What are AHL’s top picks for FY25?

AHL’s model portfolio for FY25 presents a strategic selection of top picks across various sectors, aiming to capitalise on anticipated economic recovery in Pakistan.

Here’s an overview of their recommendations:

Oil & Gas Exploration

Top picks: OGDC and PPL
AHL highlights these companies due to expected higher payouts and the potential sale of government stakes in state-owned enterprises, including the Reko Diq project, which may serve as key growth triggers.

Banking sector

Top picks: UBL, MEBL, and MCB
While subdued interest rates may limit earnings growth, these banks are expected to focus on volumetric growth and enhancing non-markup income, positioning them well in the current economic climate.

Fertilizer

Top Pick: FFC
FFC is recognized for its strong pricing power and stable demand.

The company is well-placed to pass on any gas tariff hikes to consumers, ensuring profitability in FY25.

Cement

Top picks: LUCK and MLCF
These companies are expected to benefit from improved demand amid economic revival, lower coal costs, and higher retention prices, alongside initiatives aimed at energy efficiency.

Oil & Gas marketing

Top pick: PSO
With the anticipated economic recovery and lower oil prices, PSO is expected to see increased demand for petroleum products, making it a key player in this sector.

Textiles

Top picks: ILP and NML
The global recovery is expected to drive demand in textiles, while energy costs are projected to decrease due to government initiatives.

However, the impact of a normal tax regime on earnings should be monitored.

Power generation

Top pick: HUBC
Timely tariff adjustments are expected to alleviate cash flow issues and help manage the circular debt problem, positioning HUBC favourably for growth.

Automobile assembly

Top pick: INDU
As economic stability returns, demand for vehicles, particularly hybrids, is expected to rise, driven by lower interest rates and increased fuel efficiency.

AHL has also made adjustments to its portfolio, closing positions in ENGRO and increasing allocations in FCCL and FFBL, reflecting a proactive approach to market dynamics.