Tax On Reserves

REP-300
Revenue collection measure

Tax on reserves of corporates
27-May-2023
Best Securities House: 2022

Best Investment Bank: 2022 Best Investment Bank: 2022 Best Equity House: 2022 Best Equity Advisor: 2021
Tahir Abbas
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Corporate Finance House: 2022
F: +92 21 32420742 Best Economic Research House: 2022 Top 25 Companies Excellence Award Best Money Market Broker
E: tahir.abbas@arifhabibltd.com
Best Equity Research Analyst: 2022 (2019, 2018 & 2017) Leading Brokerage House for RDA 2021
1
(Islamic) 2021
Introduction: Potential tax levy on undistributed profits
 Given the enormous tax revenue target of PKR 9.1tn for FY24, the government is contemplating the imposition of new
taxation measures in the upcoming budget.
 In this regard, one of the proposals is to impose a tax on the undistributed profits (reserves) of corporates to the tune of
5% for listed companies and 7.5% for unlisted companies.
 Pertinently, this tax will be adjustable for the shareholder against the advance tax paid on future dividends by the
company.
 Below is the sensitivity with four potential scenarios and their revenue impact for the government.
Exhibit: Tax Collection Sensitivity

PKR bn Tax percentage
Total Reserves* 5.0% 7.5% 10.0%
All Companies 6,577 329 493 658
Companies not paying dividends
Not paid dividends since last one year 1,192 60 89 119
Not paid dividends since last two years 645 32 48 65
Not paid dividends since last three years 519 26 39 52
Source (s): Company Financials, AHL Research *latest available financial statements
2
There are precedents for such a tax measure
 To recall, a taxation measure was introduced in 2017, whereby if 20% of the profits were Exhibit: Historical Payout Ratio of KSE100 Index
not distributed, a 5% tax was imposed on the accounting profit before tax for the year.
60%
 Prior to that, in 2015, a taxation measure was introduced whereby if 40% of earnings or 57%
50% of paid-up capital (whichever is lower) were not distributed, a levy was imposed at 55%
55%
52%
the rate of 10% on the reserves which are in excess of 100% of paid-up capital. This 52%
measure faced legal implications and because of that, it was modified in 2017. 50%
48%
45% 44%
Legal implication on retrospective or prospective undistributed profits? – It is yet to
42%
be seen
40%
 Under the current circumstances, it is yet to be seen whether the imposition will be on a 37%
retrospective basis whereby those companies that have failed to distribute profits in prior 35%
years will be penalized, or only those that will not distribute profits in the forthcoming year.
 It is likely that any levy on retrospective years’ reserves may have legal implications as it 30%
2015 2016 2017 2018 2019 2020 2021 2022
is the discretion of the shareholders and sponsors to decide how to utilize the reserves for
either growth or distribution purposes. Source (s): PSX, AHL Research
 Moreover, as the proposed tax is advance tax paid on future dividends it may be difficult
to implement as shareholders may change in the future.
