Report
EUR 9.24 For Business Accounts Only

PSMC: Major developments keep sentiment afloat, (AKD Daily, De 06, 2019)

  • Continuing the to-and-fro between the GoP and PSMC sponsors, the company (as expected) is reportedly proceeding with planned capacity expansions, despite receiving no incentives from the GoP.
  • Additionally, news flow suggests the launch of an upgraded Swift is in the works, where we showcase earnings sensitivities from a spike in sales and price tags, setting up our base case expectations of 15-18% growth in NPAT from a potential new model launch with accompanying price/sales hike of ~7/4% from current levels.
  • IN this backdrop we assess the benefits from capacity expansions on the OEMs profitability, erring on the side of caution as the stock seems to have decoupled from fundamentals, with losses making the case for an expansion largely mute, in our view.
  • While we retain a Sell call on the stock, our forecasts may be amended following guidance on new model launches in the premium or LCV segment, while the capital stack for any planned expansion (contribution from internal cash flows or equity) could sway our estimates significantly.
Underlying
Pak Suzuki Motor Co. Ltd.

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.

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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