AKD Securities Limited Equity Research – Daily Report

Karachi, March 12, 2019 (PPI-OT): Pakistan Autos: Receding growth with PC sales sustaining

Total industry sales for the month of Feb’19 came in at 20,275 units (-12%MoM/-13%YoY) with LCV sales of 17,071 units (-12%MoM/-10%YoY), Truck offtake of 527 units (-2%MoM/-27%YoY) and 36 Buses (-45%MoM/-36%YoY), marking MoM/YoY depletion in all automotive segments.

Cumulative 8MFY19 total industry sales stood at 167,628 units (+9.4%YoY) with passenger car sales at 140,462 units +13.9%YoY, LCVs amounting to 22,230 (-9%YoY) and Truck sales of 4,289 units (-17%YoY), with monthly sales continue their four month downtrend.

Amongst OEMs PSMC/INDU/HCAT recorded monthly offtake of 10,851/5,529/3,281 units moving -8/-12/-27%MoM and -17/+8/-27%YoY, taking cumulative 8MFY19 sales to 85,754/44,409/32,077 vehicles, a move of +3/+25/+10%YoY, with INDU marking relative resilience during 3QFY19 and into Feb’19.

Channel checks with dealers indicate a clear softening of demand, with order books re-ceding and delivery schedules for Civic/Corolla 1.6-1.8L variants shorter than a month. In this backdrop we remain sanguine on our outlook for sales, with INDU on firm grounds to hit our expected sales growth target of 12.4%YoY (underpinned by Corolla sales growth of 15%YoY) for FY19.

That said, our Neutral call on the stock stands, with recent price performance (+13%CYTD return) lowering potential upside to 14.1% (TP of PkR1,465/sh), inclusive of a tapered D/Y of 7.3% as CAPEX guidance lowers our expectation of payouts over the medium term.

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AKD Securities Limited Equity Research – Daily Report

Karachi, March 12, 2019 (PPI-OT): Pakistan Autos: Receding growth with PC sales sustaining

Total industry sales for the month of Feb’19 came in at 20,275 units (-12%MoM/-13%YoY) with LCV sales of 17,071 units (-12%MoM/-10%YoY), Truck offtake of 527 units (-2%MoM/-27%YoY) and 36 Buses (-45%MoM/-36%YoY), marking MoM/YoY depletion in all automotive segments.

Cumulative 8MFY19 total industry sales stood at 167,628 units (+9.4%YoY) with passenger car sales at 140,462 units +13.9%YoY, LCVs amounting to 22,230 (-9%YoY) and Truck sales of 4,289 units (-17%YoY), with monthly sales continue their four month downtrend.

Amongst OEMs PSMC/INDU/HCAT recorded monthly offtake of 10,851/5,529/3,281 units moving -8/-12/-27%MoM and -17/+8/-27%YoY, taking cumulative 8MFY19 sales to 85,754/44,409/32,077 vehicles, a move of +3/+25/+10%YoY, with INDU marking relative resilience during 3QFY19 and into Feb’19.

Channel checks with dealers indicate a clear softening of demand, with order books re-ceding and delivery schedules for Civic/Corolla 1.6-1.8L variants shorter than a month. In this backdrop we remain sanguine on our outlook for sales, with INDU on firm grounds to hit our expected sales growth target of 12.4%YoY (underpinned by Corolla sales growth of 15%YoY) for FY19.

That said, our Neutral call on the stock stands, with recent price performance (+13%CYTD return) lowering potential upside to 14.1% (TP of PkR1,465/sh), inclusive of a tapered D/Y of 7.3% as CAPEX guidance lowers our expectation of payouts over the medium term.

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