Autos_Incumbents should not be taken lightly
Automobile assemblers have had a tepid run in FY18TD where listed players have dipped ~8% on market weighed basis. While recent weakness could be underpinned by uncertainty over limitation placed on purchase of CKD, CBU sales, we believe broader factors impacting fair values remain sanguine. We take a comprehensive look at commodity and currency movements elevating costs for industry OEMs. CAPEX additions in annual and quarterly accounts reveal sustained BMR, enhancements and new model related outlays where elements of CWIP and related party transactions allude to possible upgrades in the offing. Lastly we analyze credit disbursement growth and subdued CPI rise imposing limited pressures on consumer disposable spending, while rising POL product prices could be detrimental to retail demand. Budgetary confusion over implementation of policy restricting sales to non-filers has shone a spotlight on wider grey-spots concerning the industry, in our view, which remain over hyped. Years of strong operational expertise ensure competitive advantages for incumbents (referred to as 'moats' by Mr. Buffet), justifying out bullish thesis on the space.
Indus Motor is engaged in the assembly, progressive manufacture, import and marketing of Toyota motor vehicles. Co. is also the sole distributor of Toyota and Daihatsu vehicles in Pakistan.
Pak Suzuki Motor is engaged in assembling, progressive manufacturing and marketing of Suzuki cars, pickups, vans, and 4X4 vehicles. Co.'s product models include Baleno, Margalla, Mehran, Kyber, Ravi Pickup, Bolan Van and Potohar Jeep.
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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