2008:
225,2007:175,1QCY11:314offices).Subbranchesarebranchesthatprovidebasicfa
cilities but do not handle more sophisticated operations like giving out advances and
handlingforeignexchangetrade.Thismodel(ofamixofbranchesandsubbranches)is
expectedtoincreaseBAHLsaccesstocheapdeposits.We,however,donotexpectitto
incuranylessadministrativeexpensesthanapurebranchesmodelwouldhave.

Impressiveperformancesofarthisyear
BAHLpostedaprofitaftertaxofPKR1,034.8m(EPS:PKR1.18)inthe1QCY11,compared
toPKR880.6m(EPS:PKR1.00)inthecorrespondingperiodlastyear.Aswithmostother
banksintheindustry,thisgrowthwaslargelydrivenbyincreaseinnetinterestincome.
Astheaverage6monthKIBORin1QCY11was140bpsabovethatinthecorresponding
periodinCY10,interestincomegrewby30.7%.Buildupincheapdeposits(CASAasat
30Mar,2011:61.0%;31Dec,2010:59.27%),meanwhile,ensuredthatinterestexpenses
didntrisebyasmuchasinterestincome,resultingina40.9%surgeinnetinterestin
come.
Provisionsincreasedsubstantially(by297%)asaresultofbothriseininfectionratioand
ageing of loan portfolio. Though the infection ratio has risen by the end of 1QCY11
(2.21%)comparedtothatof1QCY10(1.93%);ithasactuallydeclinedfromthatbythe
endof2010(2.28%).
Noninterestbasedincomeandexpenseshaveincreasedby23.5%YoYand27.9%YoY,
respectively,inlinewiththetrend.

14

TaurusSecuritiesLimitedValueCall:May2011

BankALHabibLimited

InPKRmn

Unconsolidated

1QCY11

1QCY10

%Chg

MarkupIncome

8,251

6,315

30.7%

MarkupExpense

4,939

3,964

24.6%

NetMarkupIncome

3,312

2,351

40.9%

ProvisionsExpense

484

NIIafterProvisions

2,828

2,229

26.9%

618

500

23.5%

OtherExpenses

1,795

1,403

27.9%

Profitbeforetax

1,651

1,326

24.5%

616

445

38.5%

1,035

881

17.5%

1.18

1.00

17.5%

NonMarkupIncome

Taxation

Profitaftertax
EPS

122 297.1%

Source:CompanyReports

Briefcompanyoverview
Bank AL Habib, the eighth largest commercial bank in Pakistan by asset size, has been
operatingasapubliclylistedbanksince1992(incorporatedinOctober1991).Itsmajor
sponsor is the Dawood Habib Group, the same group that initially established Habib
BankLimited.Currentlyithasonlyonesubsidiary,ALHabibCapitalMarkets(Pvt.)Lim
ited, as its other subsidiary, AL Habib Financial Services Limited, was wound up in De
cember2010.

Outlook:Apleasantrideahead
Goingforward,weexpectthebottomlinetogrowonthebackofhealthyriseintopline,
whichinturnwillbedrivenbylowercostoffundsandincreaseininterestearningassets
(both investments and advances). Provisions will continue to remain subdued due to
BAHLsconservativepolicies;thoughweexpecttoseeaslightrise ininfectionoftheir
loanbookasanaturalconsequenceofthepresentandforeseeneconomicscenario.
Rise in noninterest based income and constrained growth in operating expenses
(despitenetworkexpansion)duetomanagementefficiencywillfurthersupportearnings
inthefuture.

15

TaurusSecuritiesLimitedValueCall:May2011

FinancialHighlights
BankALHabibLtd
BalanceSheetHighlights

InPKRmn

CashandBalanceswithBanks

CY10A

CY11E

CY12F

CY13F

CY14F

21,133

25,130

27,123

31,374

35,040

Investments

137,168

157,340

176,394

195,970

215,567

Advances

125,773

136,149

152,322

172,221

192,832

TotalAssets

301,552

338,630

378,560

425,264

472,334

Borrowings

22,579

24,724

27,942

31,900

35,660

249,774

280,964

314,989

353,099

391,940

14,706

17,527

20,249

23,931

28,139

301,552

338,630

378,560

425,264

472,334

Deposits
Equity
TotalLiabilitiesandEquity
ProfitandLossHighlights

InPKRmn
CY10A

CY11E

CY12F

CY13F

CY14F

InterestIncome

27,475

30,109

33,195

37,234

41,550

InterestExpense

16,679

18,518

20,359

22,741

25,336

NetInterestIncome

10,797

11,591

12,836

14,492

16,214

ProvisionsCharge

946

1,126

1,164

1,124

1,161

NonInterestIncome

2,130

2,808

3,131

3,467

3,828

NonInterestExpense

6,324

6,731

7,283

7,839

8,398

ProfitBeforeTax

5,656

6,543

7,520

8,996

10,482

ProfitAfterTax

3,602

4,253

4,888

5,848

6,813

CY10A

CY11E

CY12F

CY13F

CY14F

KeyPerformanceIndicators
EarningsPerShare(PKR)

4.10

4.84

5.56

6.66

7.75

DividendsPerShare(PKR)

2.00

2.50

2.50

3.00

3.00

BookValuePerShare(PKR)

16.74

PricetoEarnings(x)

6.92

DividendYield(%)

7.04%

PricetoBookValue(x)

