As we get closer to resuming the IMF program and receiving a USD 1bn tranche, we expect the market to perform well in-tandem. Whereas recent bouts of selling at the index has once again opened up valuations; we advise investors to cherry-pick blue chip stocks with a long term focus. Key short term risks include: regional volatility and the ensuing security concerns, together with PKR depreciation.
Our preferred stocks are EPCL, PSO, OGDC, HUBC, HBL, MCB, UBL, MCB, LUCK, AGHA, FFC, ENGRO, INDU, PTL, SNGP, UNITY, HTL, and ILP.
The KSE-100 is currently trading at a PER of 5.2x (2021) compared to Asia Pac regional average of 14.7x while offering a dividend yield of ~8.1% versus ~2.2% offered by the region.
Courtesy – AHL Research