Pakistan Autos: Slow and steady is the new norm
- Monthly automobile industry sales data is out, with a total of 19,934 units being sold (+8%MoM/+2%YoY) of which 16,957 cars (+10%MoM/+8%YoY), 2,388 LCVs (+5%MoM/-24%YoY), 539 Trucks (-12%MoM/-28%YoY) and 5,818 tractors (+44%MoM/-2%YoY) made up total offtake.
- In the passenger car segment, total sales of 16,957 (+10%MoM/+8%YoY) consist of 3,539, 800CC & below segment (0%MoM/-33%YoY), 4,455 1,000CC segment (+16%MoM/+41%YoY) and 8,963 1300CC & above segment (+12%MoM/+25%YoY) sales respectively.
- Cumulative 9MCY18 total industry sales of 200,234 units (+9.3%YoY) pushed by passenger car sales growth of 9.3%YoY (164,575 units sold), where HCAR (40,168 vehicles sold up 14.1%YoY), PSMC (104,324 vehicles up 10.6%YoY), INDU (48,353 units sold up 4.0%YoY) are below 5YR historic CAGRs (HCAR/PSMC/INDU 9MFY13-18 CAGR of 16/12/9%) signifying a general slowdown vs. long term growth rates
- Citing wider industry headwinds including the flat-lining of sales growth in the price-sensitive 800cc & below segment coupled with recent PkR weakness against the Greenback (~7% in Oct'18) nudging OEMs for a further round of price hikes (4th round this year with prices rising 7-11% CYTD already), we highlight the demand outlook to be on a contractionary path.
- Re-iterating our cautionary outlook on the sector, the recent sell-off in the space has opened up valuations (FY19/20 P/Es of 5.4/5.7x) where INDU remains our top pick in the coverage universe with attractive D/Ys (FY19/20 D/Ys of 11.0/10.6%) and an unencumbered balance sheet (cash and short term investments of PkR57.2bn or PkR786/sh) underpinning our BUY call on the stock.
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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