Pakistan Research

Monday, March , 2007 Fridayay,Oct. 01 21, 2007

VALUE SEEKER
A Daily Publication of InvestCap Research

Car Assemblers update & outlook post FY07

Car Assemblers Univ. Mkt. Cap (KSE): Top Pick(s): Sector Outlook: Rs65.4bn DFML PK Neutral to Positive Car Assemblers Univ. P/E (2008F): Car Assemblers Univ. Yield (2008F): Car Assemblers Univ. Earning Growth (2008F): 9.1x 2.9% 10.1%

Sales of local car assemblers of Pakistan consolidated during the last year. In todays Value Seeker, we have presented some positive and negative changes taking place during FYTD, which are going to affect the future direction of the auto industry.

Consequently, issuance of new auto loans is also on a declining path, which has reduced to Rs7.7bn in FY07 from 31.9bn in FY06.
Auto Loans vs Car Financing Rates
Change in Auto Loans (LHS) (Rs bn) 40.00 30.00 20.00 10.00 FY04A FY05A FY06A FY07A
Source: SBP & InvestCap Research

Interest Rates (RHS) (%) 20.00 15.00 10.00 5.00 -

Car sales improved by 22% YoY in Aug-07

During 2MFY08, locally assembled total car sales increased by 5.8% to 28.2k units from 26.7k units in the same period last year. This is mainly due to shut down of Pak Suzukis plant for maintenance. However, in August 2007, locally produced car sales improved by 22% on YoY basis.

AIDP provides a clear road map

The approval of Auto Investment Development Plan (AIDP) in FY08 budget, provides a long-term policy for car assemblers in every field i.e. capacity expansion, investment in new technology and protection of local car assemblers through import duty tariff structure.

Outlook: Neutral to Positive

Most of the above mentioned steps are positive for the local car assemblers except higher interest rates. Going forward, we foresee a 12-13% growth in car sales during FY08. Abdul Azeem azeem@investcapital.com +92-21 5215226-8 (ext. 209)

Low influx of imported cars

In the recent past, inflow of imported cars has slowed down by 53% from 5.8K to 2.7K for 2MFY08. This is mainly due to restriction on imports of more than 3-year old cars. Previously, the government had allowed import of upto 5year old cars. Therefore, upsurge in imported car prices is witnessed after this decision. This is a positive step for local car assemblers, importantly for Honda Atlas Cars and Dewan Farooque Motors.

Yen depreciated by 1.26% in 1QFY08

The favorable movement of Japanese Yen against Pak Rupee is also beneficial for the profitability of car assemblers, as sector is dependent on imported raw materials from Japan. During FYTD, Japanese Yen depreciated by an average of 1.26% against Pak Rupee on YoY basis.

Pioneers LAT forecast at Rs113mn (LPS: Re0.67)

For detailed result preview of Pioneer Cement, please refer to our Value Seeker titled Fauji Cement & Pioneer Cement: FY07 results previews dated Aug. 17, 2007.
PIONEERS RESULT PREVIEW
(Rs mn) Volume ('000 tons) Net Sales Gross Profit Fin. Charges NPAT EPS (Rs) DPS (Rs) FY07E 1,269 3,176 319 339 (113) (0.67) FY06A 837 3,076 1,231 197 676 3.98 1.00 YoY 52% 3% -74% 72% -117%

Imposition of 2.5% WT: Not a hurdle

Due to the government decision to impose Withholding Tax of 2.5% from September 01, 2007, the local car assemblers have increased car prices to pass on this impact to local consumers. However, WT would be adjusted in consumers annual tax filing, thereby having neutral impact for tax-paying customers.

Sharp rise in car financing rates

Due to State Bank of Pakistans tight monetary policy stance, car-financing rates went up to 15-16% during FY07.
Invest Capital & Securities (Pvt.) Ltd.
A corporate member of the Karachi Stock Exchange (Guarantee) Ltd. National Commodity Exchange Ltd. www.investcapital.com

Source: Company Reports & InvestCap Research

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Pakistan Research
Monday, Oct 01, 2007

VALUE SEEKER
A Daily Publication of InvestCap Research

KARACHI STOCK MARKET STATISTICS

LAHORE STOCK MARKET STATISTICS

INTERNATIONAL EQUITY MARKETS

(Sep. 28, 2007)

KSE-100 Index Change in points % Change from last closing YTD% (Since 29-Dec- 06) KSE-30 Index Change in points % Change from last closing YTD% (Since 29-Dec- 06) FYTD SCRA position, (US$ 000) 28-Sep-07 13,351.79 23.66 0.18% 32.98% 16,183.09 33.28 0.21% 29.24% (4,624.96)

(Sep. 28, 2007)

LSE-25 Index Change from last closing % Change from last closing YoY% YTD% (Since 29-Dec- 06) Hi for 2007 (08-Feb.) Lo for 2007 (03-Jan) Average for 2007 4,582.48 15.19 0.33% 2.95% 12.51% 4,952.32 4,081.83 4,517.58 US (Dow Jones)

(Sep. 28, 2007)

Index 13,896 2,702 27,142 16,786 3,706 17,291 6,467 7,833 Chg.(%) YTD% -0.12% 11.49% -0.30% 11.85% 0.29% 35.95% -0.28% -2.56% -0.23% 24.13% 0.82% 25.42% -0.30% 3.95% -0.45% -1.26%

