Oil & Gas Exploration: Earnings Drop 39% YoY on Absence of Tax Adjustment & Dry Wells – By IIS Research

Jan 22 2025


Ismail Iqbal Securities


  • We preview the IIS E&Ps universe, where 2QFY25 earnings are expected to decline by 39% YoY (down 1.1% QoQ). The YoY drop is largely due to dry wells during the quarter and a 13.8% YoY decline in international oil prices. Revenues are anticipated to contract by 13.3% YoY (down 6.7% QoQ), driven by PKR appreciation and lower hydrocarbon production. Stable USD/PKR parity in the quarter will result in the absence of FX gains, while lower interest rates are expected to reduce other income by 16.6% QoQ. On a YoY basis, however, other income is likely to rise 62%, as the base quarter included significant exchange losses.
  • Exploration expenses are projected to increase by 25.1% YoY due to dry wells by OGDC (Kandewaro-1) and PPL (Durug X-1). MARI also encountered a dry well (Zarghun South-5); however, since it is a development well, the cost will be amortized rather than expensed immediately. Additionally, the absence of one-off tax-related adjustments recorded during the SPLY will weigh on YoY earnings for OGDC and PPL, further exacerbating the decline. MARI’s earnings are expected to be impacted by higher royalty charges due to its lease extension, while POL will face pressure from lower oil prices, PKR appreciation, and slightly reduced hydrocarbon production.

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AirLink Communication Ltd ((AIRLINK): Innovation unplugged - By Foundation Research

May 27 2025


Foundation Securities


  • We initiate coverage on AirLink Communication Ltd. with an ‘Outperform’ rating and a Dec’25 TP of PKR 273.3/sh, implying a 67.8% upside. AIRLINK has established a strong position in the mobile manufacturing market through the local assembly of prominent brands including Xiaomi, Tecno, and Itel. The company has ambitious plans to expand its product portfolio further by venturing into the manufacturing of laptops, TV’s and EV’s.
  • Our positive outlook on AIRLINK is supported by (1) increasing broadband and smartphone penetration in Pakistan, (2) strategic expansion aided by a 10-year tax holiday, (3) rising market share of low budget smartphones, (4) diversification into laptops and TVs, (5) potential in Xiaomi smartphone exports, and (6) expanding horizons with EV’s. Despite growing competition, the company’s forward looking initiatives position it strongly to capitalize on untapped market opportunities.
  • Increasing broadband and smartphone penetration: Pakistan’s smartphone penetration (31%) is significantly lower than in neighboring India (47%) and other developing countries (avg: 54%) with a GDP per capita close to Pakistan’s. Similarly, smartphone penetration in South-East Asia stood at 79% in 2024, highlighting the gap and growth opportunity in Pakistan. Improved internet access and evolving popularity of social apps coupled with digitalization are likely to keep demand for smartphones robust in the near term.
Pakistan Economy: May-25 CPI likely at 2.7%, base effect wears off - By JS Research

May 27 2025


JS Global Capital


  • Pakistan's Consumer Price Index (CPI) is expected to clock in at 2.7% for May-2025. The base effect is now fading, signalling a return to normalized price trends. This is likely to take 11MFY25 average inflation to 4.7%, down from 11MFY24 average of 24.9%.
  • Due to the rapid disinflation during the year, our base case CPI forecast for FY25 averages 4.6%. The rolling 12-month forward CPI estimate stands at around 5.7%.
  • State Bank of Pakistan (SBP) reduced policy rate to 11% in the last MPC meeting, owing to rapidly declining inflation. A further rate cut of 50-100bps cannot be ruled out in the near future. SBP is scheduled next to meet on 16th June 2025 for its Monetary Policy Committee (MPC) meeting.
Morning News: IMF in disagreement over key targets, subsidies - By Vector Research

