AKD Quotidian about — UBL: 1HCY13 Result Preview

Karachi, July 31, 2013 (PPI-OT): On a consolidated basis, AKD Securities expects UBL to post NPAT of PkR4.68bn (EPS: PkR3.82) in 2QCVI3, flat on a VoY basis but down by 4%QoQ.

According to AKD Securities this will bring 1HCYIS NPAT to PkR9.18bn (EPS: PkR7.50) in 1HCYI3 against NPAT of PkR9.39bn (EPS: PkR7.67) in IHCY12, translating into a marginal 2%YoY decline. Alongside the result, AKD Securities expects a cash dividend of PkR2/share, bringing 1HCYI3 dividends to PkR4/share.

Key highlights of upcoming IHCYI3 results are expected to be:

6%YoY decline in Nil due to slight NIM compression

A 10%YoY decline in total provisions

Strong 25%YoY non-interest income growth driven by higher fees, dividends and capital gains

Contained 7%YoY growth in non-interest expenses

Investment perspective: At current levels, UBL trades at a CYI3F P/B of 1.4x and P/F of 8.4x (CY14F P/B: 1 .3x, P/E: 7.7x, D/Y: 7.6%). In this regard, while KASB Securities Limited targets price of PkR1 20/share implies a Neutral stance, AKD Securities believes the stock’s recent 13% decline from its 52wk high of PkR1 37/share opens up opportunities for building fresh positions in the stock.

MCB: 1HCY13 Result Preview

With MCB likely having divested its stake in ULEVER as part of the latter’s buyback and delisting program, AKD Securities expects the bank to post consolidated NPAT of PkR6.l6bn (EPS: PkR6.09) in 2QCYI3 which would represent growth of 7%YoY/5%QoQ. As a result, consolidated IHCYI3 NPAT would come to PKRI2.O4bn (EPS: PkRII.90) vs. NPAT of PkR11.50bn (EPS: PKR11.37) in 1HCYI2, translating into 5%YoY growth. Alongside the result, AKD Securities expects a cash dividend of PkR3.5!share, bringing 1HCYI3 payout to PkR7/share.

7%YoY decline in NIl due to NIM compression

Net loan provisioning reversals of PkR726mn vs. provisioning charge of PkR408mn in 1HCY12

9%YoY non-interest income growth largely driven by capital gains

Contained 5%YoY increase in non-interest expenses

Investment perspective: With MCB likely to post relatively strong results in 2QCY13, stock price performance may remain buoyant in the near-term. That said, with the stock having already gained 43%CYTD to trade at a forward P/B of 2.4x and P/E of 12.7x (vs. a forward PIE of 8.3x for the broader market), AKD Securities would take any share price increase as an opportunity to exit. In this regard, KASB Securities Limited targets price of PkR225/share implies 18% downside. Reduce!

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