PSMC: LCV demand to the rescue
PSMC is scheduled to release earnings for 2QCY18 in the backdrop of drastic moves in input costs (PkR vs. US$ -10.0%, PkR/JpY -11.9% till June'18), and slower sales (total sales for PSMC -3%QoQ) from seasonal swings. We expect the OEM to report 2QCY18E earnings of PkR614mn (EPS:PkR7.45/sh.) recording a slide of 10%YoY, taking cumulative 1HCY18 NPAT to PkR1.52bn (EPS:PkR18.45/sh), marking a decline of 31.2%YoY. Clouds dissenting over the stock follow from the absence of any new model launches and external pressures to input costs keeping margins under pressure, while longer term questions over demand persisting in the face of price hikes (~7%CYTD following three price hikes). These may be overblown, where the core demand base for LCVs (transporters, commercial users, movers) remains in place (Bolan/Ravi sales for 1HCY18 up 17/19%YoY) to support sales numbers. Currently trading at PE's of 7.9x/5.9x for CY18F/19F, we have a BUY stance on the stock with TP of 610/sh. .
PSMC Co Ltd. PSMC CO., Ltd is a Korea-based company primarily involved in the manufacture of structural materials for semiconductors. The Company's main product is lead frame, a thin piece of copper alloy strip used as a mounting pad for silicon chips and its internal connections. The lead frames include plastic dual in line packages, plastic leaded chip carriers, small outline integrated circuits, quad flat packs, discrete and transistor outlines, as well as others. It also manufactures and markets tools, including lead frame tools, tool parts and fixtures, motor core tools and connector tools; pre-molded products, which are used in image and pressure sensors for cars, medical instruments, photoelectrons and other devices; palladium/nickel pre-plated frames (Pd/Ni PPFs), which are lead frames developed to prevent the discharging of environment pollutants, and electronic connectors.
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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