INDU_Yaris - A silver bullet to cyclical slip, (AKD Daily, Dec 19, 2019)
- We reiterate our call for INDU launching a new brand as a flanker to the successful Corolla franchise and effectively upgrading the OEMs offerings in the 1,300CC+ sedan category, contributed the lion’s share of INDU’s profits
- Running a sensitivity analysis for profitability accretion from variations in price and sales growth from any new-model effect compared against our base case (15% price dip vs. comparable Corolla variants and ~28K unit sales), we conclude with the view that unit sales growth trumps any price discounts, with the OEM possibly pushing annual profits by 5-31% from annual Yaris sales of 30-50K units
- On price rise frequency and cumulative hikes amongst the three major OEMs through the CY17-19 devaluation led pricing escalations, INDU has the highest cumulative price rise for its Corolla variant, with higher price rises sooner, confirming our case for INDU continuing this trend to preserve margins
- Based on our outlook for the Yaris launch, we retain our Buy stance on the stock (TP of 1,452/sh) where near term hiccups in profitability are countered by earnings growth from the new model, in a competitive segment largely shunned by new entrants (KIA or Hyundai yet to announce plans to enter this segment with CKD offerings) making for sustainable upside
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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