HCAR _1QMY23 Result Review -Above expectation, (AKD Off the Analyst's Desk Jul 26, 2022)
AKD, Off the Analyst's Desk
HCAR: 1QMY23 Result Review -Above expectation
HCAR announced its financial result for 1QMY23 which posted earnings of PkR658mn (EPS: PkR4.61), growing by 234%QoQ compared to earnings of PkR197mn in 4QMY22 and decreasing by 29%YoY compared to earnings of PkR928mn (EPS: PkR6.50) during 1QMY22. Revenue for the quarter has clocked in at PkR30.25bn, remaining flat QoQ while up 39%YoY from the revenue of PkR21.77bn in SPLY.
- These earnings are well above our expectations, mainly due to the company boasting an impressive recovery in gross margins, with margins for this quarter standing at 6.3% vs. 4.5% in 4QMY22. The gross margins have increased due to the revision of prices twice in the last quarter, once in April and then again in May, hence keeping margins elevated.
- Sales for the company have remained flat at -2%QoQ compared to 4QMY22, reaching PkR30.25bn while posting PkR30.77bn for 4QMY22. The price increases have kept volumes subdued, with the company selling 9,442 units in 1QMY23, lower by 10% QoQ.
- Distribution & Marketing costs seem have normalized again, dropping well below expectations to PkR242mn. To recall, this expense clocked in at PkR613mn in the 4QMY22 as the company promoted the new Civic.
- Other Income has been recorded at PkR527mn declining by 16%QoQ. This indicates diminished Cash & ST Investments as the interest rates have risen in the past quarter (525bps hike in the interest rate last quarter).
- Other expenses for the quarter are PkR753mn, owing to exchange losses on trade Payables due to heavy currency depreciation experienced in the last quarter.
- Financial charges have been recorded well below expectations, as the payments on late deliveries to customers have not become a crisis as of yet. This is primarily due to the company’s wise policy to take advances of ~20% of the price from customers, which is lower than the other OEMs. It remains to be seen how the crisis will impact the company going forward.
AKD Research
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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