INDU: FY18 Results will pass muster
From a sectoral perspective, dampeners prompting selling in the space include PkR weakness and ban on sales to non-filers, which have led INDU to soften by 10.2%CYTD, weakening in the process to trade at a FY19/20F P/E of 6.9x/6.4x. Even so, 4QFY18E forecasts (BoD meeting on 28th August) show the company releasing an earnings read of PkR3.6bn (EPS:PkR45.96), a rise of 6%YoY, where key catalysts are 32%YoY rise in revenues as a follow-on from price hikes (~12% from July'17 to May'18) preserving margins (FY18E GM of 16.9% vs. 17.7% for FY17). Cumulative FY18E NPAT is expected to be PkR15.25bn (EPS:PkR193.99), so far its best year. Accompanying the results, we expect an additional payout of PkR30/sh taking full year payouts to PkR125/sh (payout ratio of 64%). Commenting on INDU's ability to fortify competitive moats preserving margins, we highlight the launch of CKD variants segmenting the lower end of the Corolla (Vios to replace 1.3L offering), and continued hold on premium SUV space as delivering an investment case grounded on growth and value. With an FCFE based Jun'19 TP of PkR2,190/sh, we recommend a BUY stance on the scrip highlighting current multiples (FY19/20F P/Es of 6.9/6.4x) as being too good to ignore.
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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