3
Proposals
 The two likely proposals in the upcoming budget pertaining to reserves would be:
1. Tax on companies that have not distributed profits recently (1, 2, or 3 years; timeline yet to be decided), and
2. Tax on undistributed reserves of all companies across the board.
 In the first case, there is a likely scenario that if a company has announced a 20-40% payout of its earnings or its paid-
up capital, or commits to such a distribution either through dividend or bonus, it will be able to avoid the aforementioned
tax. However, failure to do so will result in a tax being imposed on the existing reserves (difference in the minimum
payout of 20% or 40% and actual payout).
 While in the latter case, it has been proposed that a flat tax will be imposed on the undistributed reserves of all
companies, irrespective of any precedent or expected announcement of payout.
 We view that the first scenario would be more likely where the additional tax would be imposed on the current year
accounting profit contingent to dividend or bonus distribution (recall 2017 taxation, discussed on slide 3), while the latter
would have very high chances of legal implications.
4
Companies at the PSX have been quick to react Exhibit: Corporate Actions regarding increase of Authorized Capital
Ticker Company BM Date Corporate action
 Given the looming threat of a hit from the aforementioned levy, listed AICL Adamjee Insurance Company Ltd. 26-May-23 increased authorized capital from 3.7bn to 30bn
companies have either already announced an increase in their NML Nishat Mills Ltd. 26-May-23 increased authorized capital from 11bn to 90bn
TGL Tariq Glass Industries Ltd. 26-May-23 increased authorized capital from 5.0bn to 15bn
authorized capital (to potentially offer bonus shares to existing
GATM Gul Ahmed Textile Mills Ltd. 14-Jun-23 To increase authorized capital from 7.5bn to 50bn
shareholders), or they have announced an EOGM / emergent board ISIL Ismail Industries Ltd. 16-Jun-23 To increase authorized capital from 2.5bn to 17.5bn
meeting scheduled in the upcoming days. Please find these Ticker Company BM Date Corporate action
KTML Kohinoor Textile Mills Ltd. 27-May-23 To increase authorized capital
companies highlighted in the table at right.6
MLCF Maple Leaf Cement Factory Ltd. 27-May-23 To increase authorized capital
PRET Premium Textile Mills Ltd. 27-May-23 To increase authorized capital
SAPT Sapphire Textile Mills Ltd. 29-May-23 To increase authorized capital
RCML Reliance Cotton Spinning Mills Ltd. 29-May-23 To increase authorized capital
GWLC Gharibwal Cement Ltd. 29-May-23 To increase authorized capital
SRVI Service Industries Ltd. 29-May-23 Emergent Board Meeting
SGF Service Global Footwear Ltd. 29-May-23 Emergent Board Meeting
JKSM J.K. Spinning Mills Ltd. 29-May-23 To increase authorized capital
BTL Blessed Textiles Ltd. 29-May-23 To increase authorized capital
FASM Faisal Spinning Mills Ltd. 29-May-23 To increase authorized capital
BHAT Bhanero Textile Mills Ltd. 29-May-23 To increase authorized capital
