Intermarket Intel - INDU 2QFY18 Result Review: Higher Fortuner/Hilux sales resulted in stable margins
- INDU has announced 2QFY18 NPAT of PRs3.7bn (EPS: PRs47.5), up 23% YoY/3% QoQ, higher than our EPS expectation of PRs44.1. INDU also announced a dividend of PRs32.5/sh, in addition to PRs30.0/sh paid in 1QFY18
- The company posted gross margins of 17.7% during 2QFY18, slightly higher than 17.4% GMs in the previous quarter. Despite rising steel prices, increasing share of Fortuner/Hilux sales is supporting margins, in our view. To recall, sales were 15k units during 2QFY18, unchanged from previous quarter, but Hilux/Fortuner volumes grew by 7% as Corolla sales dipped by 2%
- Other highlights in the quarter include (i) distribution expenses of PRs270, down 7%YoY, but (ii) increase in admin expenses of 76%YoY to PRs404mn and (iii) financial charges of PRs120mn, up 13%YoY, driven by markup on late deliveries.
- We await detailed accounts before updating our estimates. Currently, we are Neutral on INDU with Jun’18 TP of PRs1,834/sh, offering an upside of 8% from LDCP and a dividend yield of 8%.
Indus Motor is engaged in the assembly, progressive manufacture, import and marketing of Toyota motor vehicles. Co. is also the sole distributor of Toyota and Daihatsu vehicles in Pakistan.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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