Pakistan Auto_Cash-flows post strong recovery, (AKD Daily, Nov 27, 2020)
- Presenting an updated cash flow position upon release of detailed financial accounts for auto OEMs we find aggressive normalization in industry CAPEX with the TTM total outlay of PkR5.64bn (down 21%QoQ/60%YoY) with PSMC/INDU/HCAR contributing 23/34/44%, where HCAR’s CAPEX outlay is an expected indication of model launch expectations.
- The industry’s TTM topline/gross profit recovered from near bottom levels seen just last quarter but remaining lower by 33/48%QoQ where the growth in outgoing Sept’20 quarter was outsized (cumulative sales/gross profit up 2.9x/5.5xQoQ and up 33/62%YoY) showcasing resilience post COVID-19 driven business disruptions while a stable FX situation bolstered margins (industry GM at 6.3% for Sept’20 vs. 5.2% SPLY).
- In terms of free-cash flows, normalized outflows are evident, with net working capital variations improving under healthier order books stabilizing Net Working Capital outflows as the industry rationalized CAPEX (cumulative 2QCY20 CAPEX of PkR5.7bn down 21%QoQ/60%YoY)
- A positive spillover of improved profitability and indication of continued order book health are the drastic decline in leverage levels, as OEMs (led by PSMC) reduce short term loans while benefiting from improved organic cash generation. INDU has filled its ST Invt. coffers back to the brim with current outstanding amount of PkR66.2bn higher than previous peak (PkR55.0bn on June’18) continuing to cushion payouts.
AKD Research
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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