Karachi, April 23, 2019 (PPI-OT): PSMC: 1QCY19 Result Review
PSMC reported 1QCY19 net loss of PkR981mn (LPS: PkR11.92/sh) against net profit of PkR904mn (EPS: PkR10.98) in 1QCY18, significantly deviating from our rather conservative LPS estimate of PkR1.00/sh.
Major deviations arose from: 1) lower than expected GM of 3.2% (vs. our expectations of 3.6% and 4QCY18 GM of 3.2%, where beginning year price bump failed to counter cost inflation, 2) higher total operating expenses (17% above our expectations), despite in the absence of any major product launch, and 3) finance charges tripled to PkR327mn vs. PkR73mn during 1QCY18.
We expect losses to sustain through to 2QCY18, where Alto sales (with associated margin and new-model sales bump) may provide some respite. Reiterating soft guidance on the stock, we highlight the disclosure of Alto’s price points and commencement of sales as near term flash points.