SFL Sapphire Fibres Ltd. 29-May-23 To increase authorized capital
TATM Tata Textile Mills Ltd. 30-May-23 To increase authorized capital
SUTM Sunray Textiles Ltd. 2-Jun-23 Matters other than financials, declaration of entitlements
IDYM Indus Dyeing & Manufacturing Co. 2-Jun-23 Matters other than financials, declaration of entitlements
CEPB Century Paper & Board Ltd. 21-Jun-23 Extra Ordinary General Meeting
Source (s): Company's announcements, AHL Research
5
Sensitivity of the tax on undistributed profits
 In the below annexure, we have highlighted the companies with:
1. KSE all companies with reserves and quantum of expected bonus with the assumption of 100% conversion of
reserves to share capital.
2. Companies having a lower than 40% payout ratio.
3. Companies not paying dividends for the last one year with reserves and quantum of expected bonus with the
assumption of 100% conversion of reserves to share capital.
4. Companies not paying dividends for the last two year with reserves and quantum of expected bonus with the
5. Companies not paying dividends for the last three year with reserves and quantum of expected bonus with the
6
Annexure 1
Exhibit: All Companies
Expected Expected Expected Expected Expected
Company Reserves* Company Reserves* Company Reserves* Company Reserves* Company Reserves*
Bonus Issue Bonus Issue Bonus Issue Bonus Issue Bonus Issue
ILTM 2.12 42352% NRL 31.80 3976% MIRKS 3.03 1949% TRG 67.81 1243% NCL 17.86 744%
BHAT 10.13 33768% ELSM 3.83 3496% ATBA 6.52 1861% ACPL 16.97 1235% PMPK 4.57 742%
RMPL 21.54 23317% APL 41.37 3325% TATM 10.33 1845% INIL 16.22 1230% PSMC 6.03 733%
UPFL 10.81 16965% DYNO 3.12 3304% GATI 6.88 1793% PAKT 30.81 1206% IDRT 1.43 720%
BTL 9.44 14684% MUREB 8.41 3039% PPL 486.85 1789% FEROZ 5.23 1203% FML 28.63 717%
SFL 26.66 12897% SUTM 6.16 2976% UBL 211.26 1726% HABSM 8.45 1127% NPL 25.13 710%
SAPT 27.92 12872% GIL 0.09 2916% WAHN 1.53 1697% SZTM 1.98 1102% PGCL 0.30 703%
PRET 7.77 12605% KHTC 2.00 2885% IBFL 52.16 1680% SEPL 6.38 1077% FRSM 1.73 692%
FASM 12.56 12565% AABS 4.89 2816% CFL 2.04 1643% ABL 121.33 1060% SHJS 0.82 685%
MARI 151.07 11324% FSWL 0.56 2814% ABOT 15.98 1632% JKSM 10.77 1053% CSAP 5.24 675%
SIEM 6.64 8057% PMRS 1.04 2768% POML 1.04 1604% JKSM 10.77 1053% AICL 23.52 672%
FZCM 23.03 7676% PSEL 8.70 2676% ATLH 19.79 1595% ALNRS 2.11 1029% BERG 1.33 652%
BATA 5.72 7570% TOWL 4.48 2634% HINOON 7.29 1582% SHFA 6.50 1028% KAPCO 57.10 649%
INDU 57.37 7299% JDWS 15.19 2630% SCL 0.61 1573% TRIPF 3.96 1020% PIOC 14.42 635%
GADT 20.00 7134% SALT 0.88 2626% KOHC 30.60 1523% BWHL 1.34 1004% PKGP 23.13 622%
THALL 28.09 6933% SHSML 5.45 2582% DGKC 66.55 1519% NONS 1.65 1001% MEBL 110.86 619%
RCML 7.11 6909% SSOM 1.42 2502% SRVI 7.10 1510% ARPL 3.37 988% HMB 64.83 619%
SITC 12.91 6024% ISIL 15.95 2403% STJT 1.44 1492% BWCL 58.51 981% PCAL 2.51 614%
MEHT 9.96 5310% NML 84.14 2393% SANSM 1.78 1489% AGTL 2.84 981% SAIF 1.61 611%
SAPL 4.93 5115% NAGC 4.47 2389% MCB 174.31 1471% CHCC 19.04 980% AHL 3.99 610%
LCI 47.19 5109% SURC 10.53 2374% DINT 7.62 1452% IGIHL 13.48 945% KTML 18.27 610%
