PSMC: High quality cash flows endure
Re-assessing our forecasts for PSMC, particularly watering down of gross margin (CY18-21F GM's now average 8.9% vs. 9.2% previously) and pricing power (lowered beyond CY20F) assumptions reducing our TP for Dec'18 by ~10% to PkR610/sh. Retaining our BUY stance on the stock we incorporate a mediocre rise in unit sales and pricing on the back of a new below 1000CC passenger car segment variant launch between CY18-19F (where management refrains from offering guidance following industry norms). This is expected to prolong PSMC's dominance in the segment, where we forecast below 1000CC passenger car segment to deliver 3YR forward sales growth of ~8.5%), despite threats to pricing power emerging at the tail-end of our horizon. Our bullish stance stands on the firm foundations of an unleveraged balance sheet, with working capital cycles conforming to long term moving averages, filtering through into clean, unrestrained Free Cash Flows. Buying into the dip is advocated, where the stock looks attractive on multiples (CY18E/19F P/E of 10.2x/7.7x) and value (P/B for CY18E/19F of 1.2x/1.0x).
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.