Author Topic: PSMC -- Pak Suzuki Motor Co. Ltd.  (Read 246376 times)

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Offline Farzooq

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #999 on: September 06, 2018, 04:34:06 PM »
Entry of Bravo – Should it Threaten Mehran’s Hegemony?

·         According to media reports, United Motors is expected to launch locally assembled 800cc Bravo and 1000cc pickup on September 8, 2018. Depending on the price tag (our expectation: PKR650-750k), we project Bravo to achieve annual sales of 2,500-5,000 units in 2019 – order booking is likely to start in 4Q2018.

·         Due to better price-value proposition, we expect Bravo to take away 3-6% of the market from the closest competitor and highest selling car in Pakistan i.e. Suzuki Mehran.

·         Our back of the envelope calculations suggest annualized EPS impact of PKR0.3, PKR0.5 and PKR0.6 on PSMC if Mehran’s offtakes decline by 1500, 2100 and 3000 units.

·         While we maintain an Underweight stance on the sector, the headwinds for PSMC may be diluted if the newly elected government caps car allowance benefit for its officers at 1000cc (which will be a huge boon for Suzuki Cultus).

Is The Winter Coming for PSMC? According to media reports, United Motors Private Limited (a subsidiary of United Auto Industries) is expected to launch two products (800cc hatchback “Bravo” and 1000cc pickup “Punjnad”) on September 8, 2018. Based on our discussions with the company, we understand that the products will be Completely Knocked Down (CKD) units i.e. locally assembled and order booking will commence in 1-2 months.

Earlier in 2017, the Government of Pakistan awarded Category-A Greenfield Investment Status to United Motors for assembly of vehicles covered in the exclusive contract agreement. As per media reports, the company had invested up to USD18.1million for land acquisition and plant operations.

Flipping through Company Profile, United Auto Industries was established in 1999. The company currently operates in 2/3 wheelers category and commands 22% and 18% market share in Motorcycle and 3-wheeler category (as per FY18 actuals). Operating as the second largest motorcycle brand, United Motors has maintained its product image as an affordable offering complying with quality standards.

As the company plans to launch its 800cc Bravo and 1000cc Punjnad this September, it sets the stage for a much awaited entry of competition in the monopolistic automobile sector of Pakistan. Looking at the product features of United Bravo, the product offers better features when compared to Pak Suzuki Motor’s (PSMC) Mehran.

Suzuki Mehran is currently the only locally assembled offering in the 800cc space, allowing it to be the cheapest car in the country, commanding annual sales of 46,221 units in FY18 (21% of total passenger car sales). We estimate the product to be contributing 32% to PSMC’s total product mix and 31% to its revenues.

800cc and below engine sized cars also appear to be amongst the majority of used cars being imported in the country (i.e. Nissan Days, Daihatsu Hijet, Daihatsu Mira, Suzuki Alto). United Bravo appears to be targeting this very segment too!

Launch Price to Set the Game: We believe that Mehran will continue to command the highest share within the “800cc and below segment” due to its strong brand loyalty, cheap and easy availability of auto parts, low maintenance cost and high resale value. Yet it goes without saying that this customer segment is highly price sensitive, hence success of United Bravo almost entirely depends on its pricing. Any price substantially lower than current Market Retail Price (MRP) of Mehran will allow Bravo to eat a sizable chunk of formers share in the small economy car segment.

We expect Bravo’s pricing to fall in the range of PKR650k – 750k, which should allow United Motors to sell 3,500-5,000 units in 2019. Since it will also substitute a chunk of used imported cars, we estimate a resultant decline of 2,100-3,000 units in Mehran’s annual sales. Our back of the envelope calculations suggest this decline to erode PSMC’s annualized EPS by PKR0.5-0.6.

There could be Light at the End of the Tunnel for PSMC: We maintain an Underweight stance on the Automobile sector as incumbent assemblers are bound to witness margin attrition, loss in pricing power and market share decline amidst a flurry of upcoming new players, interest rate hikes and ongoing PKR depreciation. The headwinds for PSMC may however be diluted if the newly elected government caps car allowance benefit for its officers at 1000cc (which will be a huge boon for Suzuki Cultus).