PNSC 62.28 4716% NESTLE 10.73 2365% CHAS 4.07 1419% PAKD 1.09 918% FECTC 3.01 599%
AWTX 0.37 4655% AGIL 4.24 2356% KSBP 1.87 1413% EFUG 17.17 859% SYS 17.28 595%
TICL 6.98 4647% REWM 6.98 2265% AHTM 1.19 1401% ADMM 7.05 839% TGL 10.22 594%
PSO 216.52 4612% OGDC 964.91 2243% ENGRO 78.82 1368% NATM 1.79 833% GHNI 2.50 588%
ATRL 48.30 4530% SHEZ 2.05 2118% CPPL 6.51 1326% AHCL 32.32 791% BAFL 92.49 586%
HAFL 0.53 4422% POL 58.94 2077% HCAR 18.62 1304% KML 4.02 790% PPP 0.46 578%
EXIDE 3.36 4320% COLG 25.02 2061% JLICL 12.69 1265% HUBC 102.01 786% GLAXO 18.30 575%
IDYM 23.39 4315% JDMT 1.39 2013% NBP 268.18 1261% BAHL 86.76 781% SHDT 0.94 569%
LUCK 132.17 4218% HBL 291.24 1985% MSOT 8.40 1245% NETSOL 6.97 776% GOC 0.41 562%
Source (s): Company Financials, AHL Research *latest available financial statements (PKR bn)
7
Annexure 1
Exhibit: All Companies
ZAHID 10.72 560% KOHTM 0.86 411% AGP 7.75 277% STML 0.15 169% PICT 1.08 99%
NICL 6.00 542% PKGS 3.62 405% SARC 0.15 256% TPLP 9.50 167% ANSM 0.54 97%
TSML 6.26 532% MRNS 2.45 404% GWLC 10.00 250% GTYR 2.02 166% JSBL 12.58 97%
GATM 32.60 529% MTL 5.07 396% SPEL 2.48 248% DAAG 0.07 165% NSRM 0.15 97%
SNGP 33.51 528% LPL 14.84 391% HSPI 1.36 246% PGLC 0.41 163% ITTEFAQ 1.36 94%
NCPL 19.36 527% IML 3.73 377% AGIC 1.70 237% TOMCL 2.10 156% PHDL 0.16 89%
NATF 6.08 522% ICL 3.74 374% KOIL 0.69 227% BRR 1.41 149% HICL 0.55 89%
ADAMS 0.89 515% SEARL 14.25 365% SPWL 8.64 223% CPAL 0.16 146% GEMPAPL 0.17 83%
CRTM 5.09 509% CCM 0.81 358% GLPL 0.71 222% CASH 0.16 145% AVN 2.91 77%
HUMNL 5.64 497% ILP 32.97 353% SAZEW 1.32 218% IDSM 0.14 140% INKL 0.07 77%
CEPB 10.73 481% HACC 0.06 344% EMCO 0.76 217% ORIXM 0.63 138% JSGCL 0.21 76%
EFUL 4.79 479% BNWM 0.33 342% KOHE 3.65 215% EPCL 12.34 136% DCL 3.66 76%
BIFO 2.19 473% JSML 1.15 336% SGF 4.36 213% FRCL 0.49 129% CTM 3.72 75%
TREET 8.45 473% ISL 14.52 334% ZTL 1.21 204% PABC 4.61 128% ECOP 0.36 74%
HALEON 5.48 468% FFC 41.95 330% JSCL 18.51 202% BIPL 13.83 125% FCEPL 5.42 71%
DAWH 22.49 467% RUPL 1.11 324% PTC 75.79 201% MCBAH 0.89 124% DOL 1.21 69%
MACTER 2.13 464% AATM 0.70 316% BNL 1.33 200% SFLL 0.24 120% LOTCHEM 10.41 69%
DLL 2.75 464% AEL 0.25 315% PINL 0.50 197% JSIL 0.73 119% IGIL 1.16 68%
OLPL 8.08 461% CENI 1.71 310% EFERT 26.14 196% STCL 1.41 118% RICL 0.44 66%
JGICL 9.12 460% PSYL 2.86 309% GHGL 16.12 192% AIRLINK 4.64 117% BFMOD 0.05 66%
FATIMA 90.24 430% EPQL 10.00 309% AKGL 0.19 191% BOP 38.36 117% OCTOPUS 0.97 62%
GAL 2.42 424% MFL 3.77 308% DCR 42.38 191% ARUJ 0.12 116% FPRM 0.08 60%
AKBL 60.58 418% FABL 46.58 307% HTL 2.59 186% PREMA 2.52 115% BOK 6.57 60%
OTSU 0.51 418% FHAM 3.39 306% GVGL 1.39 180% NRSL 0.81 115% SSML 0.17 56%
SEL 0.80 417% MLCF 32.64 304% GASF 0.67 176% DMTX 0.03 105% SBL 5.60 56%
MQTM 0.77 415% ASTL 9.00 303% CECL 0.06 173% SCBPL 40.45 104% FUDLM 0.19 55%
HRPL 0.83 415% SNAI 0.36 296% IBLHL 1.23 173% SNBL 11.31 103% EWIC 0.96 54%
TCORP 2.19 414% ATIL 2.76 295% THCCL 1.72 173% MACFL 0.60 102% CPHL 1.23 54%
MUGHAL 13.87 413% JVDC 10.96 288% PTL 2.89 172% FCCL 24.92 102% SINDM 0.24 53%
