reports
- Dave Nicoski
- Ross LaDuke
Vermilion ETF Pathfinder: Actionable ETF research & Ideas
Still Riding the Trend Higher; Upgrading Real Estate to Market Weight After discussing our expectations for a bounce in our 10/30/23 ETF Pathfinder with the Russell 2000 (IWM) testing major support at $162-$163, we outlined in our 11/20/23 ETF Pathfinder that we were shifting our outlook to bullish. Market-generated information has continued to be of the risk-on variety, which has only reinforced our bullish outlook on the broad equity market. Therefore, we continue to expect a rally into year-...
- Shahmir Malik
Pakistan Autos: Rising gross margins to improve sector profitability
* We expect the Japanese Auto OEMs to post NPAT of PKR579mn for the quarter ended June 2023, where the major contribution should come from INDU, while the other two OEMS are expected to post a loss. * Higher car prices are expected to translate into better gross margins for the entire industry. Although prices had been raised earlier during the year, the full realization of gross margins is expected to occur this quarter. * Despite improving margins, low volumes and persistently hi...
- Shahmir Malik
Pakistan Autos - Attractive valuations take care of the risks
* We maintain our Buy ratings on INDU (TP: PKR1,200/sh) and PSMC (PKR160/sh), but downgrade our stance to Neutral on HCAR (PKR120/sh). We look beyond interim Fx losses for PSMC and focus on its operational improvement. We also like INDU for its resilience and plans to introduce HEVs. HCAR is impeded by its relatively limited product offerings. * We think the worst of the macroeconomic shock is behind us, with auto OEMs already experiencing "default-like conditions." Demand and supply ma...
- IMS Research Team
Pakistan Autos : April 2023 Sales volume update
Auto industry volumes plunged in April, declining by 52% MoM to 4,463 units only, following a brief rebound last month. This has further contracted production and sales volumes by 53% and 50%, respectively in 10MFY23. This follows prolonged restriction on import of CKD kits, massive rise in car prices amid PKR depreciation, additional taxation and monetary tightening. INDU: During the month, INDU was able to broadly maintain sales volumes sequentially but the decline is a sharp 56% YoY. Sedan...
- IMS Research Team
Indus Motors: 3QFY23 Review - Multiple price hikes improve gross margi...
Indus Motors Ltd (INDU) has reported NPAT of PKR3.2bn (EPS: PKR40.92) in 3QFY23, up 2.4x QoQ but down 37% YoY. The result came in much better than our estimated NPAT of PKR2.3bn (EPS: PKR28.83), on higher than expected gross margins and lower FX losses. This takes 9MFY23 NPAT to PKR5.8bn (EPS: PKR74.35). The result was accompanied with an interim DPS of PKR24.4, which takes the 9MFY23 dividend to PKR42.80/sh. We expected a dividend of PKR14.0/sh. KEY RESULT HIGHLIGHTS FOR 3QFY23: * INDU’s re...
- Shahmir Malik
Pakistan Autos – Sector losses to extend on low volumes and PKR deprec...
IMS Autos Universe is anticipated to post NLAT of PKR8.6bn for the quarter ended March 2023, where the major contribution will come from PSMC which is expected to report an exchange loss of PKR10.1bn on its foreign payables. HCAR may also report losses for the quarter. Prolonged measures to curb non-essential imports have forced some local players to shut down their assembly lines. As a result, industry sales and production have further contracted by 46% and 47% QoQ basis. The timeline for ea...
- IMS Research Team
Pakistan Autos: Mar’23 - Production rebound leads to better volumes
Pakistan auto industry sales rebounded in Mar’23, increasing by 54% MoM to 9,351 units, primarily led by PSMC. However, industry volumes reduced by 66% YoY, amid measures to restrict CKD kits imports, which affected production. Secondly, a massive jump in car prices on the back of PKR devaluation and additional taxes, as well as sharp monetary tightening, have reduced automobile demand significantly. * INDU sales increased by 6%MoM, but were down by 73% YoY. The luxury segment (Fortuner and ...
- IMS Research Team
Pakistan Autos: Feb’23 - Prolonged raw material shortage further reduc...
Pakistan Auto industry sales continued to remain under pressure, declining by 45% MoM and 44% YoY to just 5,762 units in February 2023. This is due to (i) the government’s administrative measures to curb luxury goods imports, (ii) slower demand growth amid elevated interest rates, (iii) lower purchasing power amid multi-decades high inflation, and (iv) sharp hike in local car prices following PKR devaluation and increase in taxes, leading to a contraction in local production and demand. * IN...
- IMS Research Team
Pakistan Autos: Jan 23 - PSMC drags industry volumes to lowest since J...
Pakistan auto industry sales have witnessed a sharp decline of 38% MoM and 39% YoY to 10,431 units in January 2023. The massive reduction in volumetric sales is a reflection of (i) elevated interest rates, (ii) prolonged restriction on import of CKD kits, and (iii) rising inflation and general economic slowdown impacting purchasing power. With production also down by 42% MoM, restricted CKD imports are clearly a huge challenge for the industry, and the sector is likely to be beset by headwind...
- IMS Research Team
Indus Motors: 2QFY23 Review - Gross losses and reduced other income hi...
Indus Motors Ltd (INDU) has reported NPAT of PKR1.33bn (EPS: PKR16.93) in 2QFY23, a slight increase of 3%QoQ. However, on a YoY basis, NPAT contracted by 72%, due to losses on gross and operational level. These largely stem from depressed volumes amid import curbs and also PKR depreciation leading to elevated COGS. The result was accompanied with an interim DPS of PKR10.20/sh, which takes the 1HFY23 dividend to PKR18.40/sh. KEY RESULT HIGHLIGHTS FOR 2QFY23: * INDU’s revenue has shrunk by 29%...
