Author Topic: Auto Sector  (Read 173216 times)

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Offline Farzooq

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Re: Auto Sector
« Reply #919 on: July 11, 2019, 09:37:35 PM »
Automobiles: Vehicle sales succumb to deteriorating macros

As per the latest data released by Pakistan Automotive Manufacturers Association (PAMA), sales for total passenger cars and LCVs in Jun’19 stood at 17,561 units, down 2% MoM and 5% YoY. 

Cumulatively, total sales of passenger cars and LCVs in FY19 dropped 7% YoY to clock-in at 240,646 units compared to 258,788 units as the year saw multiple upward price revisions, steep rise in interest rates, and host of regulatory measures contributing to the noted decline.

INDU emerged as the industry outperformer registering growth of 4% YoY despite lower sales of Fortuner and Hilux IMV variant. Corolla saved the day with 56,720 units (up 10% YoY) sold for the year. On a MoM basis, INDU saw a 13% rise as Hilux IMV and Corolla sales rebounded sequentially.

On the other hand, PSMC and HCAR saw vehicle sales drop 10% YoY and 14% YoY to 130,002 units and 44,234 units, respectively. For PSMC, largest decline was seen in Mehran due to model phasing out while Wagon-R (up 12% YoY) and Cultus (up 11% YoY) provided some relief. Alto variant sales have commenced with 1,685 units.

HCAR’s BR-V sales (5,045 units) dropped 42% YoY while Civic/City sales (39,189 units) dropped by 8% YoY. Cumulatively, HCAR sold 44,234 units during the period compared to 51,493 units SPLY. On a MoM basis, a large drop of 18% MoM in Civic/City sales to 2,106 units (12M avg. 3,266 units) was observed.

Going forward, we eye auto sector to continue to face headwinds from existing macro environment where FY20 auto sales are expected to stand at ~203k units, a drop of 15% YoY.

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Re: Auto Sector
« Reply #919 on: July 11, 2019, 09:37:35 PM »

Offline Farooq Qadir

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Re: Auto Sector
« Reply #920 on: July 12, 2019, 11:14:43 AM »
AKD Daily

Pakistan Autos: Gravity of a weak economy catches up with auto sales

•   June'19 total automotive industry sales tapered to 16,288 units (-11%MoM/-15%YoY) closing FY19 with total industry sales of 245,724 (-9%YoY).

•   Major constituents of total industry sales for FY19 moved -5%/-37%/-29%YoY for Passenger Cars/Trucks/Tractors while LCVs & Pickups sales slipped (-21%YoY) mostly from rapidly rising prices, adverse regulatory measures enforces by the GoP, amidst falling disposable incomes (hindered by petrol prices, cost of borrowing) effectively deflating consumer durable demand.
•   Segment-wise sales composition in the passenger car segment confirm the trend of relative resilience in premium segment sales (1,300CC+ segment sales up 2%YoY), with mid-segment sales showing strong growth (1,000CC sales up 11%YoY, mostly from the new model effect) as the small segment sales slag (800CC sales drop 27%YoY)

•   Bearish sentiment prevailing in the wider market has squeezed auto sector valuations, forcing attractive levels, despite wider questions over organic demand growth, medium term competitive environment (KLM confirming Sportage launch for Sept'18) and pricing power of OEMs following drastic price hikes (~25-40%YoY rise between June'18 vs. June'19).

•   We believe INDU remains a high quality offering, with its blend of demand growth from premium SUV offerings, sturdy margins in sedan segment and cash heavy balance sheet augmenting robust competitive moats, arguably the best placed to weather competitive pressures. Moreover, we have a FCFE based TP of PkR1,465/sh, trading at FY19/20F P/E of 6.8x/6.7x, offering upside of 33% at current levels.

AKD Research