External broker reports(aggregated public sources), Topline Securities

Topline Securities

External broker reports(aggregated public sources)

Topline Securities is one of the fastest growing brokerage houses in Pakistan. It has strong equity brokerage, economic / equity research, mutual fund distribution, commodity trading and corporate finance & advisory functions. Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Macroeconomics

<ul><li>Pakistan's Consumer Price Index (CPI) for Nov 2024 is expected to clocked in at 4.5-5.0% YoY (+0.4% MoM), taking 5MFY25 average to 7.91% compared to 28.62% in 5MFY24.</li><li>During Nov 2024, Food Inflation is expected to increase by 0.2% MoM mainly on the back of rise in Eggs price, Pulse Moong, Tomatoes, and potatoes prices in the range of 5-35%.</li><li>Housing, water, electricity and gas segment is expected to witness approx. 0.11% MoM growth due to increase in LPG prices by 7% MoM, while electricity prices are expected to decline on the back of negative fuel cost adjustment.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Pakistan's Consumer Price Index (CPI) for Nov 2024 is expected to clocked in at 4.5-5.0% YoY (+0.4% MoM), taking 5MFY25 average to 7.91% compared to 28.62% in 5MFY24.During Nov 2024, Food Inflation is expected to increase by 0.2% MoM mainly on the back of rise in Eggs price, Pulse Moong, Tomatoes, and potatoes prices in the range of 5-35%.Housing, water, electricity and gas segment is expected to witness approx. 0.11% MoM growth due to increase in LPG prices by 7% MoM, while electricity prices are expected to decline on the back of negative fuel cost adjustment.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Pakistan Economy: Nov 2024 CPI Expected Between 4.5-5.0% YoY

Thematic (Sector/Industry)

<ul><li>Pakistan recorded monthly IT exports of US$330mn, up by 39% YoY and by 13% MoM in Oct-2024. These monthly IT exports in Oct-2024 are higher than last 12-month average of US$287mn. This is the 13th consecutive month of YoY IT export growth, starting from October 2023.</li><li>This takes 4MFY25 IT exports to ~US$1.21bn, up by 35% YoY.</li><li>YoY jump in IT exports is due to (1) IT export companies growing client base globally, especially in GCC region, (2) relaxation in the permissible retention limit by the State Bank of Pakistan, increasing it from 35% to 50% in the Exporters' Specialized Foreign Currency Accounts, and (3) stability in PKR encouraging IT exporters to bring higher portion of profits back to Pakistan.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Pakistan recorded monthly IT exports of US$330mn, up by 39% YoY and by 13% MoM in Oct-2024. These monthly IT exports in Oct-2024 are higher than last 12-month average of US$287mn. This is the 13th consecutive month of YoY IT export growth, starting from October 2023.This takes 4MFY25 IT exports to ~US$1.21bn, up by 35% YoY.YoY jump in IT exports is due to (1) IT export companies growing client base globally, especially in GCC region, (2) relaxation in the permissible retention limit by the State Bank of Pakistan, increasing it from 35% to 50% in the Exporters' Specialized Foreign Currency Accounts, and (3) stability in PKR encouraging IT exporters to bring higher portion of profits back to Pakistan.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Pakistan Technology: Oct-24 IT Exports up by 39% YoY to US$330mn; 4MFY25 exports up by 35% YoY

Cross Asset Strategy

<ul><li>Based on the Oct 2024 holding analysis, the FTSE benchmarked fund, Vanguard (the fund), has sold approx. US$66mn worth of stocks in Oct 2024, taking total selling to US$149mn out of total portfolio of US$171mn using current market price. Our sales team believes that approx. US$11mn worth of stocks are sold in first 2 weeks of Nov 2024, taking total selling to US$160mn.Resultantly, we believe, stocks worth of US$10-12mn are left with fund now.</li><li>Background: On Jul 03, 2024, FTSE Russell announced reclassification of Pakistan from Secondary Emerging to Frontier Market status with effect from Sep 23, 2024 as Pakistan failed to meet the criteria of stock count. FTSE benchmarked fund held ~US$170mn of position in Pakistan stocks as of Apr/May 2024.</li><li>Top sold positions in Oct 2024: Fund sold stocks worth of US$66mn in Oct 2024 and was fully sold in 10 out of 14 stocks by Oct 2024. HUBC and PPL were the biggest positions sold in month of Oct 2024 valuing US$9.2mn each, followed by UBL and LUCK valuing at US$7.7mn and US$5.0mn, respectively.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Based on the Oct 2024 holding analysis, the FTSE benchmarked fund, Vanguard (the fund), has sold approx. US$66mn worth of stocks in Oct 2024, taking total selling to US$149mn out of total portfolio of US$171mn using current market price. Our sales team believes that approx. US$11mn worth of stocks are sold in first 2 weeks of Nov 2024, taking total selling to US$160mn.Resultantly, we believe, stocks worth of US$10-12mn are left with fund now.Background: On Jul 03, 2024, FTSE Russell announced reclassification of Pakistan from Secondary Emerging to Frontier Market status with effect from Sep 23, 2024 as Pakistan failed to meet the criteria of stock count. FTSE benchmarked fund held ~US$170mn of position in Pakistan stocks as of Apr/May 2024.Top sold positions in Oct 2024: Fund sold stocks worth of US$66mn in Oct 2024 and was fully sold in 10 out of 14 stocks by Oct 2024. HUBC and PPL were the biggest positions sold in month of Oct 2024 valuing US$9.2mn each, followed by UBL and LUCK valuing at US$7.7mn and US$5.0mn, respectively.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FTSE Rebalancing Outflow; 10 out of 14 stocks sold out by Oct; Sold over US$65mn in Oct alone