Elixir
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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #999 on: September 06, 2018, 04:34:06 PM »

Offline Farzooq

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1000 on: October 03, 2018, 12:11:55 PM »
Pakistan Suzuki Motors Company: Recovery in margins may reduce stock price underperformance
 
We revisit our investment thesis on PSMC post release of 1HCY18 accounts. We have cut our estimates for PSMC by -8/-12/-2% for CY18/19/20E as we incorporate actual 1HCY18 earnings and revised outlook on margin. We have lifted our rating on the stock to Buy from Neutral following massive underperformance  (17% in 3-mth).

We contend that margins for 3Q are expected to show recovery as; (i) price hikes in 1H18 were back-loaded with increase only applicable to new orders, (ii) steel prices have cooled-off, and (iii) a modest recovery in PKR and JPY against USD.

PSMC’s gross margin slipped from 10% in 1HCY17 to 7% in 1HCY18 though the company recorded 10% jump in volumes. The drop in margin resulted in 35% YoY drop in earnings.

Key headwinds for PSMC, currently part of our base-case, may dilute on the premise that the government allows non-filers to purchase vehicles in budget car segment (1,000cc and below) and caps car allowance upto 1,000cc for government officials as part of its austerity drive.

Key risks include: (i) higher than expected devaluation, (ii) steep increase in steel prices, and (iii) higher than expected slowdown in economic activity.

bma
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Offline MZ

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1001 on: October 08, 2018, 07:53:16 PM »
PSMC: UNFAVORABLE SECTOR DYNAMICS HAVE PUT THE SCRIP DOWN IN THE DUMPS

Monday, 08 October 2018

BY: ABBASI SECURITIES (PRIVATE) LIMITED

We revise our stance on PSMC from BUY to SELL due to the changed dynamics of the overall sector with the target price of Rs246, providing downside potential of 13% from the last day closing price (LDCP)
Despite of increase in volumetric growth by 22%, the 1HCY18 EPS has plunged by 34.86% due to rising input cost.
Ban on non-tax fillers for buying new cars has caused the sales of the company to decline by 12% YoY in 2MFY19
Rising cost of auto finance due to increasing interest rates would also limit the volumetric growth of the company
It would be difficult for the company to pass on the impact of PKR devaluation and increasing steel prices completely due to limited volumetric growth and immense competition going ahead

Offline Farzooq

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1002 on: October 22, 2018, 01:15:06 PM »
PSMC: Pressure on Margin Led Earnings Decline By 46% YoY

The Board of Directors is scheduled to meet on 23rd Oct’18 to discuss financial result for 3QCY18. We preview Pak Suzuki Motors Company (PSMC) whereby our earnings forecast for the nine months to arrive at PKR 1,893mn (EPS: PKR 23.00), down by 39% YoY. We expect net sales of the company to grow by 22% YoY to PKR 88.73bn (overall volumetric growth of 11% YoY in 9MCY18 and multiple price increase) compared to PKR 72.80bn in 9MCY17. Increase in topline is attributed to i) WagonR sales clocked in at 22,954 units, up by 44% in 9MCY18 compared to 15,895 units in 9MCY17, and ii) multiple increase in car prices by an average of 10-12% YoY on account of massive PKR depreciation (18% YoY) resulting in rise in cost of imported raw materials and parts. On a sequential basis, net sales of the company to remain flat on yearly basis while down by 15% QoQ owing to decline in overall sales volumes by 10% YoY and 20% QoQ. Gross margins are expected to improve by 100bps QoQ on account of increase in car price to pass on currency devaluation impact.

