Morning Briefing for Jun 13, 2012– Standard Capital

Karachi, Jun 13, 2012 (PPI-OT): Reminder about ‘top pick’ stocks in Pakistan market

Standard Capital normally has the penchant of reminding you about low PE stocks available at the Pakistan market.

According to Standard Capital, Pakistan market is at present embracing ‘red zone’ given potpourri of issues converging from government inability to introduce clear cut reforms due to ‘resource constraints’, variety of political drama that ranges from lack of clarity on supplies to NATO forces via Pakistan route to unfolding judicial ‘crisis’ and investor’s overall inability to adjust Capital Gains Tax (CGT) despite clarity envisaged in proposed finance bill. Pakistan’s fledgling economic numbers such as ballooning current a/c deficit plus inflation and depleting reserves provide nightmares to long term investors.

However, Standard Capital should see positive side of the picture since this is the time when investors grab ‘cherries’ when chips are down. This is the time to grab good picks that are growing on earnings and envisage low FY13E PE. Standard Capital believes that problems are there to be ‘rectified’ since government’s foreign minister is quite clear about giving NATO forces an access for resuming supplies from Pakistani route and just demanding an ‘apology’ from US on its unprovoked act of killing Pakistani border post soldiers. Moreover, Standard Capital sees finance bill proposed for FY13 is after all good for ‘cement sector’ consumption since ‘election year’ cost shall now be incurred which at least spur cement demand. A higher PSDP allocation of Rs 873bn is already in place and should be spent.

Standard Capital’s hot picks include LUCK which is churning out 100% utilization from Nooriabad plant and exporting to places such as India and Standard Capital expects them to come up with new line at the advent of next fiscal. Standard Capital also likes BAFL given new management’s proactive approach and overall earnings propensity. Standard Capital likes EFOODS (which Standard Capital has been trumpeting since IPO) and envisage a target PE multiple of 15x – 17x.

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