PAKOXY 3.02 413% PAEL 24.37 285% AGHA 10.32 171% RPL 1.41 100% PAKRI 4.43 49%
8
Annexure 2
Exhibit: Companies with payout less than 40%
Company Payout Company Payout Company Payout Company Payout Company Payout Company Payout Company Payout Company Payout
AGP 39.2% SNAI 23.6% SSOM 12.9% REWM 4.7% CHAS 0.0% AVN 0.0% SAZEW 0.0% IMAGE 0.0%
HMB 38.3% IBLHL 23.6% PNSC 11.7% MSOT 4.4% CEPB 0.0% PAKOXY 0.0% CPHL 0.0% ORM 0.0%
LCI 38.2% OGDC 23.3% KML 11.0% SHDT 4.3% AGHA 0.0% FECTC 0.0% GFIL 0.0% CSIL 0.0%
HINOON 38.1% UPFL 23.0% ATRL 10.7% AWTX 4.0% TPLP 0.0% SHJS 0.0% IGIL 0.0% GGL 0.0%
SPEL 37.1% DYNO 22.8% NATM 10.6% IDYM 3.5% IML 0.0% PSYL 0.0% ASC 0.0% ARUJ 0.0%
STCL 36.1% SIEM 22.6% AHTM 10.5% SFL 3.3% ASTL 0.0% AGTL 0.0% PMRS 0.0% JSGCL 0.0%
IGIHL 35.2% NCL 22.5% ISIL 10.4% SAPT 3.1% PSEL 0.0% ASL 0.0% OCTOPUS 0.0% HAEL 0.0%
GHGL 34.7% TRIPF 22.5% NAGC 10.3% TICL 3.0% TREET 0.0% BAFS 0.0% EWIC 0.0% AKGL 0.0%
DCR 34.2% SYS 21.9% PPL 10.2% RCML 2.8% DINT 0.0% PREMA 0.0% KHYT 0.0% ASHT 0.0%
MEBL 33.9% WAHN 21.5% GADT 9.8% PMPK 2.2% GATI 0.0% GHNI 0.0% STML 0.0% SSML 0.0%
INKL 32.9% HAFL 19.8% ELSM 8.9% NBP 0.0% NETSOL 0.0% GAL 0.0% KOHTM 0.0% MUBT 0.0%
PPP 32.4% RUPL 19.8% TGL 8.3% LUCK 0.0% BOK 0.0% TOMCL 0.0% NRSL 0.0% SARC 0.0%
MACFL 32.2% GIL 19.6% EMCO 8.1% PTC 0.0% TSML 0.0% CFL 0.0% SEL 0.0% SHNI 0.0%
PAKD 30.8% POML 19.2% OTSU 7.8% TRG 0.0% PSMC 0.0% SASML 0.0% LOADS 0.0% FCIBL 0.0%
ADAMS 30.6% TOWL 19.2% BHAT 7.8% AKBL 0.0% SBL 0.0% KHTC 0.0% STPL 0.0% CYAN 0.0%
ILP 30.2% MUGHAL 18.6% GOC 7.5% IBFL 0.0% HALEON 0.0% SZTM 0.0% JSIL 0.0% TPLI 0.0%
APL 30.2% MRNS 17.7% CRTM 7.4% KEL 0.0% FCEPL 0.0% KSBP 0.0% WAVES 0.0% HATM 0.0%
HUBC 29.6% NICL 17.3% MQTM 6.9% BOP 0.0% CSAP 0.0% SANSM 0.0% NSRM 0.0% FEM 0.0%
GWLC 29.5% PGLC 17.3% CCM 6.8% MLCF 0.0% UNITY 0.0% FRSM 0.0% GLPL 0.0% FPRM 0.0%
HUMNL 29.1% SHFA 16.3% BTL 6.6% GATM 0.0% ANL 0.0% THCCL 0.0% AATM 0.0% 786 0.0%
HBL 29.1% TATM 15.8% FZCM 6.5% KOHC 0.0% SAPL 0.0% CENI 0.0% KOIL 0.0% FNEL 0.0%
JSML 26.7% ZTL 15.6% SURC 6.4% FCCL 0.0% PABC 0.0% SAIF 0.0% SCL 0.0% DAAG 0.0%
PRWM 26.4% DGKC 14.7% KTML 6.3% PAEL 0.0% FFBL 0.0% PSX 0.0% FSWL 0.0% GAMON 0.0%
SITC 26.1% PRET 14.3% IDSM 6.1% HCAR 0.0% AGIL 0.0% IDRT 0.0% SGABL 0.0% FFLM 0.0%
PAKRI 25.7% THALL 14.3% MEHT 5.9% JSCL 0.0% QUET 0.0% RPL 0.0% PINL 0.0% BPL 0.0%
ADMM 25.7% NONS 14.2% JKSM 5.6% GLAXO 0.0% MFL 0.0% BRR 0.0% FRCL 0.0% BCL 0.0%
SHSML 25.6% CPPL 13.9% PSO 5.4% PIOC 0.0% CTM 0.0% JDMT 0.0% JUBS 0.0% FANM 0.0%
ICL 24.1% NML 13.6% SUTM 5.4% SEARL 0.0% DCL 0.0% FLYNG 0.0% ECOP 0.0% DIIL 0.0%
AIRLINK 24.0% NRL 13.2% FASM 5.2% BIPL 0.0% MIRKS 0.0% ITTEFAQ 0.0% MODAM 0.0% ASIC 0.0%
PAKT 24.0% CHCC 13.1% ZAHID 4.8% JSBL 0.0% EXIDE 0.0% BNL 0.0% BNWM 0.0% ADOS 0.0%
Source (s): Company Financials, AHL Research
9
Annexure 3
Exhibit: Companies not paying dividend since last one year
ILTM 2.12 42352% FRSM 1.73 692% HSPI 1.36 246% NSRM 0.15 97% FFBL 4.38 34%
SAPL 4.93 5115% SHJS 0.82 685% GLPL 0.71 222% ITTEFAQ 1.36 94% STPL 0.74 32%
EXIDE 3.36 4320% CSAP 5.24 675% SAZEW 1.32 218% HICL 0.55 89% ASL 2.63 28%
