Pakistan Autos - The Challenging Case of Pakistan's Auto Sector,(AKD Daily, May 25, 2023)
- The impact of restrictions has hit the auto assemblers hard where auto assemblers are facing shortage of CKD kits leading to frequent plant shutdown. Where demand side issues also persist, where auto assemblers have hiked prices by a cumulative 30% in 1QCY23, blaming the PkR devaluation and increased taxation for the hikes. To note, the PkR devalued by 23%QoQ in 1QCY23, while taxes on 1,400cc cars and above were raised to 25%.
- HCAR’s production remained well below capacity, with the company producing ~26,176 units in MY23 vs actual capacity of 50,000 units. HCAR’s volumetric growth in MY24 is expected to come in at 7%YoY, and thereafter to grow at a CAGR of 11% between MY24 and MY27.
- The company’s equity has been reduced to PkR83.3/sh as of Mar’23. Trade Payables have ballooned during recent times, as the company is unable to pay its Holding Company against the import of CKD kits. As of Mar’23 end, of the PkR89bn in payables, PkR48.3bn was owed to the Holding Company.
- Production in 10MFY23 has fallen by 50%, while the delivery times have increased substantially, as the company struggles to import CKD kits. Hence, as of late, the company resembles more of an investments firm rather than an auto assembler.
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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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