19.95
5.86
8.81%

23.05
5.10
8.81%

27.24
4.27
10.57%

32.03
3.66
10.57%

1.70

1.42

1.23

1.04

0.89

AdvancestoDeposits(%)

50.35%

48.46%

48.36%

48.77%

49.20%

NPLstoGrossLoans(%)

2.28%

2.30%

2.55%

2.70%

2.80%

CASAtoTotalDeposits(%)

59.27%

59.90%

60.60%

60.90%

61.10%

YieldonAvgEarningAssets(%)

11.36%

10.76%

10.63%

10.64%

10.63%

CostofFunds(%)

6.42%

6.14%

6.04%

6.03%

6.03%

NetInterestMargin(%)

4.46%

4.14%

4.11%

4.14%

4.15%

Spreads(%)

4.94%

4.62%

4.59%

4.61%

4.60%

ReturnonAssets(%)

1.31%

1.33%

1.36%

1.45%

1.52%

ReturnonEquity(%)

26.69%

26.39%

25.88%

26.47%

26.17%

Source:CompanyReports,TSLResearch

16

TaurusSecuritiesLimitedValueCall:May2011

RATINGSGUIDE

May31,2011
Stock

Closing
EPS
DPS
BVPS
Fair
Shares Year
Div
P/BVx Beta
P/Ex
priceasat Rating
Value*
Outstanding end
Yld(%)
FY10A FY11F FY12F FY10A FY11F FY12F FY10A FY11F FY12F
310511

AlliedBank

65.0 62.0 Hold

9.6 11.6 12.3 3.6 4.0 4.0 41.8 49.4 56.7 5.4

6% 1.3 1.1

860

Dec

BankAlHabib
FaysalBank

32.4 28.4 Accumulate 4.1 4.8 5.6 2.0 2.5 2.5 18.3 22.1 25.2 5.9 9% 1.3 1.2
9.9 9.9 Hold
1.6 1.3 2.2 NIL 1.0 1.0 22.5 24.7 26.4 7.9 10% 0.4 1.2

879
733

Dec
Dec

BankAlfalah

11.6 10.3 Accumulate 0.7 1.6 2.0

1,349

Dec

HabibBank

113.5 117.3 Reduce

14.2 18.1 20.3 6.5 7.0 7.0 81.2 93.9 107.8 6.5

6% 1.2 1.1

1,102

Dec

MCBBank

200.9 208.0 Reduce

20.2 23.0 26.2 10.5 11.5 12.0 94.7 100.0 114.8 9.0

6% 2.1 1.2

836

Dec

UnitedBank
AttockCement

64.1 64.8 Reduce

74.2 54.9 Buy

9.1 10.4 11.9 5.0 5.0 6.0 55.9 61.7 70.1 6.2
11.7 6.3 8.5 5.0 3.0 4.0 62.3 65.7 70.2 8.7

8% 1.1 1.2
5% 0.8 0.9

1,224
87

Dec
Jun

CheratCement

8.5 10.1 Sell

(0.1) 0.5 1.0

NIL

NIL NIL 23.5 23.5 26.6 20.9

NIL 0.4 0.9

96

Jun

D.G.KhanCement

26.0 23.1 Accumulate 0.6 1.2 1.6

NIL

NIL 1.0 72.6 77.1 84.4 20.1

NIL 0.3 1.4

365

Jun

FaujiCement

10.5 4.8 StrongBuy 0.2 0.5 0.4

NIL

NIL NIL 7.2 10.7 11.1 9.7

NIL 0.4 1.5

1,331

Jun

LafargePakistanCem

1.9 3.0 Sell

NIL

NIL NIL 6.7 8.3 6.8 N/A NIL 0.4 1.1

1,313

Dec

LuckyCement

80.6 71.1 Accumulate 9.7 11.0 12.7 4.0 3.0 4.0 77.6 85.6 94.3 6.4

4% 0.8 1.3

323

Jun

M.LeafCement

2.1 2.3 Reduce

(4.9) (7.0) (5.6)

NIL NIL 9.8 9.8 9.7 N/A NIL 0.2 1.6

526

Jun

MillatTractorsLtd

581.9 540.0 Hold

62.4 71.2 79.1 52.0 60.0 60.0 114.5 173.4 218.3 7.6 12% 3.2 1.0

37

Jun

PakSuzuki

66.4 65.6 Hold

3.1 4.7 7.5 0.5 1.0 1.0 176.2 177.3 184.8 14.0

82

Dec

HubPower
KAPCO
AttockPetroleum
P.S.O
Oil&GasDev.
PakistanOilfields
PakistanPetroleum
IndusMotors
P.I.C.T.
P.T.C.L.
FaujiFert.Bin
FaujiFertilizer
ICIPakistan
EngroPolymer

46.2 37.6 Buy

4.8 5.5 6.9
48.5 43.5 Accumulate 5.8 8.6 8.7
408.4 378.1 Hold
52.0 58.2 62.4
342.0 283.6 Buy
52.8 57.7 67.2
107.7 150.5 Sell
13.8 14.4 15.0
302.9 333.4 Reduce 31.4 45.6 45.6
228.1 213.1 Hold
19.5 30.2 31.5
235.0 221.5 Hold
43.8 42.5 47.8
88.3 85.0 Hold
8.3 8.8 10.1
21.7 17.6 Buy
2.3 2.1 2.5
38.2 42.8 Sell
7.0 6.7 6.3
129.2 139.8 Reduce 13.0 14.7 15.1
176.4 157.0 Accumulate 17.5 20.5 17.8
12.5 11.6 Hold
(1.2) 2.0 2.2

