Company Update - Habib Metropolitan Financial Services

REK‐220 www.JamaPunji.pk
Sector Update Automobile Assembler Auto Sales Down 27% M/M Official statistics released by PAMA for 8MFY16 show car sales recording a surge of 38% Y/Y to 121,934 units. On a successive basis, turnover shrank by 22% M/M to 14,027 units. Tapering of volumes in the month of Feb’16 was in line with the historic trend of slower off take post new year euphoria, further driven by 1) Conclusion of Punjab Rozgar Scheme, and 2) Delay in HCAR model launch. INDU increased its footprint in the market to 33.25%, clawing the share back from PSMC (53%), whereas HCAR’s piece of the pie de‐
clined marginally to 13.67%. LCV’s and 4x4 segment witnessed a recession of 49% M/M to 1,847 units as Ravi sales plummeted by 56% M/M. Tractors volumes expanded by a hearty 31% M/M (↓25% Y/Y) to 2,941 units with MTL being the main propeller. With the construction activity picking up pace in the country, trucks volumes grew by 35% Y/Y in 8MFY16. On the two wheeler side, Motorcycle segment volumes tapered by 10% M/M to 107,870 units, taking 8MFY16 (↑ 26% Y/Y) to 879,211 units. •
PSMC – Company had a ball of a time in the recent months courtesy Apna Roazgar Taxi scheme where in 8MFY16, turnover inflated by 71% Y/Y to 91,608 units (↓34% M/M). With the completion of the aforementioned scheme, Bolan sales recorded a 45% M/M cut to 1,546 units. Cash cow, Mehran, witnessed a decline of 26% M/M coupled with 14% M/M downtick in Swift volumes. Cultus was the only variant which grew by 12% M/M to 1,141 units 8MFY16 8MFY15 YoY Feb'16 Feb'15 YoY Jan'16 MoM Cars & LCV's PSMC 91,608 53,669 71% 8,420 9,981 ‐16% 12,706 ‐34% INDU 41,723 34,375 21% 5,275 5,077 4% 5,967 ‐12% HCAR 15,793 14,041 12% 2,168 2,242 ‐3% 3,015 ‐28% Deewan 13 44 ‐70% 2 5 ‐60% 5 NA Others 174 351 ‐50% 9 51 ‐82% 24 ‐63% Cars 121,934 88,528 38% 14,027 14,041 0% 18,083 ‐22% LCV's + 4x4's 27,377 13,952 96% 1,847 3,315 ‐44% 3,634 ‐49% Total 149,311 102,480 46% 15,874 17,356 ‐9% 21,717 ‐27% Tractors AGTL 6,139 10,526 ‐42% 1,135 1,503 ‐24% 984 15% MTL 10,984 17,400 ‐37% 1,806 2,435 ‐26% 1,262 43% Total 17,123 27,926 ‐39% 2,941 3,938 ‐25% 2,246 31% Trucks GHNL 510 509 0% 102 86 19% 72 42% GHNI 742 499 49% 115 57 102% 102 13% Others 1,942 1,354 43% 276 192 44% 333 ‐17% Total 3,194 2,362 35% 493 335 47% 507 ‐3% Motorcycles Atlas Honda 532,183 408,204 30% 66,128 53,030 25% 73,259 ‐10% Pak Suzuki 12,158 14,661 ‐17% 1,461 2,014 ‐27% 1,576 ‐7% Dawood Yamaha 5,092 3,857 32% 714 296 ‐ 680 NA Yamaha 11,198 ‐ ‐ 1,161 ‐ ‐ 1,513 ‐23% Others 318,580 269,248 18% 38,406 22,437 71% 42,487 ‐10% Total 879,211 695,970 26% 107,870 77,777 39% 119,515 ‐10% Source: PAMA & HMFS Research Note: Please refer to the last page for Analyst Certification and other important disclosures. March 11, 2016 Market Share ‐ 8MFY16 70%
60%
50%
40%
30%
61%
52%
20%
34%
28%
10%
11%14%
0%
PSMC
INDU
HCAR
8MFY16 8MFY15
Source: PAMA Saba Mahmood AC [email protected] Monthly Market Share ‐ February ‘ 2016 14%
53%
33%
PSMC
INDU
HCAR
Source: PAMA HABIBMETRO Financial Services Sector Update • INDU – Turnover for the company dwindled by 12% M/M to 5,275 as Corolla sales waned by 13% M/M to 4,844 units. However, it is pertinent to note that the delivery lead time for Corolla still hovers around 3‐4 months. Order driven Hilux inched up by 6% M/M, followed by Fortunner volumes thinning out by 28% M/M Auto Financing & Sales ‐ 7MFY16 200 140 180 120 160 • HCAR – Following a phenomenal start to the year, HCAR sales decreased by 28% M/
