Last updated on October 22, 2018


Initial Public Offering of Shares to High Networth Individuals and Institutional Investors through Book Building Mechanism

Published: February 2012
 The Initial Public Offering of Next Capital Limited will start with offer to High Networth Individuals and Institutional Investors through Book Building Mechansim. Bidding period is from 21st February 2012 to 22nd February 2012 (both days inclusive) from 9 A.M. to 5 P.M.

Research Reports

Investment Outlook

An undervalued turnaround play

Published: MAR 21 2018
We initiate coverage on Fauji Foods Limited (FFL) with a Buy recommendation and a Dec-18 TP of PKR 47 per share. The target price offers 52% upside potential.

Monetary tightening begins..Monetary Policy

Published: JAN 29 2018
MPC raised policy rate on Friday by 25 bps to 6.0%

Heightened Uncertainties to the fore -Pakistan Equity Market Strategy..

Published: JAN 24 2018
Pakistan equity market finally entered bearish mode in 2017, after multiple years of bull run, which also turned out to be the worst performing year since 2010. A 15.3% fall in KSE-100 index may not be a true representation of the overall correction as the index is calculated using total return methodology and contains past dividends as well. Some of the blue chip stocks lost as much as 40% during the year.

No respite as retail prices remain under stress

Published: JAN 03 2018
Wholesale cement prices have dropped to an average of PKR 475 / PKR 463 / PKR 508 / PKR 480 per bag in Peshawar / Islamabad / Lahore / Multan respectively

ENGRO: Looming risk of EFOODS impairment

Published: JAN 01 2018
ENGRO reclassified EFOODS from its subsidy to associate after selling majority of its stake in the company. Under accounting rules, partial disposal of an investment in a subsidy that results in loss of control requires re-measurement of the residual holding to fair value..

Foreign exchange cover running thin

Published: DEC 22 2017
Current account deficit for Nov-2017 clocked in at USD 1.4 billion, taking cumulative deficit for 5MFY18 to USD 6.4 billion (+91% Y/Y)

CRC/HDGC prices increased post PKR devaluation

Published: DEC 19 2017
Domestic manufacturers have raised the prices of both CRC and HDGC by PKR 3,000/TON each in response to recent PKR weakness..

Strategy-Pakistan weight may reduce in MSCI EM Index

Published: Nov 06 2017
Pakistan’s weight in the MSCI Emerging Markets (EM) Index may be reduced in the upcoming MSCI semi-annual index review on 13th Nov, 2017...

Economy-Seasonal dip in current account deficit

Published: Oct 23 2017
External account reported a current account deficit of less than a billion dollars for the second consecutive month in Sep-2017...

Oil Refining Sector Acute Challanges sentiment dampens

Published: Oct 20 2017
oil refining stocks have remained in the lime light since last yera on account of record profitability and commissioning of long awaited up-gradation projects as our refining index out performed...

Strategy-Investor sentiment dampens

Published: Oct 02 2017
Investor sentiment seems to have dampened as stock market macros remain clouded with political and economic uncertainties

Banking Sector-This Time is Different

Published: Sep 25 2017
Banking sector appears to be going through significant transition with consolidation pulling down number of banks operating in country while historic low intrest..

Ecnonomy-CAD drops to USD 550 million in Aug-2017

Published: Sep 20 2017
As per the latest data released by the central bank, current account deficit registered a massive decline of 73% M/M to USD 550 million in Aug-2017 with improvement visible in trade balance of goods and workers’ remittances..

POL sales growth boosting petroleum imports

Published: Sep 12 2017
Energy sales grew 11% Y/Y in 2MFY18 Latest energy data indicates an overall sales growth of 14% Y/Y to 2.5 million tons in Aug-2017

Pakistan Equities Strategy Every why has a wherefore…

Published: Sep 06 2017
A Sharp pullback off the peak certainly makes it quite a decent correction,Widening twin deficits pose serious macroeconomic risks that overshadow discounted valuations

Oil & Gas Exploration and Production: Unconventional finds crucial for sustainability

Published: Aug 29 2017
Balance crude oil and natural gas reserves edge down 4% and 2% respectively As per the latest reserves data released by PPIS, Pakistan’s crude oil and natural gas reserves edged down by 4% and 2% to 332 MN BBL and 20.8 TCF respectively during the last six months.

