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Result Previews OGDC, ABL and UBL Wednesday April 22, 2015 OGDC ‐ BUY OGDC: 9MFY15 EPS estimated at PKR15.5 Target Price: PKR 240 Oil and Gas Development Company (OGDC) is scheduled to announce its 9MFY15 result on Thursday 23rd April, 2015. We expect the earnings to decline by 27%YoY to PKR66.8bn (EPS: PKR15.5) in 9MFY15 compared to PKR90.9bn (EPS: PKR21.1) in the corresponding period last year. In 3QFY15, PAT is estimated to decrease by 20% YoY to PKR18.9bn (EPS: PKR4.4) as against PKR23.7bn (EPS: PKR5.5) in 3QFY14. The result announcement is also expected to accompany an interim dividend of PKR2.0/sh, taking 9MFY15 cumulative payout to PKR6.5/sh. The lackluster trend in earnings during 9MFY15 can be attributed to 1) 14%YoY decline in topline, 2) 18%YoY higher operating and exploration expenses and 3) 5pps higher effective tax rate. During 9MFY15, flattish oil and gas production coupled with i) 29%YoY lower average oil prices and ii) 3% appreciation in PKR/USD remained the prime reason behind depressed topline to PKR164.4bn (down 14%YoY). On the expenditure side, we foresee operating expense to increase by 17%YoY to PKR38.9bn. Also, exploration expenditure will remain on the higher side at PKR8.3bn (up 23%YoY) on account of increased seismic activity and 3 dry wells written‐off in 1Q. On the flip side, other income is expected to increase by 8%YoY to PKR15.5bn on account of higher exchange gains at PKR1,254mn in 9MFY15 compared to exchange loss of 142mn in the same period last year. Given weak earnings outlook due to persistent delays in major development projects coupled with decline in production of old fields, near term upside in price will remain limited. At last closing, the stock is trading at FY15F and FY16F P/Es of 9.1x and 9.3x, respectively. Current Price: PKR 181 OGDC Performance 1M 3M 12M Absolute % ‐1%
‐12%
‐23%
Relative to KSE % ‐5%
‐9%
‐36%
Bloomberg OGDC.PA
Reuters OGDC.KA
MCAP (USD mn) 7,667
12M ADT (USD mn) 1.8
Shares Outstanding (mn) 4,301
ABL: 1QCY15 Earnings Preview ABL ‐ BUY Target Price: PKR 135 Current Price: PKR 113 ABL Performance 1M 3M 12M Absolute % 14%
‐1%
‐2%
Relative to KSE % 10%
2%
16%
Bloomberg ABL.PA
Reuters ABL.KA
MCAP (USD mn) 1,274
Allied Bank Limited (ABL) is expected to post NPAT of PKR3.7bn (EPS: PKR3.25) in 1QCY15, an increase of 14.7%YoY when compared with the earnings of PKR3.2bn (EPS: PKR2.83) in 1QCY14. Along with the result, the bank is likely to declare an interim cash dividend of PKR1.5/sh. Despite 200bps lower DR in 1QCY15, the bank’s earnings are likely to increase by 7%QoQ when compared with the earnings of PKR3.4bn (EPS: PKR3.02). The YoY increase in the earnings can primarily be a function of 27%YoY increase in Net Interest Income after provision to PKR7.4bn on the back of higher interest income from PIBs and lower deposit cost. On the flip side, the bank’s non interest income is expected to decline 2.3%YoY owing to lower dividend income due to divestment from mutual fund investments in 2HCY15. We reiterate our liking on the scrip due to i) unparalleled asset quality matrix and ii) conservative asset book. At current levels, we recommend a BUY call on the scrip with Dec’15 TP of PKR135/sh, offering a total return of 26% (upside: 19.5%, DY: 6.6%). ABL: 1QCY15E Financial Summary PKRmn 1QCY15E 1QCY14 YoY 4QCY14 QoQ NII after provisions 7,380 5,796 27.3% 6,708 10.0% Non Interest Income 2,729 2,793 ‐2.3% 2,676 2.0% Non Interest Expense 4,390 4,039 8.7% 4,419 ‐0.7% Profit Before Tax 5,719 4,550 25.7% 4,965 15.2% Muhammad Affan Ismail, CFA Profit After Tax 3,717 3,240 14.7% 3,459 7.5% muhammad.affan@bmacapital.com +92 111 262 111 Ext: 2058 EPS (PKR) 3.2 2.8 14.7% 3.0 7.5% DPS (PKR) 1.5 1.3 20.0% 2.0 12M ADT (USD mn) Shares Outstanding (mn) 0.4
1,145
Source: BMA Research Iqbal Dinani iqbal.dinani@bmacapital.com +92 111 262 111 Ext: 2059 ‐25.0% BMA Capital Management Ltd. 801 Unitower, I.I.Chundrigar Road, Karachi, 74000, Pakistan For further queries, please contact: bmaresearch@bmacapital.com or call UAN: 111‐262‐111 This memorandum is produced by BMA Capital Management Limited and is only for the use of their clients. While the information contained herein is from sources believed reliable, we do not represent that it is accurate or complete and should not be relied upon as such. Opinions expressed may be revised at any time. This memorandum is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned.