<ul><li>Fueled by economic stability and fiscal consolidation, Pakistan Stock Market (PSX) is set to touch 127k by Dec 2025, suggesting return of 37% including dividend yield of 10%.</li><li>We expect re-rating in PE primarily on the back of improving macro indicators and falling bond yields which is flushing more liquidity in equities, thus helping current low PE to march towards its historic forward PE of 7x during current IMF program. We expect market forward 2026 PE to reach 5.75x from current level of 4.6x by Dec 2025.</li><li>During 2025, key drivers for the market would be (1) successful completion of IMF review and passing of FY26 budget in line with IMF guidelines, (2) credit rating upgrade for Pakistan, subsequently opening the doors for launch of Eurobonds and Sukuks, (3) Pakistan relations with new USA government and (4) successful privatization of any bleeding SOE i.e. PIAA, DISCOs alongside materialization of Reko Diq deal.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Fueled by economic stability and fiscal consolidation, Pakistan Stock Market (PSX) is set to touch 127k by Dec 2025, suggesting return of 37% including dividend yield of 10%.We expect re-rating in PE primarily on the back of improving macro indicators and falling bond yields which is flushing more liquidity in equities, thus helping current low PE to march towards its historic forward PE of 7x during current IMF program. We expect market forward 2026 PE to reach 5.75x from current level of 4.6x by Dec 2025.During 2025, key drivers for the market would be (1) successful completion of IMF review and passing of FY26 budget in line with IMF guidelines, (2) credit rating upgrade for Pakistan, subsequently opening the doors for launch of Eurobonds and Sukuks, (3) Pakistan relations with new USA government and (4) successful privatization of any bleeding SOE i.e. PIAA, DISCOs alongside materialization of Reko Diq deal.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Pakistan Index to Reach 127k by Dec 2025; Market Re-Rating Due to Improving Economic Indicators

<ul><li>Topline Securities hosted the Pakistan Energy Conference 2024, where the Day-2 featured Pakistan Petroleum Limited (PPL). The session was led by Senior Management Team of the company.</li><li>PPL’s cash collection ratio improved to 81% in FY24, compared to 53% in FY23. In 1QFY25, the collection ratio improved to 100%. Management expects that this year’s collection ratio will be around 100%. Management also highlighted that, due to improved cashflows, for the first time company announced quarterly dividend (1st quarter).</li><li>Regarding the backlog of circular debt, PPL has suggested two options to the government: 1) issue bonds/TFCs as they did in the past, and 2) if in case crude oil prices decline government should keep gas prices remain unchanged and, pass the excess cash to clear the backlog.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Topline Securities hosted the Pakistan Energy Conference 2024, where the Day-2 featured Pakistan Petroleum Limited (PPL). The session was led by Senior Management Team of the company.PPL’s cash collection ratio improved to 81% in FY24, compared to 53% in FY23. In 1QFY25, the collection ratio improved to 100%. Management expects that this year’s collection ratio will be around 100%. Management also highlighted that, due to improved cashflows, for the first time company announced quarterly dividend (1st quarter).Regarding the backlog of circular debt, PPL has suggested two options to the government: 1) issue bonds/TFCs as they did in the past, and 2) if in case crude oil prices decline government should keep gas prices remain unchanged and, pass the excess cash to clear the backlog.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Topline Energy Conference: Oil & Gas Development Company (OGDC) & Pakistan Petroleum Limited (PPL)