Investment Outlook: Sign of the times

Published: Jul 24 2017
KSE-100 has taken a decent correction, finally (!) Stocks now look quite oversold. However, investors mainly remain overly-focused on the domestic political scene. Though, the fact of the matter is that there are other headwinds on the way as well that could restrict any major upside from here. Essentially, we all need to realize we are now in a situation that’s more often called a “Bear Market”

Cement: Key risks on the horizon

Published: Jul 11 2017
Aggravating external account concerns in the shape of current account deficit widening by 132% Y/Y to USD 10.6 bn in 11MFY17 amid draining foreign exchange reserves raise question marks over sustainability of balance of payments position and thus stability of currency, which is widely considered to be overvalued in the range of 20-25%.

Leveraged exposure to PKR risk

Published: Jun 21 2017
With entire revenue base denominated in USD and major chunk of costs fixed in PKR, Exploration and Productions sector is set to emerge as the bigges tben eficiary of PKR devaluation where most of the sectors stand to lose.

Budget FY18: Widening Twin Deficits

Published: May 28 2017
The major highlight of FY18 federal budget is 37% jump in PSDP allocation to PKR 2.1 tn, which attempts to boost GDP growth rate by stimulating aggregate demand besides serving the purpose of attaining popularity closer to general elections.

EFERT-Dividend yield is the attraction

Published: May 10 2017
Re-pricing of 26mmcfd gas boosts earnings in 1QCY17 EFERT reported earnings of PKR 1.24/share for 1QCY17

Fiscal deficit set to breach target by a wide margin

Published: May 08 2017
Consolidated budget deficit reaches 3.7% in 9MFY17

BAFL-Improving fundamentals yet discounted valuations

Published: May 03 2017
BAFL declared 1QCY17 earnings of PKR 1.75/share, significantly above market expectations

SC verdict on Panama case yields a relief rally

Published: May 02 2017
While KSE-100 index remained under pressure, losing 1,282 points or 2.7%,

Current account deficit appears understated

Published: APR 20 2017
Current account records a deficit of USD 562 mn, including USD 200 mn CSF inflow

Reserves upgrade raises peak production potential

Published: APR 17 2017
Initiating with ‘BUY’ investment call and Fair Value estimate of PKR 2,750

Multiple risks to long term growth ahead

Published: APR 10 2017
As per the latest data, total industry energy sales growth eased 2.5% Y/Y to 2.1 million tons in Mar-2017.

Exports crucial to tackling urea inventory glut

Published: MAR 28 2017
Exports crucial to tackling urea inventory glut Urea inventory swells as demand weakens seasonally in Feb-2017

MPC maintains status quo-Policy

Published: MAR 27 2017
MPC maintains status quo-Policy rate kept unchanged at 5.75%

Growing need for non-debt financial inflows

Published: MAR 22 2017
Excluding CSF inflow, current account deficit stands at USD 1.1 billion for Feb-2017.

Pakistan Engineering HDGC duty imposition to keep ISL in the limelight

Published: FEB 09 2017
As per the latest news flow, in its final determination of anti-dumping duty on HDGC.

International Steels Limited-Expansion places ISL in pole position to capture demand

Published: FEB 02 2017
ISL’s announcement of increasing its CRC capacity to 1.0mn tons from 0.6mn tons is unequivocally.

Pakistan Engineering Result Preview 2QFY17: ISL expected to be the stand-out performer

Published: JAN 24 2017
We estimate NEXT?s steel universe earnings to jump by 127 Percent YoY/30Precent QoQ in 2QFY17 profitability of long rolled players ASTL and MUGHAL to rise by 12 Precent.

Pakistan Market Strategy 2017

Published: JAN 10 2017
Prepare for a Sideways Market Mostofthere-ratinghasalreadytranspired

Pakistan Oil & Gas Exploration & Production

Published: NOV 30 2016
OPEC production cut to balance oil market in 2017; prices likely to sustain near US$ 60/bbl

Pakistan Fertilizers Fuel tariff cut to neutralize impact of price discounts

Published: NOV 28 2016
The Economic Coordination Committee has approved a PKR 200/mmbtu cut in fuel gas prices. On a stand-alone basis...

Strategy-BAML Conference Takeaways- Strong buy-in to the consumption story, but skepticism remains on macros

Published: NOV 18 2016
In the Bank of America Merrill Lynch MENA & Pakistan conference held this week in Dubai, the key insight from our discussions with global fund managers was a keenness to play the Pakistan consumption...

