INDU_Lean, mean, vehicle volume machine, (AKD Daily, Dec 17, 2020)
AKD Daily
INDU: Lean, mean, vehicle volume machine
- Detailed accounts for 1QFY21 continue to depict a normalized operational backdrop, furthered by improved sales (reverting to 1QFY19 levels), where the OEM posted NPAT of PkR1.85bn (EPS:PkR23.48/sh) up by 9.1xQoQ/74%YoY, where recent sales performance has set the OEM on track to beat our previous sales forecasts for FY21
- Based on the same and with the confirmation of an upgraded Corolla (face-lift) launch in Jan’21, we adjust our earnings outlook for the firm raising FY21/22 EPS expectations by 42.4/30.0% against our previous forecasts to PkR106.3/137.2/sh, translating to a rolled-over DCF based TP of PkR1,500/sh
- With the expected normalization of working capital cycle (post COVID-19 related disruptions receding and PkR swings stabilizing), reduced CAPEX, augmented order books driving liquidity (mean reversion for operating cycle) we believe the OEM is likely to revert back to its pre-FY20 payout ratio of ~63%, translating to FY21/22 D/Ys of 4.9/6.2% at last close.
- We remain cautious on significant margin accretion from the newly launched Yaris, reflected in our muted GM’s for the forecast horizon (FY21-23 avg. of 9.9% vs. FY18-20 avg. of 12.6%), with earning growth increasingly predicated on volumetric sale growth (FY20-23 expected CKD sales CAGR of 25.6%).
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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