M to 2,168 units (↑ 12% Y/Y in 8MFY16). With the company pushing the launch of new Civic model to December’16 (as opposed to Sep’16), turnover is likely to remain under pressure with City to keep juice alive 100 140 80 120 Industry Outlook FY16TD
FY14
40 FY12
80 FY10
60 FY08
100 Sales (000's) Auto Financing …
Source: PAMA, SBP • News flows are again suggesting no special incentives to be offered to new players entering the market which will be detrimental to the overall industry growth and or consumers. However, elusion of finalization of auto policy is keeping both partici‐
pants and consumers on tenterhooks • Outlook for inflation is likely to remain subdued in the remaining months of the on going fiscal year, ruling out any reversal in monetary policy direction thus keeping auto financing robust (↑ 35% Y/Y in Jan’16) • Margins will come under pressure as Yen as appreciated by 6% in CY16TD, however, auto manufactures will counter it by passing on the impact to the end consumers by jacking up the prices. INDU has already hiked its prices which will be applicable on deliveries from May’16 in the range of PKR20,000‐60,000 in various Corolla variants Rating Definition Recommendation BUY ACCUMULATE NEUTRAL REDUCE SELL Expected Return > 15.0% > 5.0% to <15.0% > ‐5.0% to <5.0% > ‐15.0% to <‐5.0% >‐15.0% Analyst Certificate The research analyst denoted AC on the cover of the report on with the name of analyst who has written the report. The analysis and views express in this report exclusively reflect his/her personal views about the subject, company or security. Furthermore his/her compensation was, is or will not be directly related to the recommendation or views articulated in this report. The information pro‐
vided in this report is based on information available to the analyst and in accordance with best of his/her knowledge. Disclaimer This report has been prepared and circulated by Habib Metropolitan Financial Services Limited ("HMFSL") for information only, and is not intended to provide investment advice and does not take into account the specific investment objectives, financial situation and the particular needs of the recipients. It may be noted that information presented and opinions expressed in this report do not con‐
stitute a proposition for or solicitation of any offer to buy or sell any securities or futures. While information collected for the report has been through sources believed to be accurate and reliable at the time of publication, HMFSL nonetheless makes no representa‐
tion or warranty as to its accurateness and/or completeness. Investors should always seek financial advice and make their own judg‐
ment regarding the appropriateness of investing in any securities or other investments and should understand that statements re‐
garding future prospects of investments or investment strategies may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Ac‐
cordingly, investors may receive back less than originally invested and HMFS accepts no responsibility or liability whatsoever for any type of subsequent and significant loss arising from any use of this report or its contents. To the extent permissible by law HMFSL and any of its officers, employees or directors may take or have a position, or otherwise be interested in any transaction in any secu‐
rities or futures directly or indirectly forming the subject of this report. HMFSL may be also interested or may have business relation‐
ships with the companies profiled in this report. This report may not be distributed and published without HMFSL's consent. www.hmfs.com.pk HABIBMETRO Financial Services 2

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