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INDU & PSMC_ Result Previews, (AKD Daily, Jul 28, 2022)

INDU & PSMC: Result Previews
INDU – FY22 earnings to clock in at PkR236.7/sh: We expect Indus Motor Company Limited (INDU) to post NPAT of PkR3.3bn (EPS: PkR42.1) in the closing quarter of FY22, down 25%YoY/35%QoQ compared to PkR4.4bn (EPS: PkR56.2) in SPLY and PkR5.1bn (EPS: PkR65.1) in 3QFY22. This will take cumulative FY22 earnings to PkR236.7/sh (+45%YoY), capping off a great year. FY22 will see INDU post record revenues, with all-time high net sales of PkR276.7bn and volume offtakes of 74,536 CKD units sold, although volumes are down 3%QoQ in 4QFY22 owing to supply-side issues prevalent in the industry. Moreover, gross margins should see an improve-ment due to the company revising prices twice during the quarter, hence margins are likely to remain flat at 8% compared to 7.7% in the last quarter. Other income is expected to come at PkR4.5bn (PkR58.3/sh) for the quarter, up 44% QoQ, owing to rising interest rates along with strong ST investments held by the company. We expect an adjustment of the 10% Supertax ap-plicable for FY22 to be accounted for in this quarter, bringing ETR for 4QFY22 to 63%, hence reducing earnings for the quarter. Lastly, we expect a dividend payout of PkR28.0/sh, taking cumulative dividends for FY22 to PkR118/sh, with a payout ratio of 50%.
PSMC – 2QCY22 earnings to clock in at PkR2.3/sh: We expect Pak Suzuki Motor Company Lim-ited (PSMC) to post NPAT of PkR189mn (EPS: PkR2.2) in 2QCY22, decreasing by 55%YoY but in contrast to the LPS of PkR5.6 in 1QCY22. This will take 1HCY22 loss to PkR271mn (LPS: PkR3.3), dropping drastically compared to earnings of PkR1.2bn (EPS: PkR14.5) in 1HFY21. We expect this quarter to turn profitable for the company due to a 43% surge in revenue, due to two price hikes along with the company closing the quarter with 40,860 units sold (+11%QoQ). Moreover, the price hikes aforementioned along with outstanding sales for high margin offerings (Swift, Alto) are likely to bring gross margins to 4.2% for the quarter. We expect financial charges to remain concerning for the company, denting profitability, albeit lesser than the PkR1.0bn charge record-ed in the previous quarter due to higher volume offtakes which are likely to alleviate the pres-sure. Further impact on the earnings for this quarter are due to the adjustment of the 10% su-pertax applicable on CY21, which along with a 4% increase in tax for 2QCY22 takes ETR for the quarter to 73%. A factor to cushion the impact on earnings is the 33%QoQ increase in other income to reach PkR700mn due to rising interest rates. We do not expect the company to an-nounce dividends as it still has some way to go in making up for the loss recorded in 1HCY22.