LUCK 132.17 4218% PIOC 14.42 635% JSCL 18.51 202% AVN 2.91 77% ASC 1.05 28%
KHTC 2.00 2885% SAIF 1.61 611% PTC 75.79 201% JSGCL 0.21 76% IMAGE 0.31 28%
FSWL 0.56 2814% FECTC 3.01 599% BNL 1.33 200% DCL 3.66 76% CSIL 0.28 26%
PMRS 1.04 2768% GHNI 2.50 588% PINL 0.50 197% CTM 3.72 75% WAVES 0.72 26%
PSEL 8.70 2676% GLAXO 18.30 575% AKGL 0.19 191% ECOP 0.36 74% SHNI 0.15 26%
SALT 0.88 2626% TSML 6.26 532% THCCL 1.72 173% FCEPL 5.42 71% FFLM 0.06 24%
AGIL 4.24 2356% GATM 32.60 529% AGHA 10.32 171% IGIL 1.16 68% GAMON 0.06 23%
JDMT 1.39 2013% CEPB 10.73 481% STML 0.15 169% BFMOD 0.05 66% ALIFE 0.52 21%
MIRKS 3.03 1949% TREET 8.45 473% TPLP 9.50 167% OCTOPUS 0.97 62% CYAN 0.13 21%
GATI 6.88 1793% HALEON 5.48 468% DAAG 0.07 165% FPRM 0.08 60% HSM 0.11 20%
IBFL 52.16 1680% GAL 2.42 424% TOMCL 2.10 156% BOK 6.57 60% FLYNG 1.38 20%
CFL 2.04 1643% AKBL 60.58 418% BRR 1.41 149% SSML 0.17 56% PSX 1.44 18%
SCL 0.61 1573% SEL 0.80 417% CPAL 0.16 146% SBL 5.60 56% FEM 0.09 17%
KOHC 30.60 1523% PAKOXY 3.02 413% CASH 0.16 145% EWIC 0.96 54% FANM 0.03 14%
SANSM 1.78 1489% KOHTM 0.86 411% FRCL 0.49 129% CPHL 1.23 54% TRSM 0.02 8%
DINT 7.62 1452% IML 3.73 377% PABC 4.61 128% KEL 46.54 48% TSMF 0.00 7%
CHAS 4.07 1419% SEARL 14.25 365% BIPL 13.83 125% 78600.0% 0.07 45% GGL 0.24 7%
KSBP 1.87 1413% HACC 0.06 344% SFLL 0.24 120% MODAM 0.36 45% TPLI 0.11 5%
NBP 268.18 1261% BNWM 0.33 342% JSIL 0.73 119% ADOS 0.03 44% ASIC 0.03 4%
TRG 67.81 1243% AATM 0.70 316% BOP 38.36 117% GRR 0.62 44% FNEL 0.07 2%
SZTM 1.98 1102% CENI 1.71 310% ARUJ 0.12 116% BCL 0.05 42% MSCL 0.00 0%
AGTL 2.84 981% PSYL 2.86 309% PREMA 2.52 115% UNITY 4.99 42% AKDCL 0.01 0%
IGIHL 13.48 945% MFL 3.77 308% NRSL 0.81 115% ASHT 0.18 39%
NETSOL 6.97 776% MLCF 32.64 304% DMTX 0.03 105% ANL 1.85 38%
PSMC 6.03 733% ASTL 9.00 303% FCCL 24.92 102% ORM 0.28 38%
IDRT 1.43 720% PAEL 24.37 285% RPL 1.41 100% DIIL 0.03 35%
PGCL 0.30 703% SARC 0.15 256% JSBL 12.58 97% LPGL 0.03 34%
10
Annexure 4
Exhibit: Companies not paying dividend since last two years
Expected Expected Expected Expected
Company Reserves* Company Reserves* Company Reserves* Company Reserves*
Bonus Issue Bonus Issue Bonus Issue Bonus Issue
ILTM 2.12 42352% HACC 0.06 344% DMTX 0.03 105% WAVES 0.72 26%
EXIDE 3.36 4320% BNWM 0.33 342% FCCL 24.92 102% SHNI 0.15 26%
LUCK 132.17 4218% AATM 0.70 316% RPL 1.41 100% FFLM 0.06 24%
KHTC 2.00 2885% MFL 3.77 308% JSBL 12.58 97% GAMON 0.06 23%
FSWL 0.56 2814% MLCF 32.64 304% NSRM 0.15 97% FCIBL 0.13 20%
PMRS 1.04 2768% ASTL 9.00 303% ITTEFAQ 1.36 94% HSM 0.11 20%
PSEL 8.70 2676% PAEL 24.37 285% DCL 3.66 76% FLYNG 1.38 20%
SALT 0.88 2626% HSPI 1.36 246% CTM 3.72 75% FANM 0.03 14%
JDMT 1.39 2013% GLPL 0.71 222% ECOP 0.36 74% TRSM 0.02 8%
MIRKS 3.03 1949% SAZEW 1.32 218% FCEPL 5.42 71% TSMF 0.00 7%
GATI 6.88 1793% JSCL 18.51 202% IGIL 1.16 68% GGL 0.24 7%
KOHC 30.60 1523% PTC 75.79 201% OCTOPUS 0.97 62% TPLI 0.11 5%
SANSM 1.78 1489% BNL 1.33 200% BOK 6.57 60% FNEL 0.07 2%
DINT 7.62 1452% PINL 0.50 197% SSML 0.17 56% MSCL 0.00 0%
SZTM 1.98 1102% AKGL 0.19 191% EWIC 0.96 54% AKDCL 0.01 0%
NETSOL 6.97 776% GASF 0.67 176% KEL 46.54 48%