1,157
880
69
172
4,301
237
1,195
79
109
5,100
934
848
139
663

Jun
Jun
Jun
Jun
Jun
Jun
Jun
Jun
Jun
Jun
Dec
Dec
Dec
Dec

0.7 (0.3)

NIL 1.0 1.0 16.5 17.4 18.3 6.4 10% 0.6 1.3

NIL

5.0 5.0 6.5 25.8

5.0 8.0 8.5 25.6
25.0 35.0 40.0 133.6
8.0 10.0 15.0 171.0
5.5 5.0 5.0 36.6
25.5 32.0 32.0 123.1
7.5 12.0 13.0 66.9
15.0 13.0 14.0 160.1
4.0 4.0 5.0 34.1
1.8 2.0 2.0 21.2
6.6 6.2 13.8 13.1
10.4 13.2 13.6 18.2
17.5 17.5 10.0 97.1
NIL0.3 14.1 10.4

17

26.2 27.1 6.9

70.5 57.4 5.0
106.1 137.8 6.5
265.0 317.4 4.9
45.8 55.8 10.5
136.7 150.3 7.3
87.6 106.1 7.1
213.7 244.3 5.2
34.4 40.1 9.7
21.7 22.3 8.4
13.6 6.0 6.4
16.9 23.7 9.5
111.4 131.2 7.6
12.6 0.8 5.7

2% 0.4 0.9
13%
18%
9%
4%
3%
10%
6%
6%
5%
11%
14%
9%
11%
2%

1.4 0.9
0.6 0.7
3.6 1.0
1.1 1.1
3.3 1.1
2.4 1.2
2.4 1.0
1.0 1.1
2.5 0.8
0.8 1.1
3.1 1.0
8.3 0.8
1.4 1.0
0.9 1.1

TaurusSecuritiesLimitedValueCall:May2011

KSE100KEYINDICATORS
Sector
OilAndGas

Company

AttockPetroleumLtd
AttockRefinery
MariGasCompanyLimited
NationalRefinery
OGDC
PakistanOilfields
PakistanPetroleumLtd
PakistanRefinery
PakistanStateOil
BycoPetroleum
Sec.P/E:10.29
ShellPakistan
Chemicals
ClariantPakistan
DawoodHercules
EngroCorporation
EngroPolymer&ChemicalsLtd
FaujiFertiliserBinQasim
ArifHabibCorporation
FaujiFertilizer
ICIPakistan
Sec.P/E:8.37
AgritechLimited
LottePakistanPTALtd.
ForestryAndPaper
FatimaFertilzerCompany
IndustrialMetalsAndMining
SecurityPapers
ConstructionAndMaterials
InternationalIndustries
AttockCement
BestwayCement
D.G.KhanCement
JavedanCement
LafargePakistanCement
Sec.P/E:8.66
LuckyCement
GharibwalCement
GeneralIndustries
GhaniGlass
PackagesLimited
SiemensEngineering
Sec.P/E:5.25
ThalLimited
ElectronicsAndElectricalEquipments PakistanCablesLimited
AlGhaziTractors
IndustrialEngineering
Sec.P/E:7.09
MillatTractors
IndustrialTransportation
P.I.C.T
Sec.P/E:8.03
P.N.S.C.
SupportServices
TRGPakistanLimited
AutomobileAndParts
AtlasHonda
IndusMotors
Sec.P/E:7.34
PakSuzukiMotors
Beverages
MureeBreweryCoLtd
FoodProducers
NestlePakistan
RafhanMaize
UnileverPakistanLtd.
Sec.P/E:26.16
UnileverFoodsLtd
HouseholdGoods
PakElectronLimited
LeisureGoods
GraysofCambridgePak
PersonalGoods
AzgardNineLimited
BataPakistanLtd.

Mkt.Cap
(mln)

Equity
(mln)

Sh.O/S
(mln)

PAT
(mln)

26,132
11,178
8,017
29,171
647,247
78,874
254,638
2,988
48,638
3,631
15,411
5,534
7,620
76,415
7,683
40,008
8,528
118,539
21,785
7,393
22,592
25,800
1,716
6,237
4,753
4,274
10,121
3,567
3,938
22,985
2,462
6,028
9,510
8,191
3,161
1,396
9,962
19,767
9,275
3,735
1,091
9,259
17,411
5,399
1,869
153,727
24,625
65,757
8,621
941
345
2,921
3,826

9,236.6
12,196.9
9,190.8
19,638.0

157,392.5
29,124.7
79,906.2
2,348.8
29,336.1
(8,068.9)
7,900.0
2,658.4
22,671.8
30,599.0
6,906.3
12,210.0
16,135.3
15,447.5
15,455.4
10,799.5
9,688.4
24,258.8
3,110.7
4,690.5
5,395.4
7,006.1
26,519.2
12,435.8
8,815.4
25,095.9
4,000.4
4,143.6
26,929.9
7,168.4
5,664.0
1,399.7
6,362.7
4,192.4
3,718.0
7,133.5
1,015.7
3,891.8
12,587.6
14,497.9
3,785.5
5,581.9
4,953.9
3,560.3
404.4
6,795.7
201.2
18,469.7
1,960.7

