BMA Today for May 18, 2018 
 
     FRIDAY 18 May 2018 
 
 

 

   

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At a Glance

Previous Market Session

Local Market    
 KSE 100 N.A N.A
 KSE T. Value PKRbn N.A N.A
 10YR PIB N.A N.A
 6M KIBOR N.A. N.A.
 PKR/USD N.A. N.A.
Asia Pacific    
 BSE SENSEX 30 N.A N.A.
 NIKKEI 225 N.A N.A.
 STRAITS TIMES INDEX N.A N.A.
 KUALA LUMPUR N.A N.A.
 JAKARTA COMP. N.A N.A.
 THAI SET 50 N.A N.A.
Middle East    
 DFM GENERAL N.A N.A.
 TADAWUL ALL SHARE N.A N.A.
 MSM30 INDEX N.A N.A.
 KUWAIT SE WEIGHTED N.A N.A.
 DSM 20 INDEX N.A N.A.
Global Markets    
 OIL (NYMEX) N.A. N.A.
 US 10YrBOND N.A. N.A.
 LIBOR6MTH N.A. N.A.
 FTSE 100 N.A N.A.
 DOWJONES N.A N.A.
 S&P 500 N.A N.A.
       
 
In Focus
Pakistan Engineering: Concerns overplayed; reiterate BUY!

   Recent softness in international margins has clearly emerged as a source of concern depicted in recent underperformance of flat-rolled steel stocks (-8%/-1.5% in 3M/6M relative to KSE-100). However we believe that the concerns have been overplayed. Developments on international front have weighed on the margins, however expected agreement of EU exports to US by month end would likely take off pressure from the margins, in our view. We contend that investors’ focus has been misplaced from meaningful protection available through antidumping duty which would likely protect local industry from adverse changes in int’l margin as local CRC prices still trades at PKR5-6k/ton discount to its imported counterpart. Comparing local CRC prices with average HRC price considering an inventory cycle of 3-4mths, CRC-HRC margins are expected to hover around USD68/ton, vs USD72/ton in 3QFY18, lending further support to our thesis. With massive underperformance, flat steel players are trading at implied CRC margins of USD53/ton, reflecting a steep discount of 22% to local margins. Hence, we reiterate BUY on ISL/ASL, with ISL as our top pick, trading at an attractive forward P/E of 5.2/9.2x, respectively.

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Media Watch

Sectoral: Miftah lauds role of Engro Foods in different successful projects / Business Recorder
Sectoral: PSO all set to scrap CoA with PNSC / Business Recorder
Economy: ECC considers proposal of ensuring tax exemptions at Gwadar Port Gwadar Free Zone / Business Recorder
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DISCLAIMER
This memorandum is produced by BMA Capital Management Limited and is only for the use of their clients. While the information contained herein is from sources believed reliable, we do not represent that it is accurate or complete and should not be relied upon as such. Opinions expressed may be revised at any time. This memorandum 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.