Pakistan Autos_Nothing much to see here, (AKD Daily, Jul 14, 2020)
AKD Daily
Pakistan Autos: Nothing much to see here
- June’20 total automotive industry sales recorded at 8,960 units (+97%MoM/-45%YoY) continuing consecutive YoY softening of sales into its 20th month, closing FY20 with total industry sales of 115,234 (-53%YoY), reversing cumulative sales back by a decade, to FY09-10 levels.
- Major constituents of total industry sales moved -93%/+253%/+100%/+187%MoM for Passenger Cars/Trucks/LCVs/Tractors, while cumulative FY20 category performance remains subdued (-53%/-48%/-54%/-35%YoY) mostly from customers facing “sticker shock” and COVID-19 induced measures taking the wind out of consumer demand
- Confirming our stance of 1,300CC premium offerings leading any recovery in sales, MoM segment-wise sales moves were +406%/0%/+16%MoM for 1,300CC+/1,000CC/800CC & below, while cumulative FY20 sales remained weak (-61%/-65%/-24%YoY), symptomatic of the constrained buying behavior exhibited during period of rising uncertainty and weak consumer confidence
- FY20 was slated to be the year for new entrants launching major PC CKD variants, where only one major Greenfield player (Kia Lucky) has launched two variants (compact SUV Sportage in Aug’19, and hatchback Picanto in Oct’19), in an environment of overall weakness, where the much awaited Yaris launch was delayed and the eventual launch hampered by COVID-19
- We remain upbeat on INDU, which remains a high quality offering, with its blend of demand growth from premium PC offerings, margin preservation and robust competitive moats (dealer, service center network), arguably the best placed to weather competitive pressures. We have a FCFE based TP of PkR1,375/sh, trading at FY21 P/E of 15.9x, offering upside of ~18% (inclusive of FY21 D/Y of 2.5%) at current levels.
AKD Research
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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