69.1
85.3
73.5
80.0
4,300.9
236.5
1,195.0
35.0
171.5
392.1
68.5
34.1
120.3
393.3
663.5
934.1
375.0
848.2
138.8
392.4
1,514.2
2,000.0
41.2
119.9
86.6
325.7
438.1
58.1
1,312.6
323.4
400.3
106.7
84.4
8.2
30.7
28.5
42.9
36.6
109.2
132.1
385.4
62.6
78.6
82.3
17.3
45.3
9.2
13.3
6.2
121.9
7.3
449.3
7.6

3,594.3
126.4
1,186.0
3,284.8
59,177.1
7,437.0
23,320.5
(2,974.5)
9,049.6
(1,616.4)
1,615.6
762.7
3,248.0
6,441.0
(813.8)
6,514.4
(2,768.9)
11,028.8
2,428.8
885.7
4,527.8
(163.6)
348.1
1,026.3
1,003.6
(1,209.4)
233.0
(128.9)
(948.5)
3,137.5
(1,027.5)
947.2
(332.4)
999.5
1,366.3
45.5
1,908.9
2,284.5
907.8
711.5
(1,616.8)
712.5
3,443.4
211.1
315.3
4,112.8
1,837.9
3,273.2
437.5
260.5
(18.3)
60.5
585.5

18

EPS P/E
(Rs) (x)
52.0
1.5
16.1
41.1
13.8
31.4
19.5
(85.0)
52.8
(4.1)
23.6
22.4
27.0
16.4
(1.2)
7.0
(7.4)
13.0
17.5
2.3
3.0
(0.1)
8.5
8.6
11.6
(3.7)
0.5
(2.2)
(0.7)
9.7
(2.6)
8.9
(3.9)
121.2
44.5
1.6
44.5
62.4
8.3
5.4
(4.2)
11.4
43.8
2.6
18.2
90.7
199.0
246.2
71.0
2.1
(2.5)
0.1
77.4

7.3
88.4
6.8
8.9
10.9
10.6
10.9
N.M
5.4
N.M
9.5
7.3
2.3
11.9
N.M
6.1
N.M
10.7
9.0
8.3
5.0
N.M
4.9
6.1
4.7
N.M
43.4
N.M
N.M
7.3
N.M
6.4
N.M
8.2
2.3
30.7
5.2
8.7
10.2
5.2
N.M
13.0
5.1
25.6
5.9
37.4
13.4
20.1
19.7
3.6
N.M
48.3
6.5

Price
Weightage
31May Div.Yield(%)
(%)
378.07
131.05
109.07
364.79
150.49
333.44
213.09
85.38
283.57
9.26
225.02
162.19
63.33
194.30
11.58
42.83
22.74
139.76
156.95
18.84
14.92
12.90
41.70
52.02
54.89
13.12
23.10
61.37
3.00
71.08
6.15
56.50
112.71
993.19
103.00
49.04
232.01
540.00
84.97
28.28
2.83
148.02
221.51
65.60
107.92
3389.81
2666.08
4946.40
1400.00
7.72
46.94
6.50
506.13

7.94
0.00
2.84
5.48
3.65
7.65
4.22
0.00
2.82
0.00
5.33
8.32
7.90
3.09
0.00
15.29
0.00
9.30
11.15
0.00
3.35
0.00
11.99
7.69
9.11
0.00
0.00
0.00
0.00
5.63
0.00
4.42
2.88
9.06
3.88
3.06
8.62
12.04
4.71
5.30
0.00
1.69
6.77
0.76
4.63
2.21
4.31
4.97
5.07
0.00
5.33
0.00
5.53

0.91%
0.39%
0.28%
1.02%
22.53%
2.75%
8.86%
0.10%
1.69%
0.13%
0.54%
0.19%
0.27%
2.66%
0.27%
1.39%
0.30%
4.13%
0.76%
0.26%
0.79%
0.90%
0.06%
0.22%
0.17%
0.15%
0.35%
0.12%
0.14%
0.80%
0.09%
0.21%
0.33%
0.29%
0.11%
0.05%
0.35%
0.69%
0.32%
0.13%
0.04%
0.32%
0.61%
0.19%
0.07%
5.35%
0.86%
2.29%
0.30%
0.03%
0.01%
0.10%
0.13%

TaurusSecuritiesLimitedValueCall:May2011
Sector

Company

ColgatePalmolive
IbrahimFibers
IndusDyeing&Mfg.Company
Sec.P/E:7.04
NishatMills
Tobacco
PhillipMorris
Sec.P/E:21.85
PakistanTobaccoCompany
HealthCareEquipmentAndServices ShifaInternationalHospitals
PharmaAndBioTech
AbbotLaboratories
Sec.P/E:10.55
GlaxoSmithKlinePakLtd.
TravelAndLeisure
DreamworldLtd
P.I.A.C.(A)
Sec.P/E:53.59
PakServices
FixedLineTelecommunication
PTCL
Electricity
HubPowerCompany
K.E.S.C.
KohinoorEnergy
Sec.P/E:7.49
KotAdduPowerCo.Ltd
GasWaterAndMultiutilities
SuiNorthernGasLtd
Sec.P/E:4.17
SuiSouthernGas
Banks
AlliedBankLimited
AskariBankLimited
BankAlHabib
BankAlFalah
BankOfPunjab
FaysalBank
HabibBank
HabibMetropolitanBank
MCBBankLtd.
MeezanBank
NationalBank
NIBBank
SoneriBank
StandardCharteredBank
Sec.P/E:7.69
UnitedBankLimited
NonLifeInsurance
AdamjeeInsurance
EastWestInsuranceCo.Ltd.
E.F.U.GeneralInsurance
IGIInsurance
NewJubileeInsurance
Sec.P/E:7.48
PakistanReinsurance
LifeInsurance
E.F.U.LifeAssurance
RealEstateInvestmentAndServices PacePakistanLimited
JahangirSiddiqui&Co
EquityInvestmentInstruments
PICICGrowthFund
SoftwareAndComputerServices
NetsolTechnologiesLimited
TechnologyHardwareAndEquipment PakistanTelephoneCables
Media
MediaTimesLtd.

