IN FOCUS Result Previews D.G. Khan Cement (DGKC): 1QFY15 Earnings Preview D.G. Khan Cement is expected to announce its 1QFY15 results on Oct24’14 where we expect the company to post earnings of PKR1,248mn (EPS:PKR2.85) as compared to PKR1,067mn (EPS: PKR2.44), representing a growth of 17% YoY. The growth in earnings can be attributed to an 86% decline in finance cost to PKR30mn due to consistent deleveraging. Local dispatches indicated a 10%YoY growth in 1QFY15 while exports declined 25%YoY thus keeping total dispatches flat. On a QoQ basis earnings are expected to decline by 38% primarily due to 1) an adjustment of PKR270mn in the preceding quarter relating to reversal of GIDC adjustment and 2) 12%QoQ decline in total dispatches due to seasonal slowdown. Allied Bank Limited (ABL): 9MCY14 Earnings Preview Allied Bank Limited (ABL) is scheduled to announce financial results for 9MCY14 on Oct 23’14. We expect the bank’s earnings to clock in at PKR11.2bn (EPS: PKR9.8) in 9MCY14, up by a notable 34%YoY. The robust growth in earnings is primarily due to i) higher net interest income at PKR21.2 bn (up 31.8%YoY) on account of margin expansion due to higher investment in PIBs and 78bps increase in average 6M KIBOR to 10.2% during the period, and ii) sturdy non-funded income of PKR8.7bn, up 20%YoY led by a 15%YoY increase in fee and commission to PKR2.6bn. On a quarterly basis, we expect the bank to post earnings of PKR4.0bn (EPS: PKR3.6), registering a growth of 5.8%QoQ. Along with the results, we also expect the board to announce third interim dividend of PKR1.5/sh taking cumulative 9MCY14 dividends to PKR4.25/sh. Going forward, the strategic shift in asset mix with higher PIB holdings along with a gradual uptick in the demand for private sector credit in the long run is likely to boost future earnings where we expect a 5yr bottom line CAGR of 13%. Thus, we continue advocating a Buy call on the scrip with a TP of PKR146/sh. At yesterday’s close, the stock is offering an upside of 16.6% alongside dividend yield of 4.5%. ABL currently trades at CY14F P/B and P/E of 1.9x and 10.0x, respectively. Report by: Sajjad Hussain Iqbal Dinani BMA Capital Management Ltd. (9221) 111 262 111 This report produced by BMA Capital Management Ltd. contains information from sources believed reliable; we do not guarantee that the matter is accurate or complete. Our Research Analysts compile this memorandum based on opinions and judgments, which may vary and be revised at any time without notice. This report 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. It is published for the use of our clients may not be reproduced, distributed or published by any person for any purpose whatsoever. Action will be taken for unauthorized reproduction, distribution or publication. The views expressed in this document are those of the BMA Research Department and do not necessarily reflect those of BMA or its directors.
Posted on: Tue, 21 Oct 2014 06:32:29 +0000
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