PSMC: Punjab Budget brings "good things"
​Heading into an election year, the Punjab Government has chosen to stick to what is old and allocate funds to concessionary automotive schemes. News reports leading up to the allocation have been on point, with publicly available sources pointing to an Orange Cab scheme (PkR35bn allocated for 50,000 units) under a continuation of the Apna Rozgar Scheme. Drawing conclusions and benchmarking shorter delivery lead times to the CY14-16 Green Cab Rozgar Scheme, we believe a 1-2% discount over list price is likely. With approximately 20,000 units being delivered, our model highlights that NPAT for CY17E can be raised by PkR576mn (PkR7.0/sh) higher by 16% from our base case sales estimate (122K unit sales forecast and Weighted Average sales price growth of 4.1%YoY). We await clarification from PSMC management, not raising our estimates at this time. Our FCFF based TP of PkR800/sh implies a Neutral stance to last close, where upsides from payout raising measures in the Federal Budget may add value.
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