Unveiling the Pakistan’s Magnificent Seven

The term magnificent seven referred to seven high-performing and influential mega-cap tech companies in the US stock market.
In a dynamic and often challenging economic landscape, identifying companies that consistently deliver outstanding performance becomes crucial for savvy investors. Today, we highlight “The Pakistan’s Magnificent Seven,” a compelling group of companies that have defied volatility and emerged as leaders in their respective sectors.

 

Proven Track Record

Over the past five years, these companies have demonstrated exceptional:

• Revenue Growth: Experiencing steady revenue growth, reflecting market leadership and demand.
• Profitability: Consistently increasing their bottom lines, showcasing strong financial management.
• Market Performance: Witnessing impressive market capital appreciation despite economic fluctuations.
• Dividend Payouts: Rewarding investors with consistent and attractive dividend distributions or buybacks.

Price Performance of Magnificent Seven Stocks vs KSE-100 Index

 

Annual Total Returns of Magnificent Seven Stocks vs the KSE-100 Index

 

 

Total Returns of Magnificent Seven Companies versus other asset classes

 

Pakistan’s Magnificent Seven Companies- Key Highlights

Dividend Distribution

Magnificent Seven companies have returned PKR 175 bn to investors in last 5 years in terms of dividend distributions and buy backs.

Magnificent Seven Companies	Total Number of Shares	Free Float %	Free Float Shares	Dividend Distributed					Dividend Distributed to Minority Shareholders	Buy Back
				2019	2020	2021	2022	2023
Hub Power Limited	1,297,154,400	75%	972,865,800	0.0	0.0	12.0	6.5	30.0	47,183,991,300
Engro Fertilizers Limited	1,335,299,375	45%	600,884,719	13.0	13.0	16.5	13.5	20.5	45,967,680,984
Pakistan Oil fields	283,855,104	46%	129,863,710	50.0	50.0	50.0	70.0	80.0	38,959,113,024
Meezan Bank Limited	1,791,253,194	25%	447,813,299	3.5	4.7	5.1	8.2	20.0	18,606,642,553
Interloop	1,401,709,468	20%	280,341,894	1.9	1.2	1.6	2.6	4.0	3,148,239,465
Lucky Cement	293,000,000	30%	87,900,000	6.5	0.0	0.0	0.0	18.0	2,153,550,000	17,245,692,688
Systems Limited	291,278,700	60%	174,767,220	1.0	1.6	2.5	5.0	n/a*	1,766,896,594
Total Funds Returned  to Investors										175,031,806,608

Lucky Cement

Pakistan’s Leading Conglomerate

Meezan Bank Limited

Pioneering Islamic banking institution offering Shariah-compliant financial solutions and strong growth potential.

Systems Limited

Leading technology and IT solutions provider delivering innovative services and driving digital transformation

Interloop Limited

Apparel & textile leader renowned for its sustainable practices and global reach, catering to renowned brands

Hub Power Company

Independent power producer ensuring reliable energy supply and significant investments in renewable energy

Engro Fertilizer Limited

Leading fertilizer producer driving agricultural productivity and food security in Pakistan.

Pakistan Oilfields Limited

Private E&P company in Pakistan, ensuring energy security and contributing significantly to the national exchequer.

Investment Strategy: SHIMPLE

Investing in the Pakistan Magnificent Seven Companies presents a compelling
opportunity to gain exposure to the Pakistani economy. Despite the volatile economic
landscape, these companies are currently trading at attractive valuations and forward Price to Earnings ratios, typically ranging between 3x and 5x (ex-Systems). This situation offers investors a favorable entry point into the market.

Moreover, the consistent dividend payouts from these companies serve as a valuable buffer against short-term price fluctuations. Their track record of dividend distribution underscores their stability amidst market uncertainties.

With all seven companies poised for growth, we anticipate that the upward trajectory in profitability witnessed over the past five years will persist in the coming years. This sustained growth is expected to translate into continued dividend payouts and robust price performance.

We advocate for investors to adopt a SHIMPLE (SYS, HUBC, ILP, MEBL, POL, LUCK, EFERT) investment strategy. This approach provides diversification across various sectors, ensuring resilience against sector-specific risks. Additionally, it capitalizes on the leading positions of these companies within their respective sectors, offering both stability and growth potential.

Disclaimer:

This information and opinion contained in this report have been complied by our research department from sources believed by it to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness.

All opinions and estimates contained in the document constitute the department’s judgment as of the date of this document and are subject to change without notice and are provided in good faith but without legal responsibility.

This report is not, and should not be construed as, an offer to sell or a solicitation of an offer to BUY any securities. Chase Securities Pakistan Private Limited (the company) or persons connected with it may from time to time have an investment banking or other relationship, including but not limited to, the participation or investment in commercial banking transactions (including loans) with some or all of the issuers mentioned therein, either for their own account or the account of their customers.

Persons connected with the company may provide or have provided corporate finance and other services to the issuer of the securities mentioned herein, including the issuance of options on securities mentioned herein or any related investment and may make a purchase and/or sale, or offer to make a purchase and/or sale of the securities or any related investment from time to time in the open market or otherwise, in each case either as principal or agent.

This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions.

Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward-looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements.

Chase Securities Pakistan Private Limited expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.

Exchange rate fluctuations may affect the return to investors. Neither the company or any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained therein. Chase Securities Pakistan Private Limited, its respective affiliate companies, associates, directors and/or employees may have investments in securities or derivatives of securities of companies mentioned in this report, and may make investment decisions that are inconsistent with the views expressed in this report.