JS Securities Limited – JS Research

Karachi, July 22, 2019 (PPI-OT): Autos: HCAR and PSMC Previews

The Board of Directors of Honda Atlas Cars (HCAR) is expected to convene on July 23, 2019 to announce 1QMY20 results. We expect the company to declare loss after tax of Rs77mn (LPS: Rs0.54), compared to PAT of Rs1,050mn (EPS: Rs7.36) and Rs1,169mn (EPS: Rs8.18) in 1QMY19 and 4QMY19, respectively.

The Board of Directors of Pak Suzuki Motor Company (PSMC) is expected to convene on July 24, 2019 to announce 2QCY20 results. We expect the company to declare loss after tax of Rs1,189mn (LPS: Rs14.45) during the quarter, compared to PAT of Rs394mn (EPS: Rs4.78) and loss of Rs981mn (LPS: Rs11.92) in 2QCY18 and 1QCY19, respectively.

HCAR: Loss of Rs0.54/share expected in 1QMY20

The Board of Directors of Honda Atlas Cars (HCAR) is expected to convene on July 23, 2019 to announce 1QMY20 results. We expect the company to declare loss after tax of Rs77mn (LPS: Rs0.54), compared to PAT of Rs1,050mn (EPS: Rs7.36) and Rs1,169mn (EPS: Rs8.18) in 1QMY19 and 4QMY19, respectively. The decline in profitability is primarily attributable to a severe drop in volumes (down 33% YoY/28% QoQ) on the back of price increases (devaluation and FED) and costlier bank financing (12-month KIBOR up ~440bps YoY). Moreover, gross margins are expected to contract to 3.0% during the quarter (down ~480bps QoQ), owing to ~5.4% QoQ devaluation of the Pak rupee against the dollar. Moreover, effective tax is expected to shoot up to ~156% for the quarter, considering minimum turnover tax of 1.25% is expected to apply.

PSMC: Loss of Rs14.45/share expected in 2QCY19

The Board of Directors of Pak Suzuki Motor Company (PSMC) is expected to convene on July 24, 2019 to announce 2QCY20 results. We expect the company to declare loss after tax of Rs1,189mn (LPS: Rs14.45) during the quarter, compared to PAT of Rs394mn (EPS: Rs4.78) and loss of Rs981mn (LPS: Rs11.92) in 2QCY18 and 1QCY19, respectively. Volumes during the quarter plunged by 17% YoY/16% QoQ, which is expected to be the primary driver for the company’s losses for the third successive quarter. Moreover, rupee devaluation is expected to take a toll on the company’s margins, which were already under severe pressure prior to the quarter.

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