NBP shares value cut by 26pc

LAHORE - The National Bank of Pakistan scrips have been under pressure as it has eroded 26 per cent in value in last six sessions, it was learnt.
Experts said that the overall local market has shed another 17 per cent of its value in last six trading sessions mainly due to aggressive foreign selling. While the NBP stock is down 81 per cent from its all-time high of Rs253.50 witnessed on Oct 08, 2007, they added. They said that the share is now trading at an attractive PBV of 0.4x, PE of 3.0x and dividend yield of 13.2% on 2008 projected earnings likely to be announced in March 2009.
In Dec 2007 foreigners were holding 58mn (6.4% of total and 32.3% of free float) shares according to NBP annual accounts. In the last 13 months, according to experts, that 38mn shares have been sold in the market. Thus in a worst case 20mn shares valuing Rs1.0bn (US$12mn) can come to the market. It is expected that only 10-15mn shares (Rs500-Rs700mn or US$6-9mn) will immediately be sold in the market and the rest will be retained.
Assuming no distress selling by local leveraged investors, selling of 10-15mn shares can be absorbed in the market in the next few sessions. The top 2 stocks that foreigners hold are OGDC and MCB Bank.
Despite some uncertainty on the level of provisioning that NBP will book in 2008, full year EPS is likely to be in the range of Rs15-16. Though base case assumption of experts is provisioning of Rs9.1bn (17.5% of banking sectors total provisioning for 2008) that generates an EPS of Rs16.3.
"Assuming that in worst case provisioning increases by Rs2bn, then EPS will be Rs15. Meaning NBP in worst case trades at PE of 3.3x on 2008 profits. In 2009 it is being expected EPS of Rs13.5. In worst case with zero payout by NIT and Rs2bn additional provisioning EPS will be Rs11.1," analysts added.
They said that NBP's EPS is at discount of 24% from average Pakistan banks PE and 66% discount to Indian counterpart State Bank of India (SBI) on PE. On PBV the discount with its local peers is 37% while discount with SBI is around 65% on 2008E book value. On regional basis NBP trades at one of the lowest price that is 60% discount to its book value.