ahl
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Offline Farzooq

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1003 on: October 23, 2018, 12:39:24 PM »
PSMC- Risk on margins to restrict bottom-line growth: We estimate the company to
report PAT of PKR0.6bn (EPS: PKR6.79) depicting a decline of 50%YoY and an increase of
42%QoQ, respectively. This translates into 9MCY18 earnings of PKR1.9bn (EPS: PKR22.6);
a drop of 40% YoY. This is led by 10% YoY (down 20%QoQ) decline in sales mainly due to
persistence price increase and in anticipation of new model launch. Gross margins are
expected to improve by 200bps QoQ to 7% in 3QCY18E, as impact of previous price hikes
is expected to completely reflect in margins, as price increase was back loaded. We
expect tax to normalize in the period under review as the company recognized super tax
in last quarter. We do not expect the company to announce any dividend with 3QCY18E
results

bma
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Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1004 on: November 01, 2018, 04:48:10 PM »
Pak Suzuki Motors increased the car price effective from November 1, 2018
Pak Suzuki increases prices of different models up to Rs 40,000
New car prices would be effective from November 1, 2018
Wagon VXL MC increased to Rs 1,274,000 from Rs 1,234,000
Wagon VXR MC increased to Rs 1,184,000 from Rs 1,144,000
Suzuki Swift DLX increased to Rs 1,515,000 from Rs 1,475,000
Suzuki Swift AT increased t Rs 1,651,000 from Rs 1,611,000
Suzuki Cultus VXR increased to Rs 1,380,000 from Rs 1,340,000
Suzuki Cultus VXL rises to Rs 1,501,000 from Rs 1,461,000
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1005 on: November 06, 2018, 07:59:41 PM »
Buy 215-216-217 and  :lazy2: :lazy2:
Inshallah havey gain is there now  :thumbsup_anim:
« Last Edit: November 07, 2018, 01:57:26 PM by Avi2013 »
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1006 on: November 07, 2018, 02:00:23 PM »
Buy 215-216-217 and  :lazy2: :lazy2:
Inshallah havey gain is there now  :thumbsup_anim:

 :biggthumpup: :fingerscrossed1: :thumbsup_anim:
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

Offline HasanZaheer

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1007 on: November 08, 2018, 12:57:36 PM »
Why is PSMC appearing as xd although it has not declared any dividend?

Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1008 on: November 08, 2018, 04:38:15 PM »
Buy 215-216-217 and  :lazy2: :lazy2:
Inshallah havey gain is there now  :thumbsup_anim:


 :shoaby: :biggthumpup:
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

Offline 007

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1009 on: November 08, 2018, 05:19:52 PM »
Excellent Call AVI Bro 

Mashallah

Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1010 on: November 15, 2018, 07:42:36 PM »
Lao lao   :clap1: :clap1: :dance :biggthumpup:
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

Offline sqs17

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1011 on: November 27, 2018, 12:56:23 PM »

Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1012 on: November 27, 2018, 02:16:00 PM »
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1013 on: November 28, 2018, 01:57:48 AM »
LAO CAP O CAP  :thumbsup_anim:
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1014 on: November 28, 2018, 10:01:38 AM »
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

aharoon

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1015 on: November 28, 2018, 11:08:25 AM »

Offline Avi2013

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1016 on: November 28, 2018, 12:30:59 PM »
Bhai main 220 se isk pechay hoon....mera target hai 280...Usk bad yeh oqat per ae ya nanga hojae...i dont care lol  :tongue: :tongue:
Buy
PIAA , PAEL , ICL , AHCL , BERG
for long term strategy :)

aharoon

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1017 on: November 30, 2018, 12:35:36 PM »
Oo Bhai ye Kon banda Hai??
Beech Road pe Suzuki Gaari Chorr Ke Bhaag gaya Hai  :tongue: :tongue:
Number plate tou Avi2013 hai :bigeyed:

aharoon

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Re: PSMC -- Pak Suzuki Motor Co. Ltd.
« Reply #1018 on: November 30, 2018, 12:38:54 PM »
Inn halaat mai 600rs wali cement Ke boori tou bikk Nahin rahee Aaj Kal logg 150000 3000000 Ke cars mahengi Karke baichnay Kay sapnay Dekh rahay Hain  :skeptic: