Premium Textile Mills Limited (PRET): Corporate Briefing Takeaways – By AHCML Research
Dec 13 2024
Al Habib Capital Markets
- Net revenue grew by 19% YoY to PKR 27 billion in FY24, driven by a 17% increase in export sales and a 63% rise in local sales.
- Gross profit declined by 5% YoY to PKR 3,740 million, with gross margins contracting to 14% from 17% in FY23.
- Total finance costs surged by 37% YoY to PKR 3,071 million due to higher borrowing rates and increased long-term and short-term borrowings.
Annual Strategy: Market Strategy 2025 Inflation likely to remain in single digits for most of CY2025 – By Chase Research
Dec 20 2024
- Inflation expected to remain in single digits for most of CY2025.
- Central Bank to continue easing. We consider single digit interest rates a high possibility in 2025.
- Current Account should not present a challenge as improved remittances, recovering exports and administrative measures to keep balance in check.
- Pakistan Credit Ratings could improve in 2025 unlocking flows and strengthening PKR.
Tri-Pack Films Limited (TRIPF): 9MCY24 Corporate Briefing Takeaways – By Taurus Research
Dec 20 2024
Taurus Securities
- Tri-Pack Films Limited (TRIPF) is a subsidiary of Packages Limited which holds 69.3% of the Company. TRIPF produces Biaxially Oriented and Cast Polypropylene (BOPP & CPP) packaging films for food and beverage applications such as snacks, confectionery, dairy food, fresh cut vegetables, beverages etc., and non-food applications such as overwrapping, lamination, bag making etc. TRIPF has annual capacities of 78,000 tons for BOPP, 14,400 tons for CPP, and 32,600 tons for Metallizers.
- TRIPF boasts a product portfolio of 19 specialized films, these include: Low Sealing Temperature Film, Ultra Low Temperature Sealable Film, Tobacco Non-Coated Transparent Wrap, Anti-Fog Films, Perforated Film, Matt Film, In Mould Labels, Low Density Label Film, High Gloss Label Film, Broad Seal High Barrier, Ultra High Barrier Metallized Film, Heat Resistive BOPP Film, Cold Seal, BOPE, BOPP Super Barrier Film, CPP High Speed Lamination Film, Paper Bond Film, CPP Metallized Low Temperature Heat Sealable Film, and CPP Metallized High Barrier Film.
- As of 9MCY24, TRIPF’s revenue increased to PKR 21.8Bn compared to PKR 18.5Bn during the SPLY. Gross margin was recorded at 13% compared to 18% during the SPLY. The loss for the period was recorded at PKR 291Mn compared to a net profit of PKR 830Mn in the SPLY. The main reason cited for the loss during the year by the management was finance costs. Finance costs during 9MCY24 were recorded at PKR 1.7Bn compared to only PKR 700Mn in the SPLY. In addition to these, the gas tariff also increased by 110%.
Annual Strategy: Pakistan Market Strategy 2025 Breaking Barriers: KSE-100 Marches Toward 148K – By Sherman Research
Dec 20 2024
Sherman Securities
- Pakistan’s KSE 100 index is all set to generate total return of 40%, breaching 148k level during CY25. Market is expected to reach target PE of 8x in line with last 10-year average PE versus current PE of 6.1x. Target PE of 8x is justified considering Pakistan’s economic outlook as most of the indicators are in line with average of last 10 years.
- After meeting all the key performance indicators specially during last 2 years (maintaining primary budget surplus, tight monetary policy, energy sector reforms and regulating FX market), Pakistan is now looking at raising tax to GDP which is expected to be key performance criterion for timely disbursement under new IMF Program of US$7bn.
- With inflation to remain below historical average and lower risk to external accounts during IMF Program, we expect policy rate to remain around 10% during next 2 years. Considering ample institutional liquidity, we expect diversion of Rs1.2-1.5trn funds (40% of the free float of KSE-100 Index) during CY25 from fixed income to equity market. Not only this, stable currency and cheap valuations will induce Foreigners’ interest in Pakistan market as they have been net sellers so far.
