Karachi, March 12, 2013 (PPI-OT): As per the latest auto sales and production figures for Feb-13, released by The Pakistan Automotive Manufacturers Association (PAMA), car and LCV sales were marginally down 1% MoM during Feb-13. With this, cumulative auto sales witnessed a 26% YoY reduction during 8MFY13.
According to Arif Habib Limited segment-wise break-up reveals the 1000- 1300cc segment dropped 8% MoM and a massive 56% YoY in 8MFY13. This was followed by the economy segment (less than 1000cc) witnessing a decline of 6% MoM and 18% YoY in 8MFY13. During this period, the high-end segment (1300cc+) remained resilient as it was slightly down 2% MoM in Feb-13, however down 12% YoY in 8MFY13. The overall lacklustre performance can mainly be attributed to the high base-effect of last year (gov’t scheme) and piled up inventory of imported cars.
|1300cc and above|
|LCV’s + 4×4|
|Company w ise||Feb-13||Jan-13||MoM||Feb-12||YoY||8MFY13||8MFY12||YoY|
PSMC: Aligning itself for a better year
Pakistan Suzuki Motor Company Limited’s (PSMC) market share dropped in 8MFY13 to 58% against 63% same period last year. This is due to a 31% YoY plunge in the sales units during 8MFY13 to 48,328 units. Encouragingly, company sales jumped by a massive 69% MoM in Feb-13, on account of increase in the sales volume of Bolan (14%) and Ravi (6%), respectively. PSMC is also efficiently managing its “Suzuki exchange offer” by which one can exchange old Suzuki’s model with the new one.
INDU: ‘Fortuner’ launched with no huge expectations!
Indus Motor Company Limited (INDU) experienced a second consecutive month of sales growth, with however a meager 1% MoM in Feb-13 to 3,588 units. Nevertheless, company’s 8MFY12 sales are still down a huge 36% YoY to 21,847 units. Sales of the flagship model ‘Corolla’ remains stagnant (+1% MoM) to 3,337 units in Feb-13. Conversely, Hilux sales dropped 5% MoM in Feb-13. INDU launched it new SUV “Fortuner” last week where Arif Habib Limited foresees incremental sales of only approx 150-200 units in FY13 from the product.
HCAR: Catering target market well
Honda Atlas Cars Pakistan Limited (HCAR) witnessed a month of contraction in sales 9% MoM in Feb-13. This was mainly owing to the upsurge in sales during Jan- 13. However, 8MFY13 portrays an improved picture as the sales during the period surged by 78% YoY mainly owing to company’s new model launch of ‘Civic’ and new edition of City variant along with the low base-effect (Thailand floods), which led to massive growth for HCAR. However in Feb-13, Civic and City’s sales contracted by 8% and 10% MoM, respectively.
Tractor industry back to normalized sales
Tractor sales have reverted to normalized levels as Punjab gov’t tractor scheme was successfully completed in Dec-12 followed by decline in growth amid high base-effect alongside imposition of the sales tax from Jan-13. Tractor sales during Feb-13 recorded a massive 47% MoM growth mainly on account of Millat Tractor’s sales that recorded 97% MoM jump in Feb-13 to 2,005 units. However, Al-Ghazi Tractors could manage to sell only 359 units in Feb-13, which was 39% lower on a MoM basis.
Earnings outlook and Recommendation
With Jan-Mar13 quarter volume expectations, Arif Habib Limited estimates INDU’s EPS in the range of PKR 6-6.5, and 9MFY13 at PKR 18.4-19.4, down 48% YoY. As far as PSMC is concerned, Arif Habib Limited expect s 1Q earnings to hover around PKR 2.5-3.00, down 54% YoY. On the downside, once again any change in the import policy with respect to age limit of imported cars (currently at 3 years) by the Federal gov’t
poses a risk to the local assemblers.
From a stock valuation perspective, INDU is trading at a FY13E PE of 7.4x while offering DY of 7%. On the other hand, PSMC is trading at a CY13F PE of 8.6x with a DY of 4%. Arif Habib Limited thus maintain a ‘Hold’ recommendation on both of the Auto Assemblers.