US (Nasdaq) Hong Kong (Hang Seng) Japan (Nikkei) Singapore (Straits Times) India (BSE-30) UK (FTSE) Saudi (TASI)

KSE Market Capitalization

Market Cap. (Rs. bn) Market Cap. (US$ mn) % Change from last closing % Change from last month YoY% YTD% (Since 29-Dec- 06) Hi for 2007 (Rs bn) (13-July) Lo for 2007 (Rs bn) (03-Jan) Average for 2007 (Rs bn) 4,101.06 67,562.75 0.39% 16.82% 40.85% 47.99% 4,203.44 2,772.39 3,525.57

LSE Market Capitalization

Market Cap. (Rs. bn) Market Cap. (US$ mn) % Change from last closing % Change from last month YoY% YTD% (Since 29-Dec-06) Hi for 2007 (Rs bn) (13-July) Lo for 2007 (Rs bn) (03-Jan) Average for 2007 (Rs bn) 3,909.64 64,409.28 0.37% 15.96% 40.89% 47.30% 4,026.18 2,662.11 3,385.54

Key Interest Rates

KIBOR (1 Month) KIBOR (3 Month) KIBOR (6 Month) Discount Rate 6-mth T-bill (Last auction Cut-Off) 12-mth T-bill (Last auction Cut-Off) Inflation (CPI) 12-months moving avg. 10-Year-PIB (Last auction Cut-Off) 10-Year US Treasury

(Sep. 28, 2007)

9.58% 9.71% 9.97% 10.00% 9.14% 9.40% 7.67% 10.35% 4.58%

KSE Market Turnover

Vol. traded (Share mn) Val. traded (US$ mn) Futures Volume (Share mn) 1 year Avg. Daily (Share mn) 1 year Avg. Daily (US$ mn) 1 year Avg. Daily Futures Vol. (Shr. mn) 163.47 272.36 74.72 232.03 370.51 63.29

LSE Market Turnover

Vol. traded (Share mn) Val. traded (US$ mn) Futures Volume (Share mn) 1 year Avg. Daily (Share mn) 1 year Avg. Daily (US$ mn) 1 year Avg. Daily Futures Vol. (Shr. mn) 14.36 25.29 0.00 33.75 51.58 0.033 Overnight 30 Days 90 Days 180 Days 365 Days

Pakistan Money Market Rates

Inter-Bank (%) High 9.90 9.25 9.25 9.40 9.70 Low 8.80 9.15 9.15 9.20 9.30 Avg. 9.35 9.20 9.20 9.30 9.50

Board Meetings
Date
Tri Pack Films Ltd. Unilever Pakistan Ltd. Packages Ltd. 24-Oct-07 25-Oct-07 25-Oct-07

KSE CFS & Futures

CFS Rate (%) Oct. Futures Spread (%) CFS Investment (Rsbn) Total Futures Open Interest (Rsbn) 11.12% 3.15% 50.58 10.80

Major Currency Rates

Interbank
Rs/Euro Rs/Sterling Rs/Yen 85.98 124.05 0.5258

YoY%
11.7% 8.6% 2.1%

KSE Key Companies Statistics

Price

Major Commodity Prices

Current
Crude Oil NYMEX (US$/bbl) Gold 24cr (Rs/10gm) Khi. Urea Fertilizer (Rs/Bag) Furnace Oil (Rs/Ton) High Speed Diesel (Rs/Liter) KCA Cotton (Rs/maund) Cement Rs/Bag (Lahore) 81.66 14,245 535 28,687 37.73 2,825 225

US$ Vs PakRs
YoY%
30.1% 18.8% -0.9% 40.4% -2.6% 23.6% 21.6%

YTD

PER
10.8 17.1 13.2 10.9 9.7 11.8 10.5

Div. Yield
7.83% 3.81% 5.82% 4.14% 4.85% 7.62% 2.87%

Rs. / US$
Inter Bank Rate Kerb (Open Market) Overnight 1 Month 3 Month 6 Month

Bid
60.70 60.65 60.70 60.89 61.29 61.90

Offer
60.72 60.70 60.71 60.91 61.31 62.00

YoY%
0.17% 0.08% 0.25% 0.35% -0.36% 0.76%

OGDCL P.T.C.L.A P.S.O. Pak. Petroleum Pak Oilfields Fauji Fert. National Bank

115.00 0.3% 52.50 18.5% 360.55 22.6% 266.00 14.7% 309.50 -11.5% 115.00 9.0% 244.00 27.7%

Note: PER & Div. Yield on InvestCap CY07 / FY07 Expectations

Data compiled by Akhtar Nawaz Equity Sales: Amyn Nasiruddin, Fahed Fazal, Noureen Moin, M.Irfan Ali Tel +92 (21) 5215226, 5211690, 521509 9 Money Market Sales : +92 (21) 5210898, 5215879, 5215093 Commodity Broking: Ali Kazmi +92 (21) 5215572

Islamabad Peshawar

+92 (51) 2825904 +92 (91) 5276028

This report is for information purposes only and we are not soliciting any action based upon it. The material is based on information we believe to be reliable but we do not guarantee that it is accurate and complete. Invest Capital & Securities (Private) Ltd. will not be responsible for the consequence of reliance upon any opinion or statement herein or for any omission. This report or any part of it may not be reproduced or published without prior permission .

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