Mkt.Cap Equity
(mln)
(mln)

Sh.O/S
(mln)

PAT
(mln)

22,430 3577.1
14,137 15238.1
5,734 4310.4
20,917 31376.3
15,099 6819.9
26,060 3602.1
1,619 1585.7
9,058 3912.5
14,515 10799.8
18,400 347.1
5,841 56416.9
4,635 22792.0
89,607 99389.6
43,544 29881.3
18,182 31300.9
2,966 7051.7
38,326 22494.7
10,521 18702.1
18,482 14072.3
53,339 35974.9
8,406 16004.0
24,943 16066.1
13,896 22305.5
3,242 3743.1
7,254 16517.8
129,295 89524.7
18,630 20308.1
173,912 79204.2
14,221 11080.0
88,716 128495.8
7,036 13662.8
3,861 8917.7
32,715 51073.1
79,376 68415.1
8,355 11035.0
7,441 338.2
4,750 10464.5
5,173 11575.9
4,570 2873.4
5,088 6785.7
5,557 1579.3
772 5194.4
5,580 10127.7
3,677 6937.2
1,654 3337.2
67 155.6
2,232 1365.1

31.6
310.5
18.1
351.6
61.6
255.5
50.5
97.9
196.4
32.0
2327.3
32.5
5100.0
1157.2
7451.6
169.5
880.3
549.1
839.0
860.3
707.0
878.6
1349.2
528.8
732.7
1102.1
1047.8
836.2
803.0
1681.8
4043.7
602.3
3871.6
1224.2
123.7
25.1
125.0
71.8
79.1
300.0
85.0
278.9
763.3
283.5
77.9
21.0
134.1

1151.6
3360.1
1858.5
2915.5
958.4
925.1
189.0
1176.9
1057.4
1.9
20785.1
427.9
9151.2
5556.1
14641.2
687.3
5089.1
2554.6
4399.1
8225.3
943.2
3602.2
968.5
10059.5
1190.3
15613.1
2818.0
16873.2
1649.6
17563.2
10112.1
125.4
3605.6
11159.9
2434.5
8.4
732.3
836.6
450.2
269.9
363.2
436.8
8983.8
551.7
951.9
107.4
73.6

EPS
(Rs)

MarketCap.(Rsm)
P/E(x)
DividendYield(%)
ROE(%)

19

Price
Weightage
31May Div.Yield(%)
(%)

36.5
19.5
710
10.8
4.2
45.53
102.8
3.1 317.27
8.3
7.2
59.49
15.6
15.8 245.19
3.6
28.2
102
3.7
8.6
32.05
12.0
7.7
92.52
5.4
13.7
73.9
0.1 9668.9 575
8.9
N.M
2.51
13.2
10.8 142.5
1.8
9.8
17.57
4.8
7.8
37.63
2.0
N.M
2.44
4.1
4.3
17.5
5.8
7.5
43.54
4.7
4.1
19.16
5.2
4.2
22.03
9.6
6.5
62
1.3
8.9
11.89
4.1
6.9
28.39
0.7
14.3
10.3
19.0 N.M
6.13
1.6
6.1
9.9
14.2
8.3 117.32
2.7
6.6
17.78
20.2
10.3 207.97
2.1
8.6
17.71
10.4
5.1
52.75
2.5
N.M
1.74
0.2
30.8
6.41
0.9
9.1
8.45
9.1
7.1
64.84
4.2
16.1 67.54
0.3
881.3
296
5.9
6.5
38
11.6
6.2
72
5.7
10.2 57.78
0.9
18.9 16.96
4.3
15.3 65.38
1.6
1.8
2.77
11.8 N.M
7.31
1.9
6.7
12.97
12.2
1.7
21.23
5.1
N.M
3.18
0.5
N.M 16.64

KSE100INDEX

N.A=NotAvailable,N.M=NotMeaningful
(**)Companieshaveequity,dividendyieldandPATof2009

P/E
(x)

1.90
4.39
0.00
7.56
1.02
3.28
7.80
5.40
5.41
0.00
0.00
0.00
9.96
13.29
0.00
14.29
11.48
10.44
6.81
6.45
0.00
7.04
0.00
0.00
0.00
5.54
0.00
5.53
0.00
14.22
0.00
0.00
7.10
7.71
3.70
0.00
0.00
4.17
3.46
17.69
7.65
0.00
13.68
15.42
5.89
0.00
0.00

