PSMC - 2QCY23 Result Review - Surprise earnings over reversal in financial charges , (AKD Off the Analyst's Desk Aug 25, 2023)
AKD, Off the Analyst's Desk
PSMC - 2QCY23 Result Review - Surprise earnings over reversal in financial charges
Pak Suzuki Motor Company Ltd. (PSMC) announced its 2QCY23 result today where the company has posted earnings of PkR3.2bn (PkR39.4/sh) compared to loss of PkR12.9bn (LPS: PkR156.9) in the quarter before. The company's profit for the quarter is mainly attributed to a negative finance charge of PkR2.7bn and elevated other income.
- Auto manufacturer's topline stood at PkR21.3bn (down 2%/67% QoQ/YoY), primarily due to a decrease in sales volumes, with the company selling 7.4k units during the quarter, compared to a monthly avg. sales of 31.5k units in CY22.
- Gross margins improved to 10.1% during the quarter, up from 9.1% in the previous quarter. This improvement is due to the full impact of increased prices over the quarter and a stable US$/PkR parity. To note, average USD/PkR rate was PkR286.2/US$ during the quarter, showing a 1% depreciation from the end price of PkR283.6/US$ in 1QCY23.
- Distribution expenses decreased by 72% QoQ to PkR243mn, mainly due to reduced transportation charges resulting from the decline in sales volumes. However, administrative costs remained elevated, increasing by 16%YoY due to inflationary pressures.
- A notable surprise was the negative financial charges of PkR2.7bn (PkR32.5/sh), which could potentially be a reversal of exchange loss incurred in the last quarter from the parent company. PSMC’s management had previously indicated the possibility of assistance from its parent company. While, further clarity is awaited to understand the exact reason for this development.
- Another positive surprise was other income, which reached PkR774mn for the quarter, marking a 9.5x increase QoQ, despite a significant decline in the company's cash reserves. Notably, the company's last reported reserves have decreased by 98% QoQ.
- Finally, for the first half of the calendar year, the company's loss amounted to PkR9.8bn (LPS: PkR117.6), primarily due to a substantial finance cost of PkR12.8bn incurred in the previous quarter.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.