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Result Previews UBL: 1QCY15 Earnings Preview UBL ‐ BUY Target Price: PKR 216 Current Price: PKR 170 UBL Performance 1M 3M 12M Absolute % 14%
‐4%
‐3%
Relative to KSE % 10%
0%
‐17%
Bloomberg UBL.PA
Reuters UBL.KA
MCAP (USD mn) 12M ADT (USD mn) Shares Outstanding (mn) 2,054
2.8
1,224
The Board of United Bank Limited (UBL) is scheduled to announce 1QCY15 financial results on April 23’15. We expect UBL to declare 1QCY15 earnings of PKR6.3bn (EPS: PKR5.16), depicting a strong growth of 21.7%YoY compared to PKR5.2bn (EPS: PKR4.26) registered in 1QCY14. The result announcement is expected to accompany an interim cash dividend of PKR3.0/sh for the quarter. Despite monetary easing cycle during the quarter, the improvement in the earnings can be attributed to 32%YoY increase in Net Interest Income after provision to PKR12.7bn driven by 9%YoY expansion in Net Interest Income to PKR12.8bn on account of higher interest from PIBs and lower deposit cost (down 12%). Moreover, non‐funded income (NFI) is likely to register a meager growth of 4.0% to PKR5.3bn in 1QCY15 due to continued contribution from fee based income (up 6%YoY) and fx trading (up 14%YoY). That said, lower income from equities particularly capital gains (down 11%YoY) and dividend income (down 6%) is likely to restrict overall increase in NFI. On the flip side, administrative expenses are likely to increase by 13%YoY as against average inflation of 3.4% for 1QCY15 on account of higher staff cost and branch expansion. Given healthy fundamentals of the bank (strong core and non‐
core operations), we reiterate our BUY stance on the scrip with Dec’15 TP of PKR216 offering an upside of 27% along with DY of 7.3%. At last close, the stock is trading at Dec’15 P/B and P/E of 1.6x and 8.2x, respectively. UBL: 1QCY15E Financial Summary QoQ PKRmn 1QCY15E 1QCY14 YoY 4QCY14 NII after provisions 12,713 9,629 32.0% 12,796 ‐0.6% Non Interest Income 5,281 5,074 4.1% 4,766 10.8% Non Interest Expense 8,244 6,891 19.6% 8,308 ‐0.8% Profit Before Tax 9,751 7,812 24.8% 9,254 5.4% Profit After Tax 6,338 5,209 21.7% 6,077 4.3% EPS (PKR) 5.2 4.3 21.7% 5.0 4.3% DPS (PKR) 3.0 2.5 20.0% 4.0 ‐25.0% Source: BMA Research BMA Capital Management Ltd. 801 Unitower, I.I.Chundrigar Road, Karachi, 74000, Pakistan For further queries, please contact: bmaresearch@bmacapital.com or call UAN: 111‐262‐111 This memorandum is produced by BMA Capital Management Limited and is only for the use of their clients. While the information contained herein is from sources believed reliable, we do not represent that it is accurate or complete and should not be relied upon as such. Opinions expressed may be revised at any time. This memorandum is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned.
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