PGCL 0.30 703% CECL 0.06 173% 78600.0% 0.07 45%
FRSM 1.73 692% AGHA 10.32 171% MODAM 0.36 45%
CSAP 5.24 675% TPLP 9.50 167% ADOS 0.03 44%
PIOC 14.42 635% DAAG 0.07 165% BCL 0.05 42%
SAIF 1.61 611% TOMCL 2.10 156% UNITY 4.99 42%
FECTC 3.01 599% CPAL 0.16 146% ASHT 0.18 39%
GHNI 2.50 588% FRCL 0.49 129% ANL 1.85 38%
TSML 6.26 532% BIPL 13.83 125% DIIL 0.03 35%
HALEON 5.48 468% SFLL 0.24 120% LPGL 0.03 34%
GAL 2.42 424% JSIL 0.73 119% FFBL 4.38 34%
AKBL 60.58 418% BOP 38.36 117% STPL 0.74 32%
SEL 0.80 417% ARUJ 0.12 116% ASC 1.05 28%
PAKOXY 3.02 413% PREMA 2.52 115% CSIL 0.28 26%
IML 3.73 377% NRSL 0.81 115% WAVES 0.72 26%
11
Annexure 5
Exhibit: Companies not paying dividend since last three years
Expected Expected Expected Expected
Company Reserves* Company Reserves* Company Reserves* Company Reserves*
Bonus Issue Bonus Issue Bonus Issue Bonus Issue
ILTM 2.12 42352% MLCF 32.64 304% ECOP 0.36 74% FNEL 0.07 2%
EXIDE 3.36 4320% ASTL 9.00 303% FCEPL 5.42 71% MSCL 0.00 0%
LUCK 132.17 4218% PAEL 24.37 285% IGIL 1.16 68% AKDCL 0.01 0%
KHTC 2.00 2885% HSPI 1.36 246% OCTOPUS 0.97 62%
FSWL 0.56 2814% SAZEW 1.32 218% SSML 0.17 56%
PMRS 1.04 2768% JSCL 18.51 202% EWIC 0.96 54%
PSEL 8.70 2676% PTC 75.79 201% KEL 46.54 48%
SALT 0.88 2626% BNL 1.33 200% ADOS 0.03 44%
JDMT 1.39 2013% PINL 0.50 197% BCL 0.05 42%
MIRKS 3.03 1949% AKGL 0.19 191% UNITY 4.99 42%
KOHC 30.60 1523% GASF 0.67 176% ASHT 0.18 39%
SANSM 1.78 1489% CECL 0.06 173% ANL 1.85 38%
DINT 7.62 1452% AGHA 10.32 171% DIIL 0.03 35%
SZTM 1.98 1102% TPLP 9.50 167% LPGL 0.03 34%
NETSOL 6.97 776% DAAG 0.07 165% FFBL 4.38 34%
PGCL 0.30 703% CPAL 0.16 146% STPL 0.74 32%
FRSM 1.73 692% FRCL 0.49 129% ASC 1.05 28%
CSAP 5.24 675% BIPL 13.83 125% CSIL 0.28 26%
PIOC 14.42 635% SFLL 0.24 120% WAVES 0.72 26%
SAIF 1.61 611% JSIL 0.73 119% SHNI 0.15 26%
FECTC 3.01 599% ARUJ 0.12 116% FFLM 0.06 24%
GHNI 2.50 588% PREMA 2.52 115% GAMON 0.06 23%
TSML 6.26 532% NRSL 0.81 115% FCIBL 0.13 20%
GAL 2.42 424% DMTX 0.03 105% HSM 0.11 20%
SEL 0.80 417% FCCL 24.92 102% FLYNG 1.38 20%
PAKOXY 3.02 413% JSBL 12.58 97% FANM 0.03 14%
IML 3.73 377% NSRM 0.15 97% TRSM 0.02 8%
HACC 0.06 344% ITTEFAQ 1.36 94% TSMF 0.00 7%
BNWM 0.33 342% DCL 3.66 76% GGL 0.24 7%
AATM 0.70 316% CTM 3.72 75% TPLI 0.11 5%
12
Analyst Certification and Disclaimer
Analyst Certification: The research analyst(s) is (are) principally responsible for preparation of this report. The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject security (ies) or sector (or economy), and no part of
the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. In addition, we currently do not have any interest (financial or otherwise) in the subject
security (ies). Furthermore, compensation of the Analyst(s) is not determined nor based on any other service(s) that AHL is offering. Analyst(s) are not subject to the supervision or control of any employee of AHL’s non-research departments, and no personal engaged in
providing non-research services have any influence or control over the compensatory evaluation of the Analyst(s).
Equity Research Ratings