May 27 2025


Vector Securities


  • The Finance Ministry said on Monday that the presentation of the Federal Budget 2025-26 has been delayed from June 2 to June 10 due to disagreements with the International Monetary Fund (IMF) over key budgetary figures, including subsidy allocations.
  • Prime Minister Muhammad Shehbaz Sharif said that the bilateral trade between Pakistan and Iran which stood at $3billion would be taken to $10 billion volume in the next few years, as there was immense potential of growth. Prime Minister Shehbaz Sharif on Monday departed to Iran after concluding his two-day official visit to Turkiye.
  • Despite projected remittance inflows of $38 billion in the current fiscal year (FY25), Pakistan’s per expatriate remittance remains significantly lower than that of peer countries. “Although remittances have grown at a compound annual rate of 6.1 per cent from 2013 to 2023, per expatriate remittance remains low in comparison to other countries in the region,” said a report released by the Policy Research and Advisory Council (PRAC) on Monday.
Morning News: Budget features bold measures for ‘strategic direction - By HMFS Research

May 27 2025


HMFS Research


  • Finance Minister Muhammad Aurangzeb on Monday pledged that the upcoming federal budget would introduce “bold measures” to steer the national economy in a strategic direction and make available whatever support is required by the armed forces. Further said that every possible support would be provided to the armed forces, stressing that it was a national need in light of recent cross-border aggression, not just a military requirement. He said the government would ensure simplified tax returns and forms for the salaried class. He said that around 70 to 80 percent of salaried people did not hold equity and fixed-income portfolios. “They receive salaries through bank accounts with tax deducted at source. They should not have to fill in 140-150 data points,” he said, adding that the government aimed to reduce that number to just nine — five for wealth tax and four for income tax. He said the process would now be accelerated, with transactions involving Pakistan International Airlines (PIA), three power distribution companies and some financial institutions expected to reach completion by the end of this year.
  • The Finance Ministry said on Monday that the presentation of the Federal Budget 2025-26 has been delayed from June 2 to June 10 due to disagreements with the International Monetary Fund (IMF) over key budgetary figures, including subsidy allocations. “The budget announcement has been delayed by a week because the Finance Ministry’s figures are still under reconciliation. The IMF has placed a cap on subsidies,” he added. He further noted that the IMF has declined to make any changes to the revised budget figures recently presented to the Fund’s team.
  • The government is seriously considering reducing federal excise duty (FED) on beverages (aerated water) in the coming budget (2025-26) to attract foreign investment in this sector. Foreign investors including Turkish investors have promised more foreign direct investment in beverage sector in case of tax relief in the coming budget (2025-26). Leading global players with Turkish and Korean franchise investors have invested over USD 2 billion in Pakistan since 2018. However, no new investments have been made since 2023 due to the current fiscal environment. The industry contributes over Rs 175 billion in taxes annually (FED, GST, income tax, super tax) - one of the highest taxed sectors.
K-Electric (KEL): Transmission and Distribution Tariff Unveiled All three businesses now will get USD tariff - By Topline Research

May 26 2025


Topline Securities


  • In Seven months after securing dollarized tariff for generation business, the K-Electric (KEL) has also secured dollarized tariff for its transmission and distribution business for 7 years, i.e. from FY24 to FY30.
  • Distribution Business awarded USD ROE of 14%: NEPRA has awarded USD IRR of 14% to KEL for distribution business against requested USD IRR of 16.67%. The USD IRR of 14% translates into PKR ROE of 25.6% for Y1 (i.e. FY24). Which is better than previous tariff PKR return of 16.67%.
  • Transmission Business awarded USD ROE of 12%: NEPRA has awarded USD IRR of 12% to KEL for transmission business against requested USD IRR of 15%. The USD IRR of 12% translates into PKR ROE of 21.4% for Y1 (i.e. FY24). Which is better than previous tariff PKR return of 15%
Market Wrap: Highlights of the day May 26, 2025 - By JS Research

