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GTYR - FY23 Analyst Brifing Takeaway, (AKD Off the Analyst's Desk Oct 26, 2023)

AKD, Off the Analyst's Desk

GTYR - FY23 Analyst Brifing Takeaway

GTYR held its analyst briefing earlier today to apprise investors about their FY23 financial results and future outlook. To recall, company posted a Loss after Tax of PkR167mn vs. a PAT of PkR356mn in the previous year. The loss during the year was due to high financial charges, clocking in at PkR1.3bn.

 

• Company has shifted their focus towards the replacement market and exports due to the sluggishness in new auto sales, exacerbated by frequent OEM shutdowns. As part of this strategy, the company introduced new designs specifically for the replacement market in the previous fiscal year.
• Diversifying its product offerings, the company ventured into a new category by providing excavators and Off the Road (OTR) tyres in the replacement market. Additionally, the company initiated the supply of 17-inch tyres to OEMs for SUVs/crossovers.
• For the mass production of 18-inch tyres, the company requires CAPEX. Once interest rates and the situation around import restriction stabilizes, the company plans to initiate efforts in that direction.
• The company sources its raw materials from various countries including, Malaysia, China, and Korea, subject to approval from its technical partner "Continental Tyre." Key raw materials include natural and synthetic rubber, carbon black, and other chemicals.
• Company’s management appreciated the government's efforts to curb smuggling, expressing anticipation for clarity on whether the initiative includes radial tires or only bike tires. They stated that smugglers typically maintain a few months of inventory, and the impact of the smuggling curb would become evident over time. Smuggled tires constitute over 50% of the tire market, according to management.
• Management anticipates a thriving demand for farm tires and tractors in the future, driven by a positive agricultural outlook.
• According to management, exchange rate stability and anticipated monetary policy easing from Mar’24 are positive factors for the company. However, volatile international oil prices may increase their raw materiala costs.
• Going forward, the company plans to explore and expand in export markets. It has already commenced exports to African markets in 1QFY24, marking a shift from its previous focus on exporting solely to Afghanistan. Management anticipates volumetric growth in the coming periods.

 

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