Arif Habib Limited (AHL) uses three rating categories, depending upon return form current market price, with Target period as Dec 2023 for Target Price. In addition, return excludes all type of taxes. For more details, kindly refer the following table;
Rating Description
BUY Upside* of subject security(ies) is more than +15% from last closing of market price(s)
HOLD Upside* of subject security(ies) is between -15% and +15% from last closing of market price(s)
SELL Upside* of subject security(ies) is less than -15% from last closing of market price(s)
Equity Valuation Methodology

AHL Research uses the following valuation technique(s) to arrive at the period end target prices;
 Discounted Cash Flow (DCF)
 Dividend Discount Model (DDM)
 Sum of the Parts (SoTP)
 Justified Price to Book (JPTB)
 Reserved Base Valuation (RBV)
Risks: The following risks may potentially impact our valuations of subject security (ies);
 Market risk
 Interest Rate Risk
 Exchange Rate (Currency) Risk
Disclaimer: This document has been prepared by Research analysts at Arif Habib Limited (AHL). This document does not constitute an offer or solicitation for the purchase or sale of any security. This publication is intended only for distribution to the clients of the Company
who are assumed to be reasonably sophisticated investors that understand the risks involved in investing in equity securities. The information contained herein is based upon publicly available data and sources believed to be reliable. While every care was taken to ensure
accuracy and objectivity, AHL does not represent that it is accurate or complete and it should not be relied on as such. In particular, the report takes no account of the investment objectives, financial situation and particular needs of investors. The information given in this
document is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. AHL reserves the right to make modifications and alterations to this
statement as may be required from time to time. However, AHL is under no obligation to update or keep the information current. AHL is committed to providing independent and transparent recommendation to its client and would be happy to provide any information in
response to specific client queries. Past performance is not necessarily a guide to future performance. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for any investment decision. The user assumes the entire
risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks
involved), and should consult his or her own advisors to determine the merits and risks of such investment. AHL or any of its affiliates shall not be in any way responsible for any loss or damage that may be arise to any person from any inadvertent error in the information
contained in this report.
13

Tax On Reserves

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Tax On Reserves

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REP-300

Revenue collection measure

Best Securities House: 2022

Exhibit: Tax Collection Sensitivity

2. Tax on undistributed reserves of all companies across the board.

 In the below annexure, we have highlighted the companies with:

2. Companies having a lower than 40% payout ratio.

Equity Research Ratings

Equity Valuation Methodology

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