Intermarket Intel - PSMC CY17 Result Review - Higher ETR results in below-expected earnings
- PSMC has announced 4QCY17 NPAT of PRs729mn (EPS: PRs8.86), down 19%YoY/35%QoQ, which is lower than our estimated EPS of PRs9.89/sh. This translates into CY17 NPAT of PRs3.8bn (EPS: PRs46.49), up 38%YoY. The company also announced a full and final dividend of PRs18.6/sh, likely in order to avoid further taxes on undistributed earnings.
- In 4QCY17, gross margin decreased to 7.8% compared to 10.7% in SPLY, likely due to rising steel prices during the quarter (CRC up 19%YoY). Distribution expenses increased by 65%YoY to PRs834mn, in line with increased sales and launch of new variants in Dec’17. Finance cost depicted a positive contribution of PRs72mn, potentially on account of some exchange gains.
- The company booked effective tax rate of 36% in the quarter, due to taxation provisions on account of last year’s payout, as per company's management. To recall, the company distributed 16% of its earnings against the statutory requirement (of 40%, or pay 7.5% tax on retained earnings). This was a major deviation from our estimated earnings.
- Currently, we have Sell stance on the scrip with a TP of PRs494/sh.
Pak Suzuki Motor is engaged in assembling, progressive manufacturing and marketing of Suzuki cars, pickups, vans, and 4X4 vehicles. Co.'s product models include Baleno, Margalla, Mehran, Kyber, Ravi Pickup, Bolan Van and Potohar Jeep.
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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