May 26 2025


JS Global Capital


  • The KSE-100 Index fell 0.8% to an intraday low of 118,150, as investor sentiment weakened due to the government's delay in presenting the federal budget and ongoing uncertainty surrounding IMF fiscal targets. The postponement of Budget 2025–26 and unresolved negotiations with the IMF are driving the risk-off behavior. Market direction remains contingent on clarity from upcoming IMF discussions and the budget announcement; volatility is likely to persist until fiscal policy details are finalized.
Pakistan Economy: OPEC’s aggressive output hike puts Pakistan in a sweet spot - By Insight Research

May 26 2025


Insight Securities


  • OPEC+ is expected to announce another output hike of 411 k bbl/day starting July, according to multiple news reports . During the group’s upcoming meeting on June 1st, members are likely to approve a production increase that is three times larger than the previously planned hike of 137 k bbl/day . If materialized, this move could add pressure to already struggling international crude oil prices, which have been weighed down by a weak global economic outlook.
  • Sources close to the group indicate that larger -than -expected output hike may be part of a broader strategy to bring as much as 2 . 2mn bbl/day back into the market by Nov’25 . The decision is widely seen as an effort, particularly by Saudi Arabia to regain lost market share and push high cost producers out of the market . Notably, Saudi Arabia’s market share has been on a declining trend since 2022 , following OPEC+ production cuts that reduced the cartel’s overall share in global oil supply . KSA’s market share declined even faster than the group’s average . The current strategy also appears to target non -compliant OPEC+ members, with Saudi Arabia leveraging its cost advantage to reclaim share from both shale producers and cartel members who are not adhering to quotas . Additionally, experts suggest a geopolitical angle to the move, particularly in the context of U . S . -Saudi relations . The Trump administration is reportedly keen on lower oil prices to curb inflation and restore market confidence especially due to tariff-induced uncertainty . On the other hand, Saudi Arabia is seeking deeper defense cooperation and has recently announced plans to invest US $600bn in US .
  • We believe that Saudi Arabia aims to capture market share from high -cost producers while maintaining some degree of control on prices through monthly OPEC+ meetings, as highlighted in group’s recent press releases . A sharp price decline would not be in KSA’s interest, especially considering its ambitious development plan .
Pakistan Economy: National Consumer Price Index (NCPI) - By AHCML Research

May 26 2025


Al Habib Capital Markets


  • Inflation in May’25 is expected to clock in at 3.0% YoY, up from 0.3% in Apr’25 and down from 11.8% in May’24, as base effects continue to fade. On a monthly basis, CPI is likely to decline by 0.6% MoM, posting the second consecutive drop, mainly due to a 2.3% fall in food prices amid improved supply of perishables. However, poultry shortages are expected to push egg and chicken prices up by 32.8% and 20.7% MoM, respectively.
  • The transport index is expected to decline by 0.7% MoM due to lower fuel prices, while the clothing and footwear index is projected to rise by 1.2% MoM.
  • On a YoY basis, food inflation is anticipated to ease to 0.9%, but non-food inflation is likely to remain elevated, led by healthcare (+12.5%), education (+10.4%), clothing (+9.9%), and restaurants (+8.4%).
K-Electric (KEL): NEPRA approves Multi-Year T&D Tariff for K-Electric - By Taurus Research

May 26 2025


Taurus Securities


  • NEPRA has approved Multi-Year Tariff for Transmission & Distribution (T&D) network segments of K-Electric for FY24- FY30. Salient features of the multi-year tariff approved by NEPRA are as follows:
  • Control Period: 7 Years, from FY24- FY30.
  • Allowed Debt-to-Equity Ratio: 70:30.
Pak Aluminium Beverage Cans Ltd (PABC): Exports outlook gets weaker; Reiterate Sell - By JS Research

