Karachi: Askari Bank Ltd (AKBL) is scheduled to announce its 9MCY11 result tomorrow.
According to AKD Securities, on an unconsolidated basis, they expects AKBL to post NPAT of PKR1,023mn (fully-diluted EPS: PKR1.45) in 9MCY11 against NPAT of PKR943mn (fully-diluted EPS: PKR1.33) in 9MCY10, translating into 9%YoY growth. AKD Securities does not expect any payout alongside the results. Key highlights of 9MCY11 results are expected to be 1) flat NII with mark-up suspensions countering strong asset expansion, 2) flat total provisions, 3) 18%Y0Y non-interest income growth, primarily due to higher fx income, and 4) contained 3%YoY increase in admin expenses in-line with management’s overall objective to consolidate profitability at the present level of operations. Having shed 37.2%CYTD (36.9% underperformance vs. the KSE-100 Index), AKBL trades at a CY11F P/B of 0.41x and PER of 5.1x. While risks remain (asset quality, capital strength), AKD Securities believes current valuations offer attractive risk-reward parameters. At current levels, AKD Securities’ target price of PKR1I .50/share offers an upside of 14% and implies an Accumulate stance. That said, AKD Securities will look to revisit its investment case for AKBL post release of detailed 9MCY11 results.
AGTL: 9MCY11 Result Preview
Al-Ghazi Tractors Limited (AGTL) is scheduled to finalize its 9MCY11 financial results tomorrow (results may be announced day after tomorrow as BoD meeting takes place at 3pm). AKD Securities expects the company to report NPAT of PKRI.25bn in 9MCY11E against NPAT of PKR1.34bn in 9MCY10, translating into a decline of 7%VoY. The result translates into an EPS of PKR29.11 in 9MCY11E against an EPS of PKR31.31 in the same period last year. Decline in earnings is expected to stem mainly from lower volumes (down 27%YoY to stand at 15,904 units in 9MCY11), as the tractor industry faced severe fallout on volumes, particularly in 3QCY11 (down 85%QoQ). However, as retention prices have remained constant, AGTL’s Gross Margin should remain flat at 19.4% in the review period. Consequently, Operating Margin should also remain constant at 17.9% in 9MCY11. Going forward, considering that the GoP has yet to address the tractor industry’s demands (particularly rationalization of GST) while rural income dynamics remain under pressure (fertilizer prices on a steep upward trajectory. cotton prices on the lower side), AKD Securities advises investors to remain sidelined in tractor scrips, at least in the near-term. That said, AKD Securities will look to revisit its investment case on AGTL post release of detailed 9MCY11 results.