Economy: Recent PSX rally led by local funds buying Thanks to the falling return on fixed income instruments – By Topline Research
Dec 20 2024
Topline Securities
- Pakistan Market since Sep 2024 to-date has returned 35% in both Rs and US$ terms, thanks to the strong net inflows of Rs58bn (US$207mn) of local mutual funds during the same period mainly due to conversion from fixed income to equities. In this note, we have tried to gauge the expected quantum of further liquidity market can receive due to conversion from fixed income to equities.
- The funds/investors are converting from Fixed income to equities as yields on fixed income instruments have fallen by 1253bps-1261bps from peak of 24.73% and 24.51% on 12M and 6M Treasury Bills in Sep 2023 to 12.20% and 11.9% on Dec 19, 2024.
- Equities will remain the preferred choice for investors: Unlike previous years where investors use to buy dollars, real estate, gold, prize bonds etc. for earning higher returns, we believe, in this cycle equities will get some portion of liquidity due to (1) higher restrictions on purchase of dollars, (2) increase in taxations, compliance and FBR valuation rates of properties, and (3) discontinuation of high denomination unregistered prize bonds.
Textiles: Increased imports vital for export growth – By JS Research
Dec 20 2024
JS Global Capital
- The United States Department of Agriculture (USDA) has raised cotton demand forecasts for India, Pakistan, and Vietnam, likely offsetting the projected decline in Chinese demand as Western importers continue diversifying their sourcing away from China and Bangladesh. Consequently, Pakistan's prospects for value-added exports, such as knitwear and ready-made garments, have improved, albeit at the expense of lower yarn exports to China.
- During 5MFY25, exports of knitwear, bedwear, and garments are up ~20% YoY while yarn exports are down 39%. On the other hand, Pakistan’s domestic cotton output is expected to fall to around 6-8mn bales (-36% to -17% YoY) due to 17% decline in cotton sowing area and lower crop yields.
- To meet the cotton requirement for the export demand, Pakistan is expected to import 5mn bales of raw cotton, costing ~US$2bn (at current avg import prices) compared to merely 1.2mn bales or US$0.45bn in FY24.
Morning News: Pakistan’s exports rise 9.06% in five months, imports edge up 1.06%: PBS – By WE Research
Dec 20 2024
- Exports from Pakistan increased by 9.06% in the first five months of FY2024-25, reaching Rs. 3,816,094 million, compared to Rs. 3,499,216 million in the same period last year. In November 2024, exports rose 7.17% year-on-year to Rs. 787,152 million. Key export commodities included knitwear, rice, readymade garments, and bedwear. Imports during July–November FY2024-25 totaled Rs. 6,248,611 million, a 1.06% increase from the previous year. November imports declined by 1.03% to Rs. 1,255,209 million. Key imports included petroleum products, LNG, palm oil, plastic materials, and mobile phones. Month-on-month, both exports and imports showed modest changes.
- Pakistan and China agreed to build an expressway linking Gwadar Port with the new Gwadar International Airport and initiate feasibility studies for new motorways, including the Mirpur-Muzaffarabad and Karachi-Hyderabad routes, under the China-Pakistan Economic Corridor (CPEC). The agreement was made during a meeting between Pakistan’s Federal Minister Ahsan Iqbal and China’s Vice Minister of Transport Li Ying in Beijing. Iqbal emphasized expediting major projects, including the KarachiHyderabad Section and ML-1 railway upgrade. He also proposed the Mashkhel-Panjgur Highway in Balochistan. Iqbal later met the President of the Export-Import Bank of China to discuss economic recovery and space projects. Both sides reaffirmed their commitment to strengthening the CPEC partnership for sustainable development and prosperity.