May 26 2025


JS Global Capital


  • We tweak down our CY25E/CY26E EPS estimates for Pak Aluminium Beverage Cans Ltd (PABC) by 9% and TP by 4%. The revision is mainly led by the expected fall in volumes led by border issues with Afghanistan coupled with the upcoming capacity expansions in Central Asia, which may adversely impact PABC’s export prospects to the region. We reiterate our Underperform rating for the stock with a TP of Rs110.
  • Furthermore, any reduction in regulatory duty in the upcoming budget (from 22%-26% currently to 15% or less) given to the local industry, may create pressure on sales volumes from dumping of cheaper products in the country.
  • We consider resumption of dividend payout and announcement of any Capex or investment plan as key triggers for the stock going forward. To highlight, PABC stands at net cash position of Rs10.7bn (Mar-2025).
Fauji Fertilizer Limited (FFC): 1QCY25 Corporate Briefing Takeaway - By IIS Research

May 6 2025


Ismail Iqbal Securities


  • Fauji Fertilizer Limited (FFC) held its corporate briefing today to discuss the financial results of 1QCY25 and future outlook of the company. Key highlights of the briefing are follows:
  • To recall, in 1QCY25 FFC on standalone basis reported earnings of PKR 13.3bn (EPS: PKR 9 .33), up 26%YoY from PkR10.5bn (EPS: PKR 7.39) in SPLY. Along side the result, FFC announced an interim cash dividend of PKR 7.0/sh.
  • The company noted that growth in the agriculture sector slowed sharply to 1.2% in 1QFY25, down from 8.1% during the SPLY. This deceleration was driven by weaker farm activity and lower overall profitability. Farmers faced a significant decline in net income across key crops, particularly wheat and rice. The impact was further compounded by rising input costs and the transition from support prices to a free market system.
Habib Bank Limited (HBL): Corporate Briefing Takeaways - By IIS Research

May 2 2025


Ismail Iqbal Securities


  • Habib Bank Limited held its corporate briefing today to discuss the financial results of 1QCY25 and future outlook of the bank. The key takeaways of the briefing are listed below:
  • In 1QCY25, wherein the bank posted consolidated profit of PkR16.6bn (EPS: PkR11.3) for the quarter (up by 9.2%YoY/15% on QoQ). Further, the bank also announced interim cash dividend of PkR4.5/share.
  • Net Interest Income (NII) increased by 14% YoY to PKR58.1bn, driven by PKR454bn growth in average balance sheet. Despite ~1,000 bps KIBOR drop, margin impact remained limited due to only 15bps KIBOR compression. Non-Fund Income (NFI) rose 17% YoY to PKR17.6bn, led by cards, banking fees, and treasury gains. Treasury income was supported by capital gains on fixed income portfolio.
Pakistan Oilfields Limited (POL): EPS Clocked in at PKR23.3 – Inline with Expectations - By IIS Research

Apr 28 2025


Ismail Iqbal Securities


  • Pakistan Oilfields Limited (POL) has announced its 3QFY25 results, reporting a Profit After Tax (PAT) of PKR 6.6bn (EPS: PKR 23.3/share), down 47% YoY and 13% QoQ. The result is broadly in line with our expectations. However, a few deviations were noted: taxation turned out lower than anticipated, while exploration costs were higher than projected, slightly offsetting operational performance.
  • During 3QFY25, Revenue witnessed decline of 11% YoY, because of drop in hydrocarbon production and lower oil prices. Moreover, operating costs increased by 17% YoY and declined by 7% QoQ.
  • Exploration expenses increased by 3.5x YoY and 2.25x, possibly de to higher seismic activity during the qtr. Other income decreased by 28% YoY and 38% QoQ, due to decline in interest rates. Other charges decreased by 39% YoY and 22% QoQ.
Mari Energies Limited (MARI): Earnings Beat by Lower Than Expected ETR - By IIS Research