12,123.15
2,872,523
9.34
5.24
19.54

0.78%
0.49%
0.20%
0.73%
0.53%
0.91%
0.06%
0.32%
0.51%
0.64%
0.20%
0.16%
3.12%
1.52%
0.63%
0.10%
1.33%
0.37%
0.64%
1.86%
0.29%
0.87%
0.48%
0.11%
0.25%
4.50%
0.65%
6.05%
0.50%
3.09%
0.24%
0.13%
1.14%
2.76%
0.29%
0.26%
0.17%
0.18%
0.16%
0.18%
0.19%
0.03%
0.19%
0.13%
0.06%
0.00%
0.08%

TaurusSecuritiesLimitedValueCall:May2011

KSE100STATISTICS

May31,2011
20Lowes tP/ExStocks
NetsolTechnologiesLimited
PacePakistanLimited
ThalLimited
DawoodHercules
IndusDyeing&Mfg.Company
PakElectronLimited
SuiNorthernGasLtd
SuiSouthernGas
IbrahimFibers
KohinoorEnergy
AttockCement
SecurityPapers
LottePakistanPTALtd.
NationalBank
IndusMotors
AlGhaziTractors
P.N.S.C.
PakistanStateOil
MureeBreweryCoLtd
InternationalIndustries

20LowestP/BVxStocks
1.74
1.77
2.31
2.35
3.09
3.61
4.12
4.20
4.21
4.31
4.74
4.93
4.99
5.05
5.06
5.22
5.25
5.37
5.93
6.08

PakElectronLimited
PacePakistanLimited
AzgardNineLimited
PakServices
JavedanCement
DawoodHercules
PackagesLimited
PakSuzukiMotors
D.G.KhanCement
KohinoorEnergy
PakistanTelephoneCables
SoneriBank
FaysalBank
LafargePakistanCement
IGIInsurance
E.F.U.GeneralInsurance
MureeBreweryCoLtd
NetsolTechnologiesLimited
NIBBank
P.N.S.C.

Top20EPSStocks (Rs )
0.14
0.15
0.16
0.20
0.29
0.34
0.35
0.37
0.38
0.42
0.43
0.43
0.44
0.45
0.45
0.45
0.49
0.50
0.51
0.52

UnileverPakistanLtd.
RafhanMaize
SiemensEngineering
IndusDyeing&Mfg.Company
NestlePakistan
BataPakistanLtd.
UnileverFoodsLtd
MillatTractors
PakistanStateOil
AttockPetroleumLtd
ThalLimited
AlGhaziTractors
IndusMotors
NationalRefinery
ColgatePalmolive
PakistanOilfields
DawoodHercules
ShellPakistan
ClariantPakistan
MCBBankLtd.

246.2
199.0
121.2
102.8
90.7
77.4
71.0
62.4
52.8
52.0
44.5
44.5
43.8
41.1
36.5
31.4
27.0
23.6
22.4
20.2

Top20ROEStocks (%)

Top20MarketCapStocks(Rsm)
UnileverFoodsLtd
108.18 OGDC
647,247
254,638
UnileverPakistanLtd.
91.94 PakistanPetroleumLtd
173,912
NestlePakistan
73.68 MCBBankLtd.
153,727
FaujiFertilizer
71.40 NestlePakistan
129,295
MillatTractors
54.49 HabibBank
118,539
FaujiFertiliserBinQasim
53.35 FaujiFertilizer
89,607
LottePakistanPTALtd.
46.73 PTCL
88,716
IndusDyeing&Mfg.Company
43.12 NationalBank
79,376
AttockPetroleumLtd
38.91 UnitedBankLimited
78,874
OGDC
37.60 PakistanOilfields
76,415
RafhanMaize
37.10 EngroCorporation
65,757
ColgatePalmolive
32.19 UnileverPakistanLtd.
53,339
SuiSouthernGas
31.26 AlliedBankLimited
48,638
PakistanStateOil
30.85 PakistanStateOil
43,544
AbbotLaboratories
30.08 HubPowerCompany
AlGhaziTractors
30.00 FaujiFertiliserBinQasim 40,008
38,326
BataPakistanLtd.
29.86 KotAdduPowerCo.Ltd
PakistanPetroleumLtd
29.18 StandardCharteredBank 32,715
29,171
ClariantPakistan
28.69 NationalRefinery
26,132
NetsolTechnologiesLimited
28.52 AttockPetroleumLtd

20

Top20Div.YldStocks(%)
PakistanReinsurance
PICICGrowthFund
FaujiFertiliserBinQasim
KohinoorEnergy
NationalBank
JahangirSiddiqui&Co
HubPowerCompany
MillatTractors
SecurityPapers
KotAdduPowerCo.Ltd
ICIPakistan
SuiNorthernGasLtd
PTCL
FaujiFertilizer
AttockCement
SiemensEngineering
AlGhaziTractors
ClariantPakistan
AttockPetroleumLtd
DawoodHercules

17.69
15.42
15.29
14.29
14.22
13.68
13.29
12.04
11.99
11.48
11.15
10.44
9.96
9.30
9.11
9.06
8.62
8.32
7.94
7.90

TaurusSecuritiesLimitedValueCall:May2011

KSE100SectorStatistics
OilAndGas
Chemicals
ForestryAndPaper
IndustrialMetalsAndMining
ConstructionAndMaterials
GeneralIndustries
ElectronicsAndElectricalEquipments
IndustrialEngineering
IndustrialTransportation
SupportServices
AutomobileAndParts
Beverages
FoodProducers
HouseholdGoods
LeisureGoods
PersonalGoods