- IMS Research Team
Pakistan Autos: Dec 22: Import restrictions continue to hold sway
The difficulties of the Auto sector continued in December as industry sales witnessed a 7% decline MoM and a significant 38% decline YoY. Production was down 10% MoM, a reflection of the recently announced industry closures across the auto sector. The recent sales and production numbers show that import restrictions, depressed demand and PKR depreciation continue to add to the woes of the Auto sector. While the sector will likely remain under pressure due to tight the foreign reserves situati...
- IMS Research Team
Pakistan Autos Sales: Volumes improved sequentially amid ease off in p...
Latest automobile sales numbers showed a positive MoM growth of 36%. Sales were down by 2% on a YoY basis. Production numbers maintained their positive momentum growing by 37% MoM to 18,391 units. This is an encouraging sign, especially considering the tough macro-environment the automakers are currently facing, with elevated interest rates, PKR volatility and import curtailment measures on CKD imports. While the numbers are encouraging persistent deterioration in Pakistan’s economic indicato...
- IMS Research Team
Oct’22 - Partial resumption of production has led to improved sales nu...
Latest automobile sales figures show some relief post the resumption in production; sales are down by 36% YoY, the MoM numbers were up 22% to 13,369 units. This is a similar number to the post pandemic lockdown in Sep’20. Despite the prevailing auto-parts import curtailment measures on CKD units, plant production resumption in Oct’22 has led to the improved production of 13,021 units (down 36% YoY but up 39% MoM). That said, elevated interest rates, PKR volatility and hampered production will...
- Abdul Ghani Mianoor
Indus Motors: 1QFY23 Review - Earnings slump on record gross losses
Indus Motors Ltd (INDU) has reported 1QFY23 NPAT of PKR1.3bn (EPS: PKR16.50), down a sharp 76% YoY but up 155% QoQ. The result is lower than our estimated EPS of PKR18.45, where the deviation largely stems from a gross loss of PKR2.4bn (-6.3% margin), even wider than that witnessed in 4QFY20 (pandemic). The result was accompanied with an interim DPS of PKR8.20, slightly lower than our DPS expectation of PKR9.00. KEY RESULT HIGHLIGHTS FOR 1QFY23: * INDU has depicted a 43% YoY decrease in sale...
- Abdul Ghani Mianoor
Pakistan Autos: Difficult year ahead; prospects likely to improve beyo...
We reduce our earnings forecast and Target Prices by an average of 7% and 9%, respectively, on account of persistent supply chain constraints and an uncertain near-term macroeconomic environment. Elevated car prices in a high interest rate environment have led to weak sales during FY23td, PKR volatility may continue to dampen industry margins in 1HFY23, before respite comes moving into FY24f. We trim our 2023-26f margins for the OEMs by an average 1ppt, and sales volume estimates by 5ppt on a...
- Abdul Ghani Mianoor
Sep’22 Result Preview - Administrative measures will push massive earn...
* For Sep’22 results, we expect IMS Auto Universe combined net profit to plunge a sharp 73% YoY to PKR2.0bn, largely owing to administrative measures imposed by the SBP to curb CKD kit imports. Lower gross margins will also contribute to this decline. * The Sep’22 quarter was marred by plant shutdowns, which resulted in a 53% decline in sales compared to last year (sales down 52% QoQ). Although commodity prices continued to slump, implying positives for input pricing, lower volumes are ...
- Abdul Ghani Mianoor
Pakistan Autos – Sep’22 - Volumes continue to dip on production woes
Latest automobile sales figures show a continued downtrend in demand to the tune of 51% YoY (down an additional 6% MoM) to c.10,950 units. This is a similar number to the pandemic lockdown in Jun’20 and is largely attributed to the ongoing production woes. Specifically, the prevailing auto-parts import curtailment measures on CKD units and resultant plant closures during Sep’22 (and in Oct’22td) have led to the decline in production as well to c.9,350 units (down 59% YoY and 27% MoM). Elevate...
- Abdul Ghani Mianoor
Indus Motors: FY 22 analyst briefing takeaways
INDU held its Analyst Briefing Session today to discuss the recent financial performance, also painting a lackluster outlook for FY23 amid import restrictions on CKD imports owing to external challenges. To recall, INDU posted a dismal EPS of PKR6.48 in 4QFY22 (FY22 EPS of PKR201.04), largely owing to significant gross margin attrition (near-pandemic levels), lower than both PSMC and HCAR, and a large one-off supertax. Going forward, FY23 is positioned to be a challenging year, owing to expec...
- Abdul Ghani Mianoor
Pakistan Auto Sales: Admin measures continue to curtail demand in Augu...
Latest automobile sales print indicates another sharp slump in demand of 46% YoY (down a further 2% MoM) to c.11,650 units, continuing its trajectory from the previous month that is similar to pandemic lockdown in Jun’20, largely owed to production constraints. The ongoing auto-parts import curtailment measures taken by the SBP, coupled with recent floods impacting supply has led to the decline in production during Aug’22. Also, high interest rates, PKR volatility, potential further price hik...
- Abdul Ghani Mianoor
Indus Motors: 4QFY22 review – earnings plunge on dismal gross margin
Indus Motors Ltd (INDU) has reported 4QFY22 NPAT of PKR0.5bn (EPS: PKR6.48), down a sharp c.90% YoY, taking FY22 NPAT to PKR15.8bn (EPS: PKR201.04), up 23% YoY. The result significantly missed our estimated EPS of PKR24.93, where the deviation largely stemmed from lower-than-expected gross margin of just 1.2% and higher selling expenses, which resulted in an operating loss for INDU for the first time since 4QFY20. The result was also accompanied with a final DPS of PKR3.25, much lower than ou...
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