Autos_FY18 growth is strong, but will it persist?
June'18 total automotive industry sales tapered off to 19,270 units (-15.2%MoM/+19.1%YoY), closing FY18 with total industry sales of 268,578 (+21.1%YoY). Major constituents of total industry sales (for FY18) moved +16.7%/+22.7%/-34.2%YoY for Passenger Cars/Trucks/Buses while LCVs & Pickups sales soared (+53.1%YoY) mostly from fleet sales. Bearish sentiment has squeezed the sector where valuations have reached attractive levels, despite wider question marks over organic demand growth following significant price hiked by OEMs. We believe INDU remains a high quality offering, with its blend of demand growth from premium SUV offerings, sturdy margins in sedan segment and cash heavy balance sheet. Moreover, we have an FCFE based TP of PkR2,191/sh, while the stock trades at 19F P/E of 6.5x, offering capital upside of 69% at current levels with a D/Y of 9.66%.
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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