§  Earnings of the KSE-100 Index depicted a robust trend for another quarter, rising 93% YoY / 12% QoQ during 3QFY21. Compared to 3QFY19 and 3QFY18, earnings of the index have accelerated 61% and 48%, respectively.

§  Moreover, earnings during 9MFY21 have augmented 55% YoY. Compared to 9MFY19 and 9MFY18, earnings of the index have improved by 47% and 41%, respectively.

§  Broadly speaking, aggregate demand-led economic turnaround has helped cyclical sectors post a sharp rebound in profitability, with some sectors swinging into healthy profits compared to losses last year.

§  During 3QFY21 / 1QCY21, major contributors to the jump in profitability growth include: Cement, OMC’s, Fertilizer, Banks, Automobile Assemblers, Power Generation, and Textile Composite posting PKR 15bn (losses of PKR 2bn SPLY), PKR 12.2bn (losses of PKR 8.5bn SPLY), PKR 24.9bn (+230% YoY), PKR 62.1bn (+33% YoY), PKR 7.5bn (+139% YoY), PKR 15.6bn (+11% YoY) and PKR 8.6bn (+221% YoY), respectively. E&P earnings witnessed a contraction of 22% YoY. On a sequential basis, KSE-100 index earnings posted a 12% uptick QoQ, led by Banks (+30%), Cement (+29%), E&P (12%), OMC’s (94%) and Chemicals (22%). Fertilizer and Power posted a decline in earnings of 9% and 19% QoQ, respectively. 

§  Earnings jump of 55% YoY during 9MFY21 was fueled by cyclical sectors with Cement posting profits of PKR 32.6bn against losses of PKR 1.6bn SPLY and OMC’s posting earnings of PKR 26.9bn against losses of PKR 492mn SPLY. Meanwhile Fertilizer, Banks, Power, Chemicals, Textile Composite and Auto Assemblers posted a jump in earnings of 118%, 27%, 27%, 96%, 89% and 190% respectively. On the flipside, E&P earnings during 9MFY21 declined by 14% YoY.

§  Sectors leading the profitability chart during 9MFY21 were Engineering (+2619% YoY), Technology & Communication (+1759% YoY), and Synthetic & Rayon (+1610% YoY). During 3QFY21, Synthetic & Rayon (+5999% YoY), Technology & Communication (+4715% YoY), Chemicals (+289% YoY), and Fertilizer (+230% YoY) led the earnings jump of the index.

§  During 9MFY21, the KSE-100 index generated a return of 29.5% (+10,166 points). Technology sector posted the highest contribution during 9MFY21 (+2,061 points) followed by Cement (+1,847 points), Banks (+1,586 points), Textile Composite (+630 points), Power (+572 points), Auto Assemblers (+557 points), Chemical (+418 points), OGMCs (+337 points) and E&P (+317 points). However, Tobacco sector eroded 42 points from the index followed by Sugar (-5 points) and REIT (-2 points).

§  On a sequential basis, during 3QFY21, the KSE-100 posted an 832 points jump with the return arriving at 1.9% (USD-based return of 6.62%). Technology sector posted the highest contribution during 3QFY21 (+810 points) amid re-rating, followed by Cement (+475 points) in lieu of sharp recovery in demand, Power Generation (+188 points) amid circular debt resolution plan, Refinery (+93 points), Auto Assemblers (+85 points) given robust sales, and Chemical (+71 points) attributable to strong results.

§  We have based our analysis on the KSE-100 index companies. We have included the result of 94 companies while the remaining 6 companies have not disclosed their results yet. The companies which have been included in our analysis represent almost 98.3% of the market capitalization of the benchmark bourse.

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