Pakistan Fertilizers-Oct-16: Off-take surprises on the upside as pre-buying kicks in

Published: NOV 03 2016
As per our channel checks, total industry urea off-take clocked in at 455k tons in Oct-16 (+131% YoY), propelled by the onset of Rabi season and FFC’s decision to discontinue discounts on urea prices from Nov-16, resulting in pre-buying...

Rating Upgrade-Amidst political noise, S&P upgrade underscores economic progress

Published: NOV 01 2016
S&P has raised Pakistan’s long-term sovereign credit rating to “B” from “B-“ with a stable outlook, citing better growth prospects and macro-economic stability..

Pakistan Fertilizers-GIDC, adding up to the uncertainties

Published: OCT 27 2016
As per the latest news flow, Sindh High Court (SHC) has ruled against the application of Gas Infrastructure Development Cess (GIDC) on natural gas consumed by industries..

Pakistan Engineering-1QFY17: Higher effective tax rate to drag down profitability

Published: OCT 26 2016
We preview 1QFY17 earnings for the two major listed players in the long rolled steel product line Amrelli (ASTL) and Mughal (MUGHAL),..

Pakistan Fertilizers-Low base effect flatters to deceive; reiterate Underperform

Published: OCT 24 2016
We expect the profitability of Pak fertilizer universe to rise by 18% YoY in 3QCY16. Abnormally depressed off-take in the same period last year..

Pakistan Banks-3QCY16: Life after PIBs to begin with 16% dip in profitability

Published: OCT 18 2016
We estimate a 16% YoY earnings dip in 3QCY16 results for the Next banking universe,

Pakistan Oil & Gas Exploration & Production ,OPEC production cut to help balance oil market in 2017t

Published: OCT 03 2016
OPEC’s recent decision to bring down production to as low as 32.5mn BPD is likely to help balance the global oil market in 2017....

Grinding capacity enhancement to rest production concerns; expect overhang curtailment

Published: SEP 09 2016
As per our channel checks, Pioneer Cement (PIOC) has decided to increase its grinding capacity by 0.75mntpa at an estimated capex of PKR 800mn.....

Modest growth in 4Q profitability; super-tax to largely offset strong demand growth

Published: AUG 31 2016
We preview 4QFY16 earnings for our cement universe, where we expect a modest 6% YoY jump in profitability.....

Pak Banks valuations cheapest since 2009- time to load up

Published: AUG 25 2016
With the recently released MPS underscoring our opinion that the cycle of monetary easing has ended, we reiterate our liking for Pakistan Banks.....

Initiate with Buy; the only growth play in Pak banking sector relatively insulated

Published: AUG 22 2016
The only growth play in Pakistan banking; we expect MEBL to be a top 5 bank by 2020....

Discount on imported urea; Fatima most vulnerable, EFERT relatively insulated

Published: AUG 19 2016
The Economic Coordination Committee (ECC) has given permission to National Fertilizer Marketing Limited (NFML) to sell its inventory....

Escalated exploration activity to drag profitability in FY16

Published: AUG 16 2016
Profitability for Next E&P universe is expected to decline by 37% YoY in FY16 mainly due to 1) ......

2QCY16 profitability to decline 69% amidst soft demand!

Published: JUL 25 2016
Profitability of the Next fertilizer universe to decline 69% YoY in 2QCY16, mainly due to low urea volumes and poor margins on both urea and DAP. Super tax is also expected to curtail earnings......

From basket case to break-out nation!

Published: Jun 15 2016
Pakistan’s upgrade from MSCI FM to EM is a major liquidity event and should trigger significant rerating.The US$300-400mn of anticipated......

Budget FY 17

Published: Jun 06 2016
Budget FY 17 Agri and export initiatives to boost growth negative from a capital markets perspective

FCCL’s accident impact over-played; buy at PKR 35

Published: Jun 02 2016
FCCL’s Raw Meal silo for Line II collapsed over the weekend, causing collateral damage to the Coal Mill area. Our channel checks indicate that the capex requirement will be about PKR 1.25 bn.

SBP surprise cut to hurt banks with heavy CY16 PIB maturity

Published: May 23 2016
In a surprise move, the State Bank of Pakistan (SBP) reduced its policy rate by 25bps to 5.75% in its latest monetary policy decision announced over the weekend.

Dismal 1Q results expected as off-take plummets

Published: Apr 22 2016
We preview 1QCY16 results of the Fertilizer sector, where we expect profit after tax for the companies under review to cumulatively fall by 64% YoY.