Apr 25 2025


Ismail Iqbal Securities


  • Mari Energies Limited (MARI PA) has announced its 3QFY25 profit of PKR 15.9bn (PKR 13.25/share), up by 13% YoY & 42% on QoQ basis. The result is above our expectations mainly due to lower than anticipated ETR.
  • Revenue fell 5% YoY (up by 10% QoQ) in 3Q, driven by lower oil prices. Royalty rose 2x YoY due to a 15% hike in MARI field charges amid lease extension from Nov’24.
  • Operating expenses declined by 27% YoY and 45% QoQ, mainly because of absence of amortization of dry well costs. Exploration expenses also decreased by 81% YoY and 22% on QoQ basis, mainly because of no dry well during the qtr.
Fatima Fertilizer Company Limited (FATIMA): Earnings Dip 39% QoQ on Lower Offtake - By IIS Research

Apr 25 2025


Ismail Iqbal Securities


  • FATIMA announced its 1QCY25 results today. On a consolidated basis, EPS came in at PKR 3.99 (our expectations of PKR 4.21). with Sales declining by 21% YoY and 40% QoQ to PKR 51.96 billion, primarily due to lower Offtakes. Despite this, gross margins remained better at 40% (vs. 42% YoY and 32% QoQ) indicating cost efficiencies as production levels remained largely consistent.
  • Inventory levels remain high, with FATIMA holding 233KT of urea, which accounts for 28% of the total industry stock, as well as 258KT of CAN, a product it produces exclusively within the industry. The overall industry continues to struggle with offtake, primarily due to reduced farm incomes following the shift from a crop support price regime to a free market system, while input costs have remained unchanged.
  • Finance costs rose sharply by 131% YoY, due to higher borrowings. The effective tax rate for the quarter stood at 39%, compared to 49% in the SPLY and 37% in the previous quarter.
Pakistan Economy: CPI expected at 0.8% in April'25 - By IIS Research

Apr 25 2025


Ismail Iqbal Securities


  • Inflation for Apr’25 is projected at 0.8%, sharply down from 17.3% in SPLY, indicating significant easing in price pressures. On a MoM basis, CPI is expected to decline by 0.29%, reversing the 0.89% increase in Mar’25. This drop is mainly driven by lower prices of Wheat, Eggs, Fresh fruits, Onions, and Tomatoes, leading to a 1.5% MoM decline in overall food inflation. The Housing index is also expected to fall by 0.8% MoM, despite rent adjustments, due to a reduction in the electricity index from negative fuel price adjustments in April.
  • Core inflation is projected to ease to 8.4% from 15.6% in SPLY, with urban core at 7.6% and rural core at 9.5%. The sharp decline is due to the high base effect and improved price stability. However, rural core inflation remains relatively elevated due to persistent challenges like supply chain inefficiencies and higher transportation costs in rural areas.
  • In its last meeting, the SBP maintained the policy rate at 12%, opting to pause after a cumulative 1,000 bps rate cut to evaluate its impact on inflation and overall macroeconomic stability. The MPC flagged persistent risks from elevated core inflation and possible upticks in food and energy prices. Meanwhile, the government raised the PDL by another PKR 8/liter, pushing the total to PKR 78/liter. The IMF has also stressed the need for continued monetary discipline, noting that the full effects of recent rate cuts are yet to be seen. Additionally, with the federal budget due in June, policymakers are likely to monitor its potential inflationary implications closely. Given these factors, we expect a status quo in the upcoming MPC.
Oil & Gas Exploration: Earnings to Dip on Lower Oil Prices and Production - By IIS Research