Technical Outlook: KSE-100; Testing the support range – By JS Research
Dec 20 2024
JS Global Capital
- The KSE-100 index witnessed another negative session, closing at 106,275, down 4,795 points DoD. Volumes stood at 1,167mn shares compared to 1,112mn shares traded in the previous session. The index is expected to test support at 105,937; a fall below this level will extend the decline towards 105,510, followed by 103,048. However, any upside will face resistance in the range of 107,980-110,040 levels. The Stochastic Oscillator and the RSI are heading down, supporting a corrective view. We recommend investors to stay cautious on the higher side and wait for dips. The support and resistance levels currently stand at 104,226 and 110,034, respectively.
Morning News: Pakistan, Türkiye Set Sights on $5 Billion Bilateral Trade Target – By Vector Research
Dec 20 2024
Vector Securities
- Prime Minister Mohammad Shehbaz Sharif held a bilateral meeting with the Turkish President Recep Tayyip Erdogan on the sidelines of 11th D-8 Summit in Cairo today
- The World Bank’s Board of Executive Directors is likely to approve “Sindh Flood Emergency Housing Reconstruction Project” worth $450 million on Friday (Dec 20), aimed at delivering beneficiary-driven, multi-hazard resilient reconstruction of core housing units affected by the 2022 floods in select districts of Sindh.
- Bangladesh’s interim leader Muhammad Yunus said Thursday he had “agreed to strengthen relations” with Pakistan, a move likely to further test his country’s frosty relations with India.
Morning News: Pakistan, Türkiye Set Sights on $5 Billion Bilateral Trade Target – By Darson Research
Dec 20 2024
Darson Securities
- Prime Minister Mohammad Shehbaz Sharif held a bilateral meeting with the Turkish President Recep Tayyip Erdogan on the sidelines of 11th D-8 Summit in Cairo today
- The World Bank’s Board of Executive Directors is likely to approve “Sindh Flood Emergency Housing Reconstruction Project” worth $450 million on Friday (Dec 20), aimed at delivering beneficiary-driven, multi-hazard resilient reconstruction of core housing units affected by the 2022 floods in select districts of Sindh.
- Bangladesh’s interim leader Muhammad Yunus said Thursday he had “agreed to strengthen relations” with Pakistan, a move likely to further test his country’s frosty relations with India.
Pakistan Petroleum Limited (PPL): Deriving value from improved cash positions –By Alpha - Akseer Research
Dec 19 2024
Alpha Capital
- We revise our stance to “Buy” on Pakistan Petroleum Limited (PPL) with our Dec-25 price target (PT) of PKR 278/sh, which projects a capital upside of 44% along with a dividend yield of 3.3%. The stock is currently trading at a discounted P/B of 0.7x along with a FY26 P/E of 5.6x against its historical 10-year average of 1.5x and 6.8x, respectively.
- Improved cashflow amid structural reforms: Under the IMF agreement, the Government of Pakistan implemented multiple price hikes to eradicate the longstanding issue of circular debt. Consequently, the gas system went from an OGRA estimated shortfall of PKR 171.2bn in FY24 to a projected surplus of PKR 78.9bn in FY25.
- Reko Diq – A tier-one asset ready to be realized: Reko Diq’s enormous copper and gold reserves yield a project NPV of USD 18.5bn, which may improve both PPL and Pakistan’s future prospects. Utilizing Barrick’s projections and timelines regarding the project, our base case for Reko Diq estimates a valuation impact around PKR 191bn (PKR71/sh) for PPL.
Premium Textile Mills Limited (PRET): Corporate Briefing Takeaways – By AHCML Research
Dec 13 2024
Al Habib Capital Markets
- Net revenue grew by 19% YoY to PKR 27 billion in FY24, driven by a 17% increase in export sales and a 63% rise in local sales.
- Gross profit declined by 5% YoY to PKR 3,740 million, with gross margins contracting to 14% from 17% in FY23.
- Total finance costs surged by 37% YoY to PKR 3,071 million due to higher borrowing rates and increased long-term and short-term borrowings.
