Karachi, March 13, 2013 (PPI-OT): Industry auto sales (cars ÷ LCVS) clocked in at 12,628 units in Feb’13, down I 6%YoY/1%MoM. As a result, 8MFYI 3 sales came in at 82,977 units, down 26%YoY.
According to AKD Securities on the flipside, while tractor sales rebounded by 47%MoM in Feb’13 to 2,364 units (driven by MTL), this was lower by a steep 73%YoY albeit partly due to a high base. In this regard, tractor sales going forward may be influenced by applicable OST where industry representatives are lobbying for a reduction in sales tax rate. Coming back to cars, PSMC and INDU recorded flat sales on a sequential basis while HCAR1s sales came off by 9%MoM. Going forward, provided status quo remains on GoP policy stance (it has been rumoured that the GoP may once again allow import of 5yr old cars), AKD Securities expects auto sales to depict sequential improvement with added impetus for INDU with the launch of the `Fortune? variant. Nevertheless, PSMC remains a preferred play with a target price of PkRII5/share implying an Accumulate stance.
Automobile Sales Volumes
Pak Suzuki Motors Company (PSMC): The company’s sales trend has stabilized, with sequentially fiat sales of 7k units in Feb’13. However, considering there appears to be an ample stock of imported used cars in showrooms, sales have yet to depict a strong sequential uptick. That said, Bolan sales in particular were impressive, up 14%MoM.
Indus Motor Company (INDU): INDU recorded sales of 3,588 units in Feb’13, up O.8%MoM, supported by Corolla sales of 3.3k units (up 1 .2%M0M) while Hilux sales declined by 4.9% to 251 units. The decline in Hilux sales may perhaps be attributed to the launch of Fortuner where the company targets annual sale of 2k units.
Honda Atlas Cars (Pakistan) Limited (HCAR): HCAR recorded sales of 2,015 units in Feb13, lower by 9.2%MoM where Civic and City sales dropped by 8% and 1O%MoM, respectively. However, 8MFY13 sales are up a robust 78%YcY, where the stock price has gained 66%CYTD.
Investment Perspective: In view of several positives for local Auto manufacturers (tighter import regime, revival in auto finance, weaker JPY), AKD Securities believes selected auto scraps can potentially outperform despite regulatory risk). In this regard, PSMC is AKD Securities preferred play with a target price of PkR1 15/share. Accumulate.