HCAR_2QMY23 Result Review, (AKD Off the Analyst's Desk Nov 16, 2022)
Honda Atlas Cars Limited (HCAR) announced it 2QMY23 result today where it posted LAT of PkR385mn (LPS: PkR2.7) compared to profit of PkR658mn (EPS: PkR4.6) in the first quarter. This brings cumulative earnings for 1HMY23 to PkR273mn (EPS: PkR1.9). The performance in the quarter is well below industry expectations due to a taxation charge of PkR544mn, culminating to an ETR of 342% for the quarter.
- Revenue for the quarter has decreased by 35%QoQ to reach PkR19.5bn, while also down by 25%YoY. The decline is due to the curb on the imports of CKD kits, with offtakes down by 40%QoQ and 39%YoY. Despite announcing hiked prices in August, the prices could not come in effect in the current quarter.
- Discounts to customers boosted by markup on late deliveries is likely to have dented net sales along with margins. Gross margins in 2QMY23 clocked in at 3.4% in contrast to the 6.3% recorded in the first quarter of the year. Significant currency depreciation along with sky high inflation have caused the per unit COGS to increase.
- Other Income has beaten expectations, likely due to accumulation of Cash & ST investments in the quarter along with higher interest rates. PkR788mn was recorded for 2QMY23, up by 50%QoQ and 53%YoY.
- Other expenses have remained flat QoQ, clocking in at PkR716mn for the quarter. The vast majority consists of exchange losses on the foreign trade payables, as the local currency suffered hefty depreciation in the quarter.
- Taxation charge for HCAR has shot through the roof in this quarter, with an ETR of 342% likely on the back of an adjustment for the Supertax imposed on FY22. To note, we had assumed an ETR of 40% for the quarter, similar to that recorded in 1QMY23.
Honda Atlas Cars (Pakistan) Limited. Honda Atlas Cars (Pakistan) Limited is engaged in assembling and progressive manufacturing and sale of Honda vehicles and spare parts. The Company's segments include Manufacturing and Trading. The Company's Manufacturing segment relates to the sale of locally manufactured cars and parts. The Trading segment relates to the trading of completely built units (CBUs) and parts. The Company's factory is located at Multan Road, Manga Mandi, Lahore. The Company offers car models, such as Honda Accord, Honda CR-V, Honda CR-Z, Honda HR-V, Honda Civic (over four models), Honda City Aspire (over four models) and Honda City (over four models) in various colors with a range of technology features. The Company's cars are available in colors, including crystal black pearl, bold beige, taffeta white, urban titanium, modern steel metallic, habenaro red, alabaster silver metallic, camelian red pearl and white orchid pearl. The Company is a subsidiary of Honda Motor Co., Ltd., Japan.
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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