HCAR_1QMY24 Result Review - Striking 'Other Income' rescues earnings ,(AKD Off the Analyst's Desk Jul 25, 2023)
AKD, Off the Analyst's Desk
HCAR_1QMY24 Result Review - Striking ‘Other Income’ rescues earnings
Honda Atlas Cars Limited (HCAR) announced its 1QMY24 results today where the company posted PAT of PkR145mn (EPS: PkR1.0) vs. LAT of PkR824mn (LPS: PkR5.8) in the previous quarter. Other income rescued the bottom-line despite the loss posted on gross level. These earnings beat the street consensus, which was anticipating a loss for the quarter.
- Topline of the clocked in at PkR3.8bn in 1QMY24, a decline of 83%/88% on quarterly and yearly basis, respectively. This significant decline is majorly attributable to a dip in the sales volume, with the company selling only 601 units compared to the MY23 quarterly average of 6.4k units. To note, company's production plant remains shutdown for over 45 days due to restrictions on importing CKD kits.
- On the gross level, company reported a gross loss of PkR148mn despite price increases in 4QMY23. The loss was majorly due to diseconomies of scale during the quarter.
- Operating expenses witnessed a decrease of 27%/28% QoQ/YoY, clocking in at PkR412mn, possibly due to lower advertising and sales promotion spending.
- Other income saved face, amounting to PkR903mn, a quarterly and yearly increase of 32%/71%, respectively. The company's strategy of increasing investments in Government T-bills paid off well in rising interest rates. To note, HCAR doubled its ST investments on a YoY basis to PkR14.3bn in MY23.
- Furthermore, finance cost of the company increased by 118%YoY to PkR44mn, primarily due to the rise in interest rates.
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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