AKD Quotidian about – MEBL: 1QCY12 Result Preview

Karachi: MEBL is scheduled to announce its 1QCY12 result on Monday, Apr 16’12. On an unconsolidated basis, AKD Securities expects MEBL to post NPAT of PkR935mn (EPS: PkR1.03) in 1QCY12E against NPAT of PkR585mn (EPS: PkRO.65) in 1QCYI1, translating into a robust growth of 60%YoY but down by 15%QoQ.

According to AKD Securities, further upside to estimates may emerge if discretionary general provisions of PkR1 .175bn (EPS impact: PkRO.85) are reversed; however, AKD Securities expects management to retain a prudent stance. Key highlights for 1QCY12 are expected to be 1) robust 24%YoY increase in Net Mark-up Income, 2) 14%YoY decline in total provisions, 3) 25%YoY growth increase non mark-up income particularly on anticipated higher capital gains and 4) high admin expense growth of 20%YoY partly due to branch network expansion (23%+Y0Y increase in branches). On a sequential basis, an anticipated 15%QoQ decline in NPAT is largely due to tax reversals in 4QCY1I – on a pre-tax basis, 1QCY12 NPBT should be up by 16%Q0Q. On a sequential basis, AKD Securities expects 1) 3%QoQ decrease in Net Mark-up Income on tighter margins, 2) 13%QoQ increase in provisions as ageing effect was higher in 4QCY11 and 3) robust 52%QoQ increase in non mark-up income on higher investment income. Having gained 85%CYTD, MEBL trades at a CY11 P/B of 1.82x and PER of 9.2x. AKD Securities expects MEBL to continue trading at a premium relative to peers (high growth trajectory + superior asset quality) where AKD Securities will shortly look to revisit AKD Securities’ investment case.

KAPCO: 9MFY12 Result Preview
Kot Addu Power Company Limited (KAPCO) is scheduled to announce its 9MFY12 results on Tuesday, Apr 17’12. AKD Securities expects the company to post earnings of PkR4.2bn (EPS: PkR4.78) in 9MFYI2 compared to earnings of PkR5.25bn (EPS: PkR5.97) during the corresponding period last year, translating into a decline of 19.5%YoY. This expected decline is primarily on the back of maintenance project during 1HFY12. In 3QFY1 2 alone, AKD Securities expects earnings to stand at PkR1 .52bn (EPS: PkR1 .73) – an increase of 8.6%YoY/1%QoQ. Cumulative power generation in 9MFY12 is expected to stand at 4,454GWH (3QFY12: 1,58OGWH), translating into a load factor of 50.1%. Furthermore, higher interest payments by Wapda are expected to be offset by rising interest costs owing to short term borrowings to finance working capital requirements. Inline with historical trend, AKD Securities does not expect any dividend payout for 3QFY12. KAPCO has gained 5.8%CYTD (underperforming the KSE-100 Index by 15% in the process) where it now trades at a 9MFY12E annualized PER of 6.8x vs. the AKD Universe forward PER of 7.Ox. AKD Securities are currently in the process of reviewing AKD Securities’ financial model for KAPCO and will update investors shortly.