Karachi, February 15, 2023 (PPI-OT): BAHL, MEBL, ABL and HUBC: Result Previews

BAHL – Expecting PkR5.9/sh in earnings for final quarter: Bank Al Habib Limited (BAHL) is slated to announce CY22 and 4QCY22 earnings later today, wherein we expect the bank to post NPAT of PkR6.6bn or PkR5.9/sh for the final quarter, higher by 23%QoQ and 37%YoY. This takes the full year earnings to PkR19.4/sh, higher by 15%YoY. The growth in the bank’s earnings is largely attributable to our expectation of a 6%QoQ/52%YoY increase in net interest income, expected to clock in at PkR21.5bn for the three-month period. Non-interest income is expected to drop by 23% sequentially to PkR4.6bn on account of lower FX income during the period. To note, the bank had posted FX income of PkR2.6bn or PkR2.3/sh in 3QCY22. We anticipate the bank’s deposits to grow by 21% over the course of CY22. Furthermore, as is customary for the bank, we expect BAHL to announce a cash dividend of PkR7.75/sh in the final quarter, compared to PkR7/sh paid out in the SPLY.

MEBL – 4QCY22 earnings expected to clock in at PkR6.6/sh: Meezan Bank Limited (MEBL) is scheduled to announce its 4QCY22 earnings tomorrow, wherein we expect the bank to post earnings of PkR11.8bn (EPS: PkR6.6) for the final quarter, higher by 3%QoQ and 34%YoY. Consequently, for CY22, we expect the bank to post earnings of PkR40.4bn (EPS: PkR22.6), higher by 42% compared to the SPLY. Our expectations of the healthy earnings growth is based on a 7%QoQ/61%YoY growth in net spreads earned, clocking in at PkR34bn for the final quarter. We expect earning’s spreads to clock in at ~6.4% for the quarter, compared to ~6.0% in the earlier quarter, on account of a majority of the investment portfolio held in variable GoP Ijarah Sukuks (~76% of total GoP Ijarah Sukuk holding as of Jun’22). Alongside the earnings, we expect the bank to announce a cash dividend of PkR2.25/sh for the final quarter, taking the full year payout to PkR7/sh, or 31% of total earnings for the year. MEBL is one of our top picks from the Commercial Banking sector, with a Dec’23 TP of PkR152/sh, offering an upside potential of ~60%.

ABL – 4QCY22 earnings expected at PkR4.6/sh: Allied Bank Limited (ABL) is expected to announce its CY22 and 4QCY22 earnings tomorrow, where we anticipate the bank to post earnings of PkR5.2bn (EPS: PkR4.5) for 4QCY22 and PkR17.8bn (EPS: PkR15.5) for CY22. The quarter’s earnings are expected to be lower by 10%QoQ, while higher by 21%YoY. The lower earnings during the final quarter are based on higher provisioning for the period, compared to the mere PkR53mn posted in the earlier quarter. Furthermore, earnings attrition for the quarter can be attributed to the 8%QoQ/28%YoY increase in operating expenses. Additionally, we expect the bank’s non-interest income to drop to PkR620mn in the final quarter, compared to PkR2.9bn in the earlier quarter – adding to the bottomline attrition in the final quarter. We expect ABL to also announce a cash dividend of PkR2.0/sh, taking the full-year payout to PkR8.0/sh, or 51% of earnings.

HUBC – 2QFY23 earnings to clock in at PkR7.6/sh: We expect The Hub Power Company Limited (HUBC) to post NPAT of PkR9.8bn (EPS: PkR7.6) in the second quarter of FY23, up 104%YoY/8%QoQ compared to PkR4.8bn (EPS: PkR3.7) in SPLY and PkR9.1bn (EPS: PkR7.0) in 1QFY23. We expect the company to post revenue of PkR18.5bn (-7%YoY/-37%QoQ) owing to no generation from the Hub plant in this quarter, while merely 19GWh were generated from the Narowal plant. The TEL plant came online in September and generated 504GWh in the quarter, contributing heavily to revenue. Due to the inefficiencies of the RFO based plants, gross margins are expected to improve to 65% for the quarter vs. the 33% recorded in the previous quarter. CPHGC and SECMC are expected to contribute PkR3.1bn to the earnings of HUBC in the quarter, remaining flat against the previous quarter as although CPHGC generated considerably lower power in 2QFY23, increased earnings are expected from SECMC owing to the completion of Phase II of its mine expansion. We expect the company to announce an interim dividend of PkR3.5/sh in the quarter, on top of the PkR15.5 announced earlier in the year, taking total payout for 1HFY23 to PkR19/sh. However, another bumper dividend can be announced if CPHGC receives another payout by CPPA-G.