INDU: Catalysts under the hood demand buy!
Updating assumptions for foreign exchange, inflation, below the line items and selling prices in light of increases (with reports indicating escalations to follow), we raise out FY18-20F NPAT estimates by ~8.5% on the back of: 1) higher than expected price increases, passing on the complete impact of external shocks while preserving margins, 2) de-bottleneck activity lifting production constraints accompanied by a beneficial product mix tilting in favor of premium SUVs while the Corolla's 'minor-major' facelift sustains demand, and 3) margin accretion through introduction of upgraded variants (Fortuner Diesel variant launched March'18) where elevated margins have been observed historically, a trend we expect to continue till FY20F. Based on the same, we raise our FCFE based Dec'18 TP for the OEM to PkR2191.84/sh (a hike of ~5.9% over our previous TP), where a hefty payout policy allows for FY18E/19F D/Y of 6.8/7.2% revealing high quality earnings (FY18-20F FCFE per share/EPS of 0.83x). Our Dec’18 FCFE based TP of PkR2191.84/sh offers 26.7% returns from current price levels. BUY!
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.
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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