Apr 24 2025


Ismail Iqbal Securities


  • We preview the IIS E&Ps universe, where 3QFY25 earnings are expected to decline by 12.6% YoY, though improve slightly by 1.8% QoQ. The YoY drop is mainly attributed to a 6.5% fall in oil prices, reduced hydrocarbon production, and a rise in MARI’s royalty expense following a lease extension. Revenues are projected to contract by 13.4% YoY (flat QoQ), led by the decline in both oil prices and production volumes. Meanwhile, other income is likely to shrink 20.1% QoQ, driven by lower interest rates.
  • Exploration expenses are expected to decline by 67.8% YoY, mainly due to the absence of dry wells during the quarter and a high base effect stemming from a one-off impairment booked by MARI in the same period last year. On a QoQ basis, exploration costs are also lower. Although OGDC encountered a dry well (Chak 202- 2), it was developmental rather than exploratory, and its cost will be amortized accordingly. Operating expenses are projected to fall by 10% YoY and 15.6% QoQ, largely due to the absence of amortization-related charges recorded by MARI in the previous quarter.1
  • At the company level, we expect YoY earnings declines across most of E&Ps universe. POL’s earnings are projected to drop by 43.1% YoY, owing to a one-off tax allowance in 3QFY24. OGDC & PPL are also likely to post lower earnings, down 10.1% and 9.4% YoY, respectively, on account of weaker oil prices and lower production. MARI’s earnings, however, are expected to remain flat YoY, with the impact of higher royalty charges offset by a lower effective tax rate in base period.
International Steels Limited (ISL): Earnings drop 41% YoY on Lower Sales and Margins - By IIS Research

Apr 24 2025


Ismail Iqbal Securities


  • International Steels Limited (ISL) announced its 3QFY25 results today, reporting a PAT of PKR 417 million (EPS: PKR 0.96), compared to PKR 706 million (EPS: PKR 1.63) in the same period last year, down by 41% YoY, mainly due to lower sales and gross margins. However, earnings increased by 18% QoQ.
  • The company’s topline declined by 15% YoY and 24% QoQ to PKR 13.9 billion, primarily due to lower volumetric sales as cheaper imported material in the market made the company less competitive. Additionally, falling product prices further impacted revenue.
  • Gross margins stood at 8.6% in 3QFY25, declining 300 bps YoY due to a contraction in CRC-HRC spread, while improving 50 bps QoQ.
Maple Leaf Cement (MLCF): Earnings beat expectation on lower tax - By IIS Research

Apr 23 2025


Ismail Iqbal Securities


  • Maple Leaf Cement (MLCF) announced its 3QFY25 results today, where the company posted consolidated PAT of PKR 2.8bn (EPS: PKR 2.64) compared to PKR 1.5bn (EPS: PKR 1.44) in the same period last year, reflecting a 2x YoY increase. This strong performance was driven by improved gross margins and a lower effective tax rate.
  • The company’s topline grew by 4% YoY to PKR 16.6bn, mainly due to higher bag prices. However, revenue declined by 13% QoQ, owing to a 10% drop in total dispatches and a 5% QoQ decline in prices.
  • Gross margins stood at 36% compared to 30% in the same period last year, benefiting from an efficient fuel mix, increased use of alternative fuels and a decline in coal prices. On a QoQ basis, it declined by 400 bps.
Meezan Bank Limited (MEBL): Earnings Down 13% YoY; Dividend Maintained - By IIS Research

Apr 21 2025


Ismail Iqbal Securities


  • Meezan Bank Limited has announced 1QCY25 result, where the bank has posted unconsolidated earnings of PKR 12.28/sh, down by 13% YoY and 8% on QoQ basis. The result is inline with our expectations. The bank has announced interim cash dividend of PKR 7/sh.
  • Net spread income declined by 9% YoY and 15% QoQ, reflecting the impact of asset repricing concentrated in 3Q/4Q and the implementation of the Minimum Deposit Rate (MDR) for Islamic banks. Fee income rose 10% YoY but dropped 8% QoQ, while FX income surged 3x amid higher trade activity and volumes.
  • Operating expenses down by 7% YoY and increase by 11% QoQ. Bank also recorded a provisioning of PKR 1.86 billion in 1QCY25 vs. Reversal of PKR0.35 bn in SPLY.