P/Ex

ROE(%)

10.29
8.37
4.34
6.08
8.66
5.25
30.67
7.09
8.03
n.m.
7.34
5.93
26.16
3.61
n.m.
7.04

30.54
21.48
11.19
21.88
4.90
7.55
3.25
39.73
14.92
0.00
14.10
8.33
66.63
3.83
0.00
13.25

20Lowes tPEGStocks *

Top20Li quidSha res (m)

LottePakistanPTALtd.
JahangirSiddiqui&Co
AzgardNineLimited
BankAlFalah
NIBBank
BankOfPunjab
D.G.KhanCement
FaujiFertiliserBinQasim
NationalBank
ArifHabibCorporation
NishatMills
FaujiFertilizer
PakistanReinsurance
BycoPetroleum
OGDC
EngroCorporation
PTCL
PakistanOilfields
HubPowerCompany
TRGPakistanLimited

Tobacco
HealthCareEquipmentAndServices
PharmaAndBioTech
Media
TravelAndLeisure
FixedLineTelecommunication
Electricity
GasWaterAndMultiutilities
Banks
NonLifeInsurance
LifeInsurance
RealEstateInvestmentAndServices
FinancialServices
EquityInvestmentInstruments
SoftwareAndComputerServices
TechnologyHardwareAndEquipment
KSE100Index

6.24
5.60
4.67
2.35
2.25
2.24
1.78
1.61
1.52
1.50
1.46
1.31
1.23
1.16
1.14
1.04
0.91
0.88
0.85
0.77

DreamworldLtd
SecurityPapers
HabibMetropolitanBank
P.I.C.T
UnileverFoodsLtd
ShifaInternationalHospitals
RafhanMaize
AttockPetroleumLtd
EngroCorporation
PakistanCablesLimited
ICIPakistan
NetsolTechnologiesLimited
PakistanTobaccoCompany
AlliedBankLimited
MariGasCompanyLimited
ShellPakistan
IGIInsurance
AskariBankLimited
FaujiFertiliserBinQasim
IbrahimFibers
*growthtakenoverlast5years

21

P/Ex

ROE(%)

21.85
8.57
10.55
n.m.
53.59
9.79
7.49
4.17
7.69
7.48
15.30
1.77
n.m.
6.66
1.74
n.m.
9.34

18.07
11.92
15.19
0.00
1.86
9.21
12.49
21.22
14.51
10.99
23.00
8.41
0.00
7.95
28.52
0.00
19.54

10Highest/LowestRel.Perf.*
0.04
0.05
0.08
0.08
0.10
0.10
0.10
0.11
0.12
0.12
0.13
0.14
0.14
0.16
0.20
0.20
0.21
0.21
0.22
0.23

AzgardNineLimited
PakistanTelephoneCables
PakistanReinsurance
JahangirSiddiqui&Co
E.F.U.GeneralInsurance
P.I.C.T
E.F.U.LifeAssurance
BankOfPunjab
GraysofCambridgePak
TRGPakistanLimited
GharibwalCement
AgritechLimited
LottePakistanPTALtd.
NetsolTechnologiesLimited
IbrahimFibers
SiemensEngineering
BestwayCement
PakSuzukiMotors
PacePakistanLimited
PakServices

27.7%
27.2%
23.3%
23.3%
22.3%
21.2%
21.0%
20.9%
18.2%
10.5%
35.1%
14.4%
7.6%
7.1%
6.6%
6.3%
6.2%
5.6%
4.8%
4.8%

*Rel.PerfomancetakenoverMoM

TaurusSecuritiesLimitedValueCall:May2011

ECONOMICINDICATORS
NominalGDP(Rsbillions)
RealGDPGrowth(%)
LargeScaleManufacturingGrowth(%)
AgricultureGrowth(%)
MajorCrops:Wheat(mtons)
Cotton(mbales)
Sugarcane(mtons)
Rice(mtons)
ServicesSectorGrowth(%)

FY04
5533
6.4
18.2
2.2
19.5
10.0
53.4
4.8
6.0

Exports(US$millions)
Growth(%)
Imports(US$millions)
Growth(%)
TradeBalance(US$millions)
CurrentAccountBalance(US$millions)

12313
10.3
15592
27.6
(3279)
280

SBPForeignExchangeReserves(US$millions)
ExchangeRate(RsperUS$)
%change

10326
57.6
(1.6)

9578
59.4
3.1

10836
59.9
0.8

14333
60.6
1.3

8745
62.5
3.2

9527
78.5
25.5

13112
83.8
6.8

35.3
1979

35.8
2129

36.4
2337

39.5
2610

44.9
3275

51.1
3861

54.5
4653

537
543
899

501
778
850

500
941
882

553
1108
940

608
1637
1020

678
1904
1271

794
2399
1456

TaxRevenue(Rsbillions)
BudgetaryExpenditures(Rsbillions)
BudgetaryDeficit(%ofGDP)

510
899
2.3

590
1001
3.3

704
1196
4.3

840
1365
4.4

1010
1921
7.6

1252
2101
5.3

1483
2577
6.3

BorrowingforBudgetarySupport(Rsbillions)
CreditExpansion(%)
M2Growth(%)

