OUR STAFF REPORTER LAHORE Corporate profits during 1QFY12 soared by 43 per cent YoY and 15 percent QoQ led by growth in the heavy-weights E&P and Banks, along with Fertilizer and Cement sectors. However, the KSE-100 failed to respond in a likewise manner, gaining a mere 0.9 per cent in Oct-2011, underperforming regional markets by an average 5 percent, while registering a fall of 5.2 percent in FY12 to date. Experts believe domestic political uncertainty and tensions with the US together with the global economic woes overshadowed the impressive corporate results. Absence of any significant payouts tamed the excitement as well. Stock market expert Atif Zafar expected that the earnings growth would settle in the vicinity of 17 percent YoY in FY12, translating into an impressive earnings yield of 16 percent (a spread of 420bps over 1 year T-bill). Hence, he maintained positive stance at the KSE (discount of 48 percent to the regional markets earnings multiple), with POL, PPL, PSO, LUCK, ENGRO, FFC and MCB being our top picks. He based analysis on a sample of 40 companies, representing 75 percent of the KSE-100 market cap. Cumulative corporate profits were recorded at Rs86.5 billion ($997m) in 1QFY12 versus Rs60.4b ($705mn in 1QFY11, up 43 percent YoY. Profits of E&Ps & OMCs increased by 32 percent YoY and 69 percent YoY, respectively during 1QFY12, while Refiners and power utilities respective earnings declined by 11 percent YoY and 26 percent YoY. Hence, energy companies cumulatively posted earnings growth of 27 percent YoY led by enhanced production profile of E&Ps, higher intl oil prices and lower turnover tax rate. The manufacturing concerns profits (over 128 percent YoY) were boosted by higher domestic demand and price hikes. To recall demand received a battering last year following heavy floods. All fertilizer offtake, local cement demand and auto sales increased by 30 percent YoY, 12.2 percent YoY and 30 percent YoY, respectively while a respective average price increase of 42 percent YoY, 40 percent YoY and 9 percent YoY were witnessed. The banks led the growth in the services sector (up 38 per cent YoY).