Topline Securities Limited - Industrial Motor Co. (INDU) Flash Note: Indus Motors (INDU): 3QFY18 Analyst Briefing Notes

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Topline Securities Limited

Topline Research

Flash Note: Indus Motors (INDU): 3QFY18 Analyst Briefing Notes

Cars Market is expected to cross 350k mark this year as per the management. Sales of SUVs are up 58% YoY in 9MFY18.
Auto sector is seeing investment due to introduction of new measures in Auto Development policy.
New players are mostly coming in the sedan & SUV segment and not much in the small car segment so the competition. However, company is gearing up for the competition.
The company made minor changes to its Hilux & Fortuner model in the months of Feb-Mar.
Budgetary measure in which non-filers can not purchase cars, is negative for the sector. Govt. is very adamant on maintaining this measure. Pakistan Automotive Association (PAMA) has recommended this suggestion to be implemented gradually so customers can start complying gradually.
As a result of this development filers may start selling cars to non-filers.
For INDU, 60% buyers are non-filers. Even if car can be transferred from filer to non-filer, people may be reluctant as zero meter car will be sold as used car to them, management believes.
Company’s current capacity is around 65k with maximum production capability of 70k mark.
There has been a slight slowdown in orders after the recent price increase but in market stock is moving. It is not a cause of concern right now.
Around 38% of the total company sales are coming from auto financing.
Management stated that any further rupee depreciation will be passed on by the company.

10/05/2018 3 EN

Underlying

Industrial Motor Co.

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.

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PK0054501017 Pakistan Stock Exchange Pakistan

Provider

Topline Securities Limited

Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.

Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.

Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.

JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).

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Analysts

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