Pakistan Cements Sector 3Q earnings to remain robust; tariff easing brings grid players to the limelight

Published: Apr 20 2016
We preview 3QFY16 results for Next cement universe, where we expect earnings to grow by 21% YoY; 9MFY16 earnings are expected to grow by 21% YoY as well.

Pak Banks valuations cheapest since 2009- time to load up

Published: Apr 18 2016
Pak bank valuations too cheap to ignore- UBL, HBL, and BAHL our top picks

Pakistan Oil and Gas Exploration and Production

Published: Mar 24 2016
Oil rally still has legs improving sentiment to trigger price discovery

“No change” in March-16 MPS will signal end to easing cycle

Published: Mar 24 2016
We expect “no change” when SBP announces its monetary policy (MPS) later this month, which in effect would signal the end of the monetary easing cycle that began in Nov-14.

Estimates revised on lower energy costs; better value in grid based players

Published: Mar 16 2016
Earnings and TPs revised on lower power costs; CHCC, PIOC and LUCK are our top picks We revise our earnings/TPs upwards for Next cement universe, with FY16 earnings estimates rising by 4-10% and TP revision in the range of 2-10%. Earnings revision largely hinges on major reduction in power costs on the back of lower oil prices; we have incorporated FO based power generation for players with the capacity to do so (DGKC, MLCF, KOHC), while revising downwards our grid tariff assumption for solely grid based players (CHCC, PIOC, ACPL). Other changes include revising our FY16 coal assumption to US$52/ton, from US$55/ton earlier, and upward revision of South FY16 local demand growth assumption to 17%, from 14% previously. Our top picks in the sector are CHCC, PIOC, and LUCK. Key rating changes include downgrading MLCF/ACPL to Neutral/Sell respectively, from a Buy previously. MLCF’s rating change is owing to strong price performance, whereas ACPL’s is due to the shelving of its coal power plant.

Pakistan Cement FO price decline to lead 2Q earnings surprise; grid based players to benefit the most

Published: Feb 10 2016
We preview 2QFY16 results for Next cement universe, where we expect earnings to grow by 17% YoY; 1HFY16 earnings are expected to grow by 20% YoY.

Pakistan Fertilizers Global overhang creates local buying opportunity; prefer EFERT and FATIMA

Published: Jan 26 2016
Astheglobalcostcurvecurrentlystands,webelievethesustainablefloorforureapricesisintherangeofUS$200-225/t.Wehadalsohighlightedthisinourreport NitrogenBubblemakeusBearish,downgradetoUnderweightreleasedon11thNov2015.

Pakistan Fertilizers 4QCY15: Margin attrition to overshadow strong offtake

Published: Jan 26 2016
We preview CY15 results of FFC and FFBL, where we expect profit after tax to fall by12%/30% YoY for FFC/FFBL respectively, owing to (1) margin attrition on the back of gas price hike and no urea price pass on, (2) lower other income, and (3) higher financial charges

Pakistan Market Strategy 2016 Debunking the myth of the cheap KSE

Published: Jan 11 2016

Urea off-take recovers in Nov; dealer discounts to hurt FFC

Published: Dec 09 2015
LProvisional numbers for Nov-15 indicate 615k tons of urea off-take, up 32% YoY, providing relief at last from the perspective of industry sales. FFC led the way by achieving YoY growth of 50%, followed by EFERT (17%). Even with a similar trend expected in Dec, full year urea off-take targets are likely to be missed, and thus we reduce CY15 earnings estimates for Next Fert universe by 7-14%

Domestic demand growth compensates for plummeting exports; estimates revised

Published: Dec 08 2015
Latest dispatches data for 5MFY16 shows local sales have surpassed our expectations, while the drop in exports is much steeper than estimates. Resultantly, we have revisited demand assumptions, revising earnings estimates for Next Cement universe in the range of -2-8%; TP’s change by -4 -23%.

Nitrogen bubble makes us bearish; downgrade to Underweight

Published: Nov 11 2015
We downgrade our stance on the Pakistan Fertilizer sector to Underweight from Market-weight, as increasingly bearish global urea price outlook will limit pricing power of local manufacturers, in our view.


Published: Sep 21 2015
We initiate coverage on Pakistan Cement Sector with an Overweight stance. Our investment thesis hinges on above consensus expectation of local demand growth which is expected to propel earnings, while margin growth now remains limited, in our view. Our top pick in the sector is Cherat Cement (TP: PKR117/sh).


