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HCAR - MY2023 Analyst Briefing Takeaway, (AKD Off the Analyst's Desk July 24, 2023)

AKD, Off the Analyst's Desk

HCAR -  MY2023 Analyst Briefing Takeaway

  • Honda Atlas Cars Limited (HCAR) conducted its analyst briefing today to brief investors on MY23 results and to shed some light on future outlook. Key takeaways from the meeting are as follows:
  • To recall, company had reported PAT of PkR260mn (EPS: PkR1.8) in MY23 vs PAT of PkR2.6bn (EPS: PkR17.6) in MY22, a decline of 90%YoY. The decline in profitability was primarily attributed to a decrease in sales volume, an exchange loss of PkR4.5bn, and the imposition of a 10% super tax.
  • Gross margins rose to 7.5% compared to 5.2% in SPLY, driven by frequent price increases owing to rapid PkR depreciation and heightened inflation. However, management clarified that high gross margins in the last reported quarter are not sustainable and were primarily driven old inventory and year-end adjustments.
  • Company’s volumetric sales posted decline of 31.6%YoY in MY23 majorly due to the import restrictions that hampered production (down 30.7%YoY). Company ended the year with a market share of 15.8%.
  • On the demand side, management expects demand to remain in check given the heightened auto prices and record high interest rates. The recent interest rate hikes have led to a decline in demand from auto financing, dropping from approximately 35-40% to around 10-15% currently.
  • Management is optimistic that the company will be able to achieve sales volumes similar to those of MY23 if the import restrictions remain eased off. To note, in 1QMY24, company only posted sales of 604 units vs. MY23 quarterly average of 6.4k units.
  • Regarding LC restrictions, the management indicated that some restrictions have been eased off, and the company has been able to open some recent LCs.
  • Currently, the localization levels stand at 71%, 61%, 52%, and 55% for City, Civic, BR-V, and HRV models, respectively. Additionally, the company is actively working on a hybrid model, which is currently in the pipeline.
  • In terms of foreign currency exposure, the company's major exposure is in US Dollars, followed by Japanese Yen and Thai Baht.

 

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AKD Securities Limited
AKD Securities Limited

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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