Treet Corporation Limited (TREET): Innovations and Expansions Lead the Way – By AHCML Research
Dec 13 2024
Al Habib Capital Markets
- The latest financial statements reveal a steady performance by Treet Corporation Limited (TREET) amidst challenging economic conditions. The Group achieved a consolidated top-line growth of 4% compared to the same period last year, supported by pricing adjustments and strategic cost management. Although high inflation and geopolitical factors posed challenges, TREET’s strategic initiatives in innovation, export market expansion, and operational efficiency highlight its resilience and potential for recovery.
- In Sep’24, the Company introduced a new range of high-quality shaving foams, receiving an overwhelmingly positive initial market response. The Company plans to expand its portfolio with high-end shaving products, catering to both domestic and international markets.v
- The cashflow of the company is expected to be strong after successfully divested 11.3% of its shares in Treet Battery Limited (TBL), liquidating 99,977,721 shares as of November 30, 2024, reducing its stake to 85.76%. And approval of TBL’s PKR 2.0 billion of inter-company loans and interest into equity by issuing 200mn new shares at PKR 10 per share, subject to SECP approval, to strengthen TBL’s financial position.
Economy: Economic Stimulus Continue: Anticipating a 200bps Rate Cut – By AHCML Research
Dec 9 2024
Al Habib Capital Markets
- The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is scheduled on December 16, 2024, to announce the Policy Rate, we expect a modest 200 basis points reduction to 13.00%. This anticipation is underpinned by the significant deceleration in inflation to 4.9%YoY for Nov’24, coupled with the stable current account and improving forex reserves, driving the impetus for a easing monetary policy.
- The CPI witnessed a notable easing to 4.9%YoY in Nov’24, primarily attributed to the high base effect along with decline in food prices.
- Pakistan's current account posted a robust recovery as surplus recorded to USD218mn during 4MFY25, a substantial improvement from 4MFY24 of deficit of USD1,528mn.
Hinopak Motors Limited (HINO): Quarterly Report Highlights – By AHCML Research
Dec 2 2024
Al Habib Capital Markets
- Hinopak Motors Limited (HINO), a key player in Pakistan’s truck and bus assembly market, is positioned to benefit from the ongoing recovery in economic activities and improving financial conditions. Despite challenges in recent quarters, including rising finance costs, the company has demonstrated operational resilience.
- Key factors such as declining debt, falling interest rates, and increasing customer advances indicate a promising turnaround. Additionally, with GDP growth projected at 3.2% in FY25, HINO is expected to experience significant sales volume growth, reinforcing its long-term value proposition.
Commercial Banks: Boost from Corporate Deposits – By AHCML Research
Nov 27 2024
Al Habib Capital Markets
- State Bank of Pakistan (SBP) has clarified about the conventional banks that the minimum profit rate requirement on savings deposits will no longer apply to deposits from financial institutions, the public sector enterprises, and public limited companies (Effective from January 1, 2025). This regulatory shift grants banks greater flexibility in managing large-scale deposits’ cost, while existing guidelines for individual account holders remain unchanged.
- The reducing funding expenses. Corporate deposits accounted for ~53% of total banking sector deposits (PKR 14 trillion out of PKR 27 trillion) in CY23, with the sector’s average deposit cost hovering around 11%.
- The ability to negotiate deposit rates with corporate clients positions these institutions to optimize their funding structures and bolster earnings in the coming year.
Morning News: Govt weighs industry status for packaging sector – By AHCML Research
Nov 26 2024
Al Habib Capital Markets
- The government is reportedly considering granting industry status to packaging sector on the requests of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Government of Punjab and All Pakistan Corrugated Cartons Manufactures Association (APCCMA).
- The Federal Board of Revenue (FBR) is facing an uphill task for meeting tax collection target of Rs1,003 billion for November 2024 without taking additional taxation measures or mini-budget.
- The World Bank has indentified bottlenecks in Electricity Distribution Efficiency Improvement Project (EDEIP) and asked power Distribution Companies (Discos) to accelerate implementation of the corrective measures on the weaknesses identified by the Implementation Support Mission (ISM) on August 26-September 11, 2024.
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