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Team AKD Research
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MTL_1QFY22 Analyst Briefing Takeaways, (AKD, Off the Analyst's Desk, Nov 25, 2021)

AKD, Off the Analyst's Desk MTL: Analyst briefing takeaways · Millat Tractors Limited (MTL) held its analyst briefing session today to discuss its FY21 and 1QFY22 results. To recall the company posted unconsolidated NPAT of PkR5.78bn (EPS: PkR85.9) in FY21, swelling by +169%YoY. In the latest quarter, the earnings have depicted growth of 16%YoY to stand at PkR1.3bn (EPS: PkR19.6). · In FY21, the company sold 35,527 tractors, depicting a growth of 70%YoY while the market share stood at 70%. In 4MYFY22, the company has sold 10.7k units, growing by 5%YoY. Among the total sold volumes, ~45% of the contribution was from bigger tractors (more than 60HP) while ~55% of the contribution was from smaller tractors (less than 60HP). · According to the management, the affordability of the farmers this is year is higher than the previous years due to bumper yields in crops. This may ignite another wave of tractors sales in upcoming months. To capitalize on the growing market, the company plans to increase its product range by introducing 100HP tractors for bigger farm sizes. · The company expects the export sales to remain under pressure in FY22 as the trade activities with Afghanistan are currently under a halt. · The tractor industry is currently being charged a GST of 5% which may be increased to 17% in near future to meet the conditions of IMF. This may adversely impact the volumes of MTL. In addition to this, the hike in interest rates is also expected to slow down the demand for overall industry in upcoming months. · The localization level of MTL currently stands at 92%, however, the company is still exposed to foreign exchange risk since the base raw materials of the localized parts are mostly imported. · In regards to the discussion about investment in Hyundai Nishat Motors, the management expects fruitful results from this strategic investment when the Hyundai brand matures in Pakistan. The global shortage of semiconductor chips, however, is currently hindering the growth of the company. AKD Research

Underlying
Millat Tractors Ltd.

Millat Tractors is engaged in the assembly and manufacture of agricultural and industrial tractors, implements and multi-application equipments including diesel generating sets, forklift trucks, prime movers and other related products. Co. is organized into three business units: the Tractor segment, which deals with assembling and manufacturing of agricultural tractors, implements and multi-application products; the Equipment and Parts segment which is engaged in the business of manufacturing of automotive, agricultural and industrial vehicles parts and components; and the Castings segment, which is engaged in manufacturing of castings for tractors and automotive parts.

Provider
AKD Securities Limited
AKD Securities Limited

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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