63.7
23.7
19.6

60.2
22.2
19.1

70.9
16.1
15.1

102.0
14.2
19.3

519.9
29.3
15.4

305.6
15.4
9.6

304.6
12.7
12.5

4.6
6.0

9.3
11.1

7.9
7.8

7.8
9.4

12.0
14.2

20.8
22.7

11.7
13.2

TotalExternalLiabilities(US$billions)
DomesticDebt(Rsbillions)
ofwhich:
Permanent(Rsbillions)
Floating(Rsbillions)
Unfunded(Rsbillions)

ConsumerPriceIndex(FY91=100)
SensitivePriceIndex(FY91=100)
Source:SBPAnnualReports

22

FY05
6548
8.4
15.4
7.5
21.6
14.3
47.2
5.0
7.9

FY06
7195
5.8
8.3
6.3
21.6
14.3
47.2
5.0
6.5

FY07
8235
6.8
8.7
4.1
23.3
12.9
54.7
5.4
7.0

FY08
FY09 FY10A/P
9922 12082 13844
3.7
1.2
4.1
4.0
(8.2)
4.4
1.0
4.0
2.0
21.0
24.0
23.9
11.7
11.8
12.9
63.9
50.0
49.4
5.6
7.0
6.9
6.0
1.6
4.6

14391 16451 16976 19052 17688 19346

16.9
14.3
3.2
12.2
(7.2)
9.4
20598 28581 30540 39966 34822 34710
32.1
38.8
6.9
30.9 (12.9)
(0.3)
(6207) (12130) (13564) (20914) (17134) (15364)
(1070) (4990) (6878) (13874) (9261) (3495)

CORPORATEOFFICE
Suite#604,6thFloor,ProgressivePlaza,BeaumontRoad,Karachi,Pakistan.UAN:(021)111828787Fax:(92)02135686279
SyedZainHussain

ChiefExecutiveOfficer

AftabAfrozMahmoodi

ChiefFinancialOfficer&CompanySecretary

Ext:217

zain@taurus.com.pk
aftab@taurus.com.pk

ResidentVicePresident(GroupChief)
SeniorManager
SeniorManager
SeniorManager
SeniorManager
SeniorManager
Manager
Manager
Manager

35682690
35212946
35673390
35662817
35662731
35215952
35681420
35684228
35651128

asifjan@taurus.com.pk
aftab.alam@taurus.com.pk
mirfan@taurus.com.pk
feroz@taurus.com.pk
tauseefladak@taurus.com.pk
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khurram@taurus.com.pk
qulb.abbas@taurus.com.pk
fahed@taurus.com.pk

HeadofResearch&InvestmentAdvisory
SeniorEquityAnalyst
EquityAnalyst
EquityAnalyst
EquityAnalyst

Ext:202
Ext:203
Ext:202
Ext:202
Ext:203

salman@taurus.com.pk
saad@taurus.com.pk
m.ali@taurus.com.pk
nabil@taurus.com.pk
shuma ila.badar@taurus.com.pk

CORPORATESALES
MuhammadAsif
M.AftabAlam
M.IrfanSurya
FerozAhmed
TauseefLadak
MuhammadUsmanAnsari
KhurramRasheed
SyedQulbeAbbas
FahedFazal

RESEARCH
SalmanRasheed
SaadNajafAliSayed
MohammadAliGhanghro
NabilSaleh
ShumailaBadar

PESHAWARBRANCH

StateLifeBuilding,2ndFloor,24TheMall,PeshawarCantt.UAN(091)111828787Fax:(091)270063

AbdulBasit
M.Adeel
Saifullah

HYDERABADBRANCH

ResidentRepresentative
EquitySales Officer
EquitySales Officer

basit@taurus.com.pk
adeelahmed@taurus.com.pk
safiullah@taurus.com.pk

MezzanineFloor,GulCentre,FatimaJinnahRoad,CanttHyderabad.Ph:(022)92011979,Fax:(022)2786691

SarfrazM.Akhund
Farhana
AneelShaikh

URL:http://www.taurus.com.pk
Email:research@taurus.com.pk

ResidentRepresentative
EquitySales Officer
EquitySales Officer

sarfraz@taurus.com.pk
info@taurus.com.pk
anil@taurus.com.pk

AnalystCertification
We, Salman Rasheed and Shumaila Badar, the authors of this report, hereby certify that all of the views ex
pressedinthisresearchreportaccuratelyreflectourpersonalviewsaboutanyandallofthesubjectissuer(s)orse
curities.Wealsocertifythatnopartofourcompensationwas,is,orwillbedirectlyorindirectlyrelatedtothespe
cificrecommendation(s)orview(s)inthisreport.

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searchisobtainedorcompiledfromsourceswebelievetobereliable,Tauruscannotanddoesnotguaranteetheaccuracy,valid
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anyofitsaffiliates,directors,officersoremployees,noranythirdpartyvendor,willbeliableorhaveanyresponsibilityofany
kindforanylossordamagethatyouincur,orresultingfromtheactoromissionofanyotherpartyinvolvedinproducingthis
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agesofanykindevenifTaurusoranyothersuchpartyhasbeenadvisedofthepossibilitythereof.

TaurusSecuritiesLimitedorindividualsconnectedwithitmayhaveusedresearchmaterialbeforepublicationandmayhave
positionsinormaybemateriallyinterestedinthesecuritiesmentionedherein.

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SABSecuritiesLimited(UK)hasanAgreementwithTaurusSecuritiesLimited(Taurus)toexclusivelydistributeitsresearchglob
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