Pakistan Autos_ups & downs are what cycles are made of
- Tepid August'18 PAMA sales data (total industry sales of 18,384units -17%MoM/-20%YoY illustrates sector dampeners (input pressures and price hikes, lack of new models) catching up to restrict demand, with the non-filer sales ban being the straw that breaks the camel's back.
- Seasonality played-out during the month (Eid effect, end of Kharif season), where cumulative 8MCY18 total industry sales of 180,300 units (+10%YoY) remains a better barometer for judging industry health (seasonal variations evened out by longer periods).
- Cumulative sales were up +13/+12/+5%YoY for PSMC/HCAR/INDU during 8MCY18, as a 23%YoY rise in 1000cc segment sales for passenger cars (driven by the Wagon R) kept PSMC's operations healthy, while a paltry 5%YoY rise in 1,300CC+ sales offtake restricted Corolla sales.
- While news reports point to additional levies on imported vehicles and reduction in maximum allowed years of depreciation for used vehicles, we believe policies surrounding the non-filer ban (exemptions) is a key measure to monitor, where new entrants are likely to feel the heat of reduced demand as well.
- Our June'19 TP of PkR2,060/sh for INDU offers 41% upside, where enhanced capacity of 75,000 by FY21F, is the perfect launchpad, in our view, for stratification of the Corolla into mid-tier and premium markets. In the meantime, yields of FY19/20F 9.8/10.3% and P/BV 2.7/2.3x underscore value.
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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