PSMC_2QCY22 Result Review, (AKD Off the Analyst's Desk Aug 25, 2022)
AKD, Off the Analyst's Desk
PSMC: 2QCY22 Result Review
Pak Suzuki Motor Company Limited (PSMC) announced its 2QCY22 result today where it posted NPAT of PkR443mn (EPS: PkR5.4) compared to loss of PkR460mn (LPS: PkR5.6) in the first quarter. This brings cumulative loss for 1HCY22 to PkR17mn (LPS: PkR 0.2). Earn-ings for the quarter are up 6%YoY despite lower gross margins due to higher volumes. The result is higher than our expectations due to significantly higher other income.
Revenue for the quarter has increased by 36%QoQ to reach PkR64.9bn due to higher volumes (+11%QoQ) and higher prices. Revenue is also up 116%YoY on the back of a record breaking year for the company in terms of offtake.
The gross margin in 2QCY22 clocked in at 4.4% in contrast 2.8% in the first quarter of the year. Despite significant currency depreciation, the company has hiked its prices in accordance. Moreover, the tremendous sales of Swift has had a positive impact due to the new model yielding higher margins than the rest.
The finance cost has shown some minute improvement, declining by 21%QoQ to PkR811mn owing lower penalties paid to consumers as the Company was able to de-liver more vehicles this quarter. To recall, SBP has imposed financial charges for the OEMs on the late delivery of vehicles.
The company has posted massive other income in the quarter of PkR1.0bn owing to strong income from Short-term investments and cash balances. This amount is signifi-cantly higher than our expectations of an income of PkR700mn, allowing the company to beat the consensus estimates.
Additionally we can see an adjustment in taxation due to the 10% Supertax imposed on the earnings for CY21. Hence, ETR in this quarter has come at 68%, in line with our expectations for the quarter.
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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