Published: Sep 10 2015
Initiation- We initiate coverage on KTML with a Buy rating, and a Sum of the parts (SoTP) based valuation TP of PKR97/sh, offering an upside of 42% from current levels.

Role reversal in the sector EFERT our top pick

Published: Sep 04 2015
Initiation- In light of the long anticipated gas tariff hike and the subsequent urea price increase, we initiate our coverage on the Pakistani Fertilizer sector

Budget- FY16

Published: June 2015
GDP growth target for FY16 set at 5.5%. The last time GDP growth was at this level was in FY07. Long term sustainable GDP growth is targeted at 7.0% by FY18.

APL- Well Placed to Capitalize on Industry Tailwinds

Published: June 2015
We initiate our coverage on APL with a BUY rating (TP of PKR650), offering a 19% upside from current levels. Forward PEG ratio is only0.6; dividend yield is also attractive at 8%, and growing.

MPS- A twist in the tale

Published: May 2015
SBP effectively cuts policy rate by 150bp- Contrary to market expectations, the State Bank of Pakistan (SBP) announced its most aggressive monetary easing move of the last few years on Saturday, reducing the SBP policy rate effectively by 150 basis points (bp) to 6.5%.

OGDC -Top pick in Pak Oil and Gas Sector

Published: May 2015
Recent under-performer amongst E&P peers; OGDC now offers the cheapest valuation in both a bull and bear crude oil market.

Pakistan Banks- Buy when there is blood on the streets

Published: Published: March 2015
We initiate our coverage on the Pakistan banking sector with an Overweight stance. The recent fall in banking stocks (down 19% on avg. in the last two months) has created an excellent entry point, where P/Bs, P/Es and dividend yields are now at their cheapest in the last two years.

Macroeconomics - DR cut to 8.5%; sanguine prospects highlight more cuts ahead

Published: January 2015
The SBP in its monetary policy announcement reduced the discount rate (DR) by 100bp (to 8.5%) in line with our expectations. The DR has fallen to an almost 10 year low; levels below this were last seen in April 2005.
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Automobile Manufacturing Sector- Positives overplayed; Initiate with Under-perform

Published: January 2015
We initiate coverage on the Auto sector with an Under-Weight stance, and a Sell rating on INDU (TP of PRs 614), HCAR (TP of PRs 137) and PSMC (TP of PRs316). Our TPs imply significant downside from current levels for all 3 stocks

Pak Oil and Gas Sector- Heads I win, tails I do not lose much

Published: January 2015
Since our initiation on Pakistan’s E&P sector a month ago, the price of Brent Crude has fallen by almost 25%. Curiously, however, E&P stocks have bucked the trend, and have hardly declined over the period.

Independent Power Producers (“IPP’s”)-Not all yields are created equal

Published: January 2015
We initiate coverage on Pakistan’s Power sector with an Under-perform stance. IPPs have been major out-performers in the last 3 months, being seen as the most natural yield plays in a falling interest rate environment.

Investment Outlook- DR cuts largely priced into equity markets; prefer POL over IPPs

Published: December 2014
With falling oil prices having provided comfort on the external account and a sharp deceleration in inflationary pressures, we expect the discount rate to decline by 150bp (to 8.0%) by March-15, with a 100bp cut expected in the upcoming Jan 2015 MPS.

Pak Oil and Gas Sector- Heads I win, tails I do not lose much

Published: January 2015
Since our initiation on Pakistan s E&P sector a month ago, the price of Brent Crude has fallen by almost 25%. Curiously, however, E&P stocks have bucked the trend, and have hardly declined over the period..
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Independent Power Producers (IPP s) - Not all yields are created equal

Published: January 2015
We initiate coverage on Pakistan s Power sector with an Under perform stance. IPPs have been major out-performers in the last 3 months, being seen as the most natural yield plays in a falling interest rate environment.
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Investment Outlook- DR cuts largely priced into equity markets; prefer POL over IPPs

Published: December 2014
With falling oil prices having provided comfort on the external account and a sharp deceleration in inflationary pressures, we expect the discount rate to decline by 150bp (to 8.0%) by March-15, with a 100bp cut expected in the upcoming Jan 2015 MPS.
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Oil and Gas Exploration and Production Sector Crude Calling

Published: December 2014
We initiate our coverage on the Pakistan Oil and Gas sector with an Overweight stance, and a Buy rating on our top pick PPL (TP of